Boring Portfolio Report
Monday, February 12, 1996
Hi. I flew back home from Florida today, and just got in the door about 10 minutes ago. So what do I see when I sign on? Same thing you did: chip book-to-bill of 0.93. Bummer.
In times like these, it pays to have a portfolio well-ballasted with sacks of cement and fertilizer.
Fine, but what about our exposure to the semiconductor industry, in the form of wire-bonding ace Kulicke & Soffa? For the past few minutes, I've been trading instant-mail messages with various MFs on precisely that question. Should I sell KLIC? Hold? Buy more?
Let's consider some facts. First, even this surprisingly pallid b-to-b indicates that chip sales in January were up 15% as compared with January 1995. Fifteen percent growth not exactly the end of the world.
Second (and more specific to our KLIC holding), it's pretty clear that the book-to-bill surprise is simply the latest installment in the continuing saga of "How Intel Bought Too Many Chips for its Low-End Motherboards and Ended Up Disrupting the DRAM Market for Everybody"--which is to say it has very little to do with Kulicke & Soffa. After all, K&S sells equipment for making the extremely fine wiring connections to all those little pins on a chip. DRAMs are low pin-count stuff. DRAM makers are simply not a big part of K&S's overall business.
Fine and dandy, but have we not seen on multiple occasions recently that when a piece of "bad" tech-related news arrives, the market sells off indiscriminately? You betcha. So should we sell KLIC, possibly to buy it back later at a better price?
The rules of this portfolio (rules I support completely) preclude any quickie trades. Besides, I really do believe that the downside on KLIC is fairly limited (although I certainly expect the stock to lose ground tomorrow). I have no intention of going down with the ship on KLIC; but for me, at this moment, a sell tomorrow does not seem warranted. So I'm holding. You, naturally, will do whatever you think you need to do.
In closing, I should at least acknowledge the three other stocks occupying the Borefolio. Texas Industries finally took a breather, the bid price sagging 7/8 today, to 60 3/4. Green Tree Financial picked up a quarter, to 31 1/8 (bid). And following a favorable story in yesterdays NY Times, Potash moved higher today to surpass by 1/8 the $76 price at which I bought 100 shares yesterday.
Oh, yes: KLIC was up nicely today, gaining 3/4 point on the bid side, to 22 1/2.
See you tomorrow. Buckle up.
GNT + 1/4 KLIC + 3/4 POT +1 TXI -1 1/8
Day Month Year History BORING +0.37% 1.47% 0.97% 0.97% S&P 500 +0.78% 4.00% 6.41% 6.41% NASDAQ +0.06% 3.35% 5.22% 5.22% Rec'd # Security In At Now Change 1/29/96 100 Texas Indus 54.52 60.75 11.42% 2/2/96 200 Green Tree 30.39 31.13 2.43% 2/9/96 100 Potash Corp 76.27 76.13 -0.19% 1/29/96 200 Kulicke & S 23.89 22.50 -5.81% Rec'd # Security Cost Value Change 1/29/96 100 Texas Indus 5449.99 6075.00 $625.01 2/2/96 200 Green Tree 6077.49 6225.00 $147.51 2/9/96 100 Potash Corp 7627.49 7612.50 -$14.99 1/29/96 200 Kulicke & S 4774.99 4500.00 -$274.99 CASH $26070.04 TOTAL $50482.54