Cash-Kings Move Ahead
TOWACO, NJ (Nov. 3, 1998) � I hope that a Happy Halloween was had by all on Saturday. I know that I certainly enjoyed taking my son trick-or-treating around the neighborhood for the first time. He dressed up like a Dalmatian for the occasion. As those that are familiar with my Message Board moniker (MrShihTzu) can probably surmise, we're dog lovers in the Weiss household. My son has fit right in in this respect. He learned the names of our two ShihTzus early on, and "doggie" is one of his favorite words. After we were through trick-or-treating, we all had fun greeting the other kids at our front door. What we probably enjoyed the most was the sight of my son and our two dogs running to the door to greet all the trick-or-treaters. All told we estimated that between 150 and 200 trick-or-treaters rang our doorbell.
Halloween came at the conclusion of a solid week for Cash-King investors. Our portfolio moved ahead 3.6% for the week, comfortably past the S&P 500's 2.6% gain. As you'll note from the table below, all but two of our stocks posted gains last week. Our portfolio is now up by 11.15% since its inception on February 3 of this year giving it a lead of nearly 2% over the S&P 500 since that date. We're quite happy to see market-beating gains from our portfolio, and we're having fun managing it at the same time.
Cash-King Last This Change Cisco $58.69 $63.00 + 7.3% Pfizer $103.50 $107.31 + 3.7% Intel $87.25 $89.19 + 2.2% S Plough $100.31 $102.88 + 1.6% Coca-Cola $70.25 $67.63 - 3.7% Microsoft $106.38 $105.88 - 0.5% AmEx $87.63 $88.09 + 0.5% T. Rowe $30.63 $35.56 +16.1% Gap Inc. $56.75 $60.13 + 6.0% Fool Four Last This Change GM $60.31 $63.06 + 4.6% Kodak $73.50 $77.50 + 5.4% Exxon $71.25 $71.63 + 0.5% Chevron $80.94 $81.50 + 0.7% S&P 500 1071 1099 + 2.6% Total C-K $23,452 $24,295 + 3.6%
American Express (NYSE: AXP), which has been the worst performing company in our portfolio so far, released third quarter earnings on Monday. The earnings report provided confirmation that, as the company stated in September, it hasn't been hit as hard by the financial woes in Asia as have many other financial institutions. Among the highlights for the quarter were a 9.5% increase in Net income, a 6.4% increase in net revenues and a 0.6% increase in Return on Average Equity as compared to the third quarter of 1997. Another positive sign was the 3.8% decrease in diluted shares outstanding as the company continues to follow through on its share buyback program. The company was also the subject of last week's Dueling Fools. I don't know about you, but I'm certainly on the bullish side of this argument.
T. Rowe Price (Nasdaq: TROW) was up strongly on the week. The only news that I could find was that the company had positive flows of cash into its funds during the month of September. Since we believe that investors are best served by having their money invested in the stock market, we view this as good news both for our company and investors in general.
Microsoft's (Nasdaq: MSFT) battle of he said-she said with the Justice Department moved into its second week. If you're interested in reading more about this war of words, you can check any of the following Microsoft trial Web sites:
On Tuesday, Mr. Softy announced that the next release of its Windows NT operating system will be named Windows 2000. This is viewed as the next step in its plan to ultimately standardize its operating systems so that there are no longer separate versions for corporate and individual customers.
Gap Inc. (NYSE: GPS) had a strong week after announcing on Wednesday that it will split its stock 3 for 2 on November 30. At the same time, a plan to repurchase up to 30 million shares of stock (on a pre-split basis) was also authorized. One thing that often confuses investors about stock splits is the record date -- in this case it's November 11.
People often ask questions on various message boards here at The Fool about what happens if they buy shares after the record date of the split but before the date the split actually takes place. The answer is that whether you buy shares before or after the actual split takes place, the shares that you purchase will split. Unlike dividends where you have to be the holder of the stock on the record date to receive your dividends, the record date for stock splits is relatively meaningless. You will often see, however, that as it gets closer to the record date the stock will also start trading on a "when issued" basis. The -wi shares trade as if the stock has split. Then, when the split takes place, these shares are the same as the post-split shares of stock.
We're happy to hear that Gap is planning to buy back more shares of its stock. As long-term investors, that's at least 1000 times more important to us than the pending stock split. We'll be checking Gap's future financial reports to monitor the company's progress in its buyback effort.
On Monday, Cisco Systems (Nasdaq: CSCO) announced an alliance with Bellcore to help customers develop and implement New World, next-generation networks. On Tuesday, our company joined with Hewlett Packard (NYSE: HWP) in announcing a telecommunications alliance and business model that they expect to change the way telecommunications are delivered and accelerate the introduction of new Internet related services. Our company will be releasing earnings for the first quarter of its current fiscal year on Wednesday. If you want information about the post-earnings conference call, click here.
On Monday, Schering-Plough (NYSE: SGP) announced that a European Union panel recommended the approval of its Temodal Capsules for the treatment of certain forms of brain cancer. It is expected that the European Commission will approve the drug in about three months. The Company has submitted a New Drug Application in the U.S. seeking marketing clearance for the drug here as well.
Before I close for the night, I thought that I'd preview the week ahead. Tomorrow night I'll be talking about whether or not investing through Dividend Reinvestment Plans makes sense for the Cash-King Investor. Wednesday I'm going to discuss dealing with investment decisions as a family in the context of a discussion my wife and I had after I purchased some stock on October 9. Thursday night I'm going to revisit the third quarter performance of Tellabs (Nasdaq: TLAB) and relay some aspects of a conversation I recently had with the company. Finally, on Friday I'm going to finish my discussion of Tellabs and how it relates to some different ways that I like to look at the flow ratio.
Have a Foolish night,
Day Month Year History S&P: +1.18% 1.18% 10.50% 10.50% NASDAQ: +1.67% 1.67% 8.08% 8.08% Cash-King Stocks Rec'd # Security In At Now Change 2/3/98 24 Microsoft 78.27 105.81 35.19% 2/3/98 22 Pfizer 82.30 108.13 31.38% 5/1/98 37 Gap Inc. 51.09 60.25 17.93% 6/23/98 34 Cisco Syst 58.41 64.69 10.75% 8/21/98 22 Schering-P 95.99 105.06 9.46% 2/13/98 22 Intel 84.67 91.81 8.43% 2/6/98 56 T. Rowe Pr 33.67 35.00 3.94% 2/27/98 27 Coca-Cola 69.11 70.88 2.56% 5/26/98 18 AmExpress 104.07 91.88 -11.72% Foolish Four Stocks Rec'd # Security In At Value Change 3/12/98 20 Eastman Ko 63.15 77.88 23.32% 3/12/98 20 Exxon 64.34 72.06 12.01% 3/12/98 15 Chevron 83.34 81.13 -2.66% 3/12/98 17 General Mo 72.41 65.19 -9.97% Cash-King Stocks Rec'd # Security In At Value Change 2/3/98 24 Microsoft 1878.45 2539.50 $661.05 2/3/98 22 Pfizer 1810.58 2378.75 $568.17 5/1/98 37 Gap Inc. 1890.33 2229.25 $338.92 6/23/98 34 Cisco Syst 1985.95 2199.38 $213.43 8/21/98 22 Schering-P 2111.7 2311.38 $199.68 2/13/98 22 Intel 1862.83 2019.88 $157.05 2/6/98 56 T. Rowe Pr 1885.70 1960.00 $74.30 2/27/98 27 Coca-Cola 1865.89 1913.63 $47.73 5/26/98 18 AmExpress 1873.20 1653.75 -$219.45 Foolish Four Stocks Rec'd # Security In At Value Change 3/12/98 20 Eastman Ko 1262.95 1557.50 $294.55 3/12/98 20 Exxon 1286.70 1441.25 $154.55 3/12/98 15 Chevron 1250.14 1216.88 -$33.27 3/12/98 17 General Mo 1230.89 1108.19 -$122.70 CASH $120.62 TOTAL $24649.93 *Please note: On 8/4/98 $2,000 cash was added to the