The $99 Portfolio

How far will $99 take you?

That was the question I posed three years ago, when I created a mock portfolio consisting of a single share of several stocks. The only stipulation was that the sum of those single shares couldn't add up to more than $99.

The concept proved so popular that I received several reader submissions. Fool Stephen Simpson even created a biotech version a month later.

I'm ashamed to say that I hadn't checked on my original $99 portfolio until this morning. The results surprised me.

 

10/11/05

5/21/08

Gain

Akamai (Nasdaq: AKAM  )

$15.92

$39.27

147%

Netflix (Nasdaq: NFLX  )

$28.21

$31.69

12%

Marvel (NYSE: MVL  )

$16.85

$32.08

90%

Sirius (Nasdaq: SIRI  )

$6.42

$2.58

(60%)

CNET (Nasdaq: CNET  )

$13.18

$11.40

(14%)

aQuantive*

$18.46

$66.50

260%

Total

$99.04

$183.52

85%

*Acquired by Microsoft (Nasdaq: MSFT  ) last year.

An 85% return over a 31-month period is nothing to sneeze at, especially these 31 months, where the rocky S&P 500 index has come though with a mere 17% return.  

Yes, aQuantive being acquired for $66.50 a share last year accounted for more than half of my gain. It certainly didn't hurt that the two sinkers in my half-dozen picks also happened to be the lowest-priced selections, although I should point out that my highest-priced pick weighed down my overall return by failing to keep up with the market.

Before dusting off this concept again -- and giving you another crack at it -- I figured I would go over what worked and what didn't work.

$99 can go a long way 
Akamai has been a wild ride. Sixteen months after kicking off my mock portfolio, the stock peaked at $59.69. It seemed like every Web giant wanted to deliver digital content faster and more securely, and Akamai's server farm was at the right place, at the right time. Akamai continues to grow, but a more cutthroat climate has nibbled away at those head-turning gains. I certainly won't look a 147% return in the mouth, though I wish I was looking at a little less plaque and gingivitis these days.

Netflix, the only stock of the six that I own in the real world, has been on a roller-coaster ride befitting some of the thrillers in its growing movie collection. The mail-based DVD rental giant hit an all-time high last month, before plunging after an uninspiring quarterly report. With 8.2 million subscribers, Netflix is here to stay. The company has been raising its 2008 membership targets, although it hasn't been accompanied by higher income projections. Digital delivery will pose a more competitive marketplace, but Netflix isn't taking those threats lying down.

Marvel has been a lot like Iron Man's metal-donning superhero, Tony Stark. It's rich. It's popular. It has the brains to give itself more brawn. The blockbuster success of the Iron Man movie isn't the only reason why Marvel hit a new all-time high this month, but as the first of the Marvel-bankrolled productions, it definitely opens up the company's earnings power now that it has more riding on its in-house features.

Sirius has been a stinker, failing to live up to the fiscal hype after Howard Stern's arrival. It's not as if one can blame Sirius. The company's subscriber growth has been explosive in recent years. Losses have been narrowing, with the occasional period of positive cash flow. The company's planned merger with XM Satellite Radio (Nasdaq: XMSR  ) has been a patience-tester, given the slow-footed FCC, but the deal's likely completion should result in model-altering cost savings and operating efficiencies.

CNET Networks joins aQuantive in giving into the buyout swan song. It may not be doing too many victory laps after last week's deal to be acquired at $11.50 a share, if only because the company's growth failed to keep pace with both its potential and the growth of the online advertising market.

A virtual $99 for your thoughts
I'll be back next week with a new version of the $99 portfolio, but why don't you give it a shot today? Now that we allow readers to post comments, take a few minutes to drum up your own $99 portfolio and post it by scrolling down this page to the section marked "Comments from our Foolish Readers."

Obviously this is just a mental exercise. Commissions alone would kill a real $99 portfolio consisting of single share purchases. However, I think you'll enjoy the challenge of trying to round up as many of your favorite stock ideas as you can stuff into a $99 box.

Many of these stocks have lit up returns in our newsletter services, too. Microsoft is an Inside Value recommendation. Marvel and Netflix are Stock Advisor selections. CNET and Akamai are Rule Breakers picks. If you don't have $99 burning a hole in your pocket, you can check out any or all of the Fool's newsletter services with a free 30-day trial subscription.

Longtime Fool contributor Rick Munarriz is glad to see that his $99 portfolio didn't wind up on a fast-food dollar menu. He owns shares in Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 22, 2008, at 1:35 PM, dennejd wrote:

    You could actually accomplish a $99.00 porfolio w/o getting killed by the commissions these days. I haven't read the fine print (always a good idea before signing things) but have heard that zecco has 10 free trades per month. Sharebuilder has a deal where if you set up automatic investments you only pay $4 p/trade. Might be a good way for newbies to get into it. I want to be clear that in no way do endorse these services though because I haven't done any DD on them. Just saying they're cheap!

  • Report this Comment On May 22, 2008, at 2:40 PM, Retiree2035 wrote:

    all 5 star recommendations.....

    HOGS $12.06

    CHNG $6.90

    CFSG $11.09

    TGB $5.34

    TASR $7.32

    IMMR $9.26

    INFN $13.15

    RBY $1.43

    BBSI $12.82

    FTK $19.02

    total $98.39

  • Report this Comment On May 22, 2008, at 10:35 PM, richbatty wrote:

    Assuming 6 stocks like last time:

    ARMH $ 6.38 -- ARM Holdings PLC

    BSX $13.50 -- Boston Scientific, Inc

    OMAB $18.96 - Central North Airport Group

    CLMS $19.45 -- Calamos Asset Management, Inc

    SGP $19.75 -- Schering-Plough Corp

    MXIM $20.85 - Maxim Integrated Products

    Total is $98.89 at close on 22MAY2008

    Picked from M* wide moat 5 star universe looking for value plays. I currently own ARMH and CLMS.

    I revisited my set from 3 years ago and current value is $76.75 with two picks now on the Pink Sheets. Down from $126.46 on 03JUL2007.

  • Report this Comment On May 23, 2008, at 12:02 PM, TMFVermont wrote:

    well said

  • Report this Comment On May 23, 2008, at 8:35 PM, Dezertenergy wrote:

    5/23/08

    BXG 6.91

    IVAN 2.74

    WWAT 0.85

    MDCI 16.28

    AIXD 2.43

    RVBD 16.10

    AZK 4.94

    MEDX 7.73

    TINY 8.00

    TIE 17.30

    IGTE 7.46

    IMAX 7.15

    XSNX 0.44

    $98.33

    These are stocks I own or have owned, and also track them on CAPS. I like taking a 1-2 year approach, with 5-10 years in mind. Finding a good stock under 10.00 is difficult for me. There's a few picks here where I don't care for the management but the price was okay. A few are on the contrary side, but the price seemed to offer a low starting point, and with a 1-2 year outlook, deals, mergers, or buy-outs are possible (so is bankruptcy!)

    For a hundred bucks and no commissions I guess I can afford to stretch a bit.

  • Report this Comment On May 24, 2008, at 9:30 AM, skelator wrote:

    If $99 is all I have to lose I would take more risk than usual so here it goes.

    icog 3.86

    lcav 8.10

    hlit 8.97

    elos 16.39

    tiny 8

    etfc 3.92

    rate 48.65

    avnx 1.04

    last one just thrown in because I had 1.11 left.

    Total $98.93

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