(FORTUNE Magazine) – A COMPANY called LAACO looks like the stuff investors' dreams are made of. LAACO (pronounced Layco) owns assets worth at least four, and possibly eight or ten, times the market value of its stock. Ordinarily that would attract a platoon of raiders who would bid up the stock toward true value. But the Icahn crowd hasn't gone after LAACO because management controls most of the stock and shows no inclination to sell. Nor does management -- and here's the stunner -- seem eager to raise the stock price on its own. If anything, the people who run LAACO seem bent on keeping the price down. That ordinarily would make outside shareholders hopping mad and lead to a derivative suit against the board. But only a handful of the 150 minority shareholders are the least disgruntled, and they refuse to criticize management publicly; the rest of the folks holding undervalued stock seem perfectly gruntled. Where could you find such a company and such peculiarly placid shareholders? Where else but Southern California. LAACO is the nickname for the Los Angeles Athletic Club Co., a supersecretive outfit whose stock has a bid price of $260 a share. LAACO owns the Los Angeles Athletic Club, the oldest and one of the most prestigious clubs in the city. Its membership has included robber barons, movie stars, cabinet members, and winners of more than 70 Olympic medals. The company's top managers and six of its 12 directors are Hathaways, a family almost as venerated in Los Angeles as the Athletic Club itself. Hathaways own more than 70% of LAACO's stock. The Hathaways, who refused FORTUNE's requests for interviews, oversee a tiara of other private clubs as well, including the California Yacht Club in Marina Del Rey, the Riviera Tennis Club in Pacific Palisades, and the neighboring Riviera Country Club. The country club is the home of the Los Angeles Open, was the site of the 1983 PGA championship, and by most ratings is among the ! top 20 golf courses in the U.S. In addition to the land under its clubs, LAACO owns 1,650 undeveloped acres in tony Topanga Canyon and tonier Malibu. It also owns shopping centers and warehouses in at least four states, a vast collection of Western art, and a subsidiary that makes vitamins and food supplements sold at the clubs. The company values all that stuff in its annual report at $55 million, carrying the land at cost and other properties at cost less depreciation. (The company has only $12.4 million of debt.) Since most of the land was bought years ago, when dirt was cheap, that accounting reflects the company's true value as accurately as a fun house mirror. And the stock market values the company even lower. The total market value of LAACO's 169,000 shares is only $42 million, some 23% below book. One real estate broker calls the market price ''ridiculously low,'' and that may be a ridiculous understatement. Consider the Riviera Country Club, a 1920s acquisition that accounts for only $1 million or so of the book value. Fred Sands, a Los Angeles real estate broker who specializes in ritzy neighborhoods like Pacific Palisades, says he could sell the Riviera's 200-plus acres for at least $112 million. That is the value he puts on the land if it were sold to a developer as a single block. Parceling it off slowly in individual building lots, he says, could easily bring $200 million. Then there is the Athletic Club at 7th and Olive streets. An expert in downtown Los Angeles property says the 120,000 square feet of prime land under the club is worth about $30 million. The Topanga and Malibu acres could fetch $20 million or so. Using Sands's lower valuation on the Riviera Country Club, that comes to a total of more than $160 million, or nearly four times LAACO's market value. And that does not include the Riviera Tennis Club, the yacht club's real estate in Marina Del Rey, the shopping centers, and the storage facilities. This trove of assets yielded just $5.1 million in earnings last year on revenues of $33 million. Anyone looking into LAACO stock as an investment -- and not just a collector's item -- will have a hard time finding out much about the company. The Hathaways are so stingy with information that a stockbroker had to buy shares to get a copy of the annual report. Even then he did not learn much. The report waxes warm about club renovations and company sponsorship of the Los Angeles marathon, but it says little about financial affairs. No report has fully listed the assets since 1981. The latest edition does proclaim that LIC Inc., a subsidiary, was a ''bright spot in 1985 results,'' but it neglects to mention what LIC does or how it produced such gratifying illumination. (LIC owns at least some of the shopping centers.) The Hathaways can reveal so little because companies with fewer than 500 shareholders are exempt from Securities and Exchange Commission disclosure requirements. LAACO also has to divulge remarkably little to the California Department of Corporations, the state securities regulator. Its last filing with the state, following the death of a family member and the redistribution of her shares, was in 1981. THE CHAIRMAN and family patriarch is Frank Garbutt Hathaway, 62, who has put in a half century working for LAACO. He started at 12 packaging the Athletic Club's own brand of chewing gum and selling it to schoolmates. At the time, LAACO also made kosher soap. (Yes, soap, not soup.) Frank's brother Charles, 59, is president, and brother James is a senior vice president. Frank's son John is in charge of investments and property management, and daughter Karen is corporate secretary and transfer agent. Charles's son Steven is a vice president, and daughter Sally is director of Athletic Club activities. In keeping with the company name, Hathaways are jocks. Frank celebrated his 51st birthday by jogging 51 miles at the Athletic Club. Charles observed his 50th with a personal version of the triathlon: He rowed 35 miles from Santa Catalina Island to the California Yacht Club, ran seven miles from there to the Riviera Country Club, and bicycled 15 miles to the Athletic Club. To understand why stockholders are so quiescent, one has to know something about the history of the Los Angeles Athletic Club. It was started in 1880 by a group calling itself the 40 Thieves. The sobriquet proved remarkably apt for one early member. Edward Doheny, the tempest in the Teapot Dome scandal, ultimately was acquitted of paying the bribe that Interior Secretary Albert Fall was convicted of accepting. Fall went to prison; Doheny got a street named after him.

The club enjoys many ancestral links to the Los Angeles aristocracy. The 40 Thieves included William G. Kerckhoff, a founder of Pacific Light & Power, and Frank A. Gibson and Fred W. Wood, the founders of what is now TICOR Title Insurance. Other early members were Otis and Harry Chandler of the Times- Mirror Co., railroad tycoon Henry Huntington, and Harry Haldeman, the originator of the club's High Jinx variety show. Harry's grandson, H. R. Haldeman, became famous for high jinks of his own. Early members also included Jews and Hispanics, groups still unwelcome at the Athletic Club's two leading competitors, the Jonathan and California clubs. Even before it was old enough to walk, the Athletic Club marched to a different drummer. It admitted blacks and women years before most private clubs in the U.S., and it has kept prices solidly in the bargain bracket. The initiation fee is $650 and monthly dues are $84. The maverick club's early years were bumpy -- so bumpy that it closed its doors for five years at the turn of the century. It failed partly because of competition from the cheaper YMCA. Frank Hathaway faces a similar challenge today: The tax-exempt Y is building a yuppie-oriented facility just three blocks from the Athletic Club. One of the men who revived the club was Frank A. Garbutt, a grandfather of the current chairman, who had become a member in 1883 when he was just 14. Garbutt incorporated LAACO in 1906 and sold stock to club members for $10 a share. For the next 40 years he personally oversaw every facet of LAACO's operations, from the selection of spoons for club kitchens to the spectacularly astute real estate investments. Garbutt was a Renaissance man. He was one of the first to drill for oil in Los Angeles, was a champion auto racer who held the mile speed record, and is generally credited with having brought the 1932 Olympic Games to Los Angeles. He also was a prime mover behind the formation of Paramount Pictures. He lured movie stars to the Athletic Club, knowing scores of lesser lights would follow. Charlie Chaplin lived at the club from time to time and once wrote to a friend: ''There was a young man who used to sit around the club lounge, a lonely fellow named Valentino who had come to Hollywood to try his luck but wasn't doing very well.'' Stockholders were not always ecstatic about Garbutt's stewardship. In 1937 dissidents voiced concern about a mysterious trust that was buying LAACO stock. Garbutt eventually acknowledged that his family owned the trust but said he was buying the shares only to prevent a controlling interest from falling into ''opportunistic or unscrupulous hands.'' The dissidents accepted the explanation because Garbutt's own hands were scrupulously clean. He subordinated both company and personal interests to the good of the club and never collected a dime for his decades of service. When club members voted him a $10,000 honorarium, Garbutt turned it down, saying: ''I picture the club as an institution to be worked for and eventually to be put beyond the reach of human vicissitudes and certainly to be protected from profiteers.'' Garbutt's heirs apparently inherited his philosophy along with his stock. None of the Hathaways, for instance, take much home from the clubs. Frank and Charles collected salaries of $174,700 in 1980, the only year for which such information is available. Other family members working for the company earned $42,000 or less. Most important, Frank Hathaway hews to his grandfather's rule that LAACO should sell assets only to finance new ones or to keep the clubs open, never for anything so crass as realizing gains and distributing them to shareholders. One security analyst (who uncharacteristically insists on anonymity) says that Hathaway's management may have less to do with family tradition than with the fact that his 96-year-old mother, Melodile Garbutt Hathaway, owns 23% of the stock (as of the 1981 filing with state regulators). Noting that the inheritance taxes on her shares will be based on the market value when she dies, the analyst argues that Hathaway has ample incentive to keep the price down. An over-the-counter broker who has made a market in LAACO stock for more than 40 years takes strong exception to that cynical view. ''Frank Hathaway sees his responsibility as being to the club members, not the shareholders,'' he says. LAACO's minority shareholders seem to agree with that assessment. Even the few who bemoan their undervalued stock describe Hathaway in terms usually associated with Mother Theresa. That could be because many of them bought their stock not for investment, but for the added cachet of being both a member and a shareholder in Frank Hathaway's clubs.

CHART: INVESTOR'S SNAPSHOT L.A.ATHLETIC CLUB CO. SALES (YEAR ENDING 1985) $33.3 MILLION CHANGE FROM YEAR EARLIER DOWN 3% NET PROFIT $5.1 MILLION CHANGE DOWN 4% RETURN ON COMMON STOCKHOLDERS' EQUITY 14% FIVE-YEAR AVERAGE 13% RECENT SHARE PRICE $260 PRICE/EARNINGS MULTIPLE 9 TOTAL RETURN TO INVESTORS (12 MONTHS TO 10/10) 12% PRINCIPAL MARKET OTC