Drip Portfolio Report

<THE DRIP PORTFOLIO>
Introducing: The Future
...in Drip Port, anyway

by Jeff Fischer (TMFJeff)

ALEXANDRIA, VA (March 18, 1999) -- Following your 50/50 vote on Ashland and Marathon, the two companies have been ousted from our study without regret. Although the businesses are interesting, we don't feel that they're profitable enough to consider, nor is it likely that either will outperform our other finalists. That decided, next week we study our three oil behemoth contenders:

Exxon/Mobil, BP Amoco, and Pennzoil-Quaker State.

For all practical purposes, we're actually studying six companies. If we'd done this review one year ago, none of the recent mergers would be in the picture. Competitive realignment is taking place in this industry, which is actually one of our stated criterion about which to be cautious, as it has been since we launched in 1997. We said we didn't want to invest: in a declining industry, a fad industry, or when an industry is undergoing enough competitive realignment that the players and competitive landscape becomes muddled. You want to be able to name the industry players and leaders, of course. That's more difficult to accomplish when everyone is reshuffling.

We're forging ahead, however, because we've taken the current mergers into account and -- considering how many have recently taken place -- we shouldn't see nearly as many large mergers in the future. However, we do want to see how the mergers impact profitability and costs at BP Amoco and Exxon/Mobil, as well as with Pennzoil, because its merger with Quaker is fairly recent. So, we'll look at our finalists next week with the caveat that we need to wait to see a quarter or two of operating results (assuming Exxon and Mobil merge) before being able to make a final decision. Next week we should be able to point to our initial favorite, however -- which would likely be our final favorite, too.

The plan is to study Pennzoil-Quaker on its own merits (because it's a different sort of beast) and compare it to BP Amoco and Exxon/Mobil -- or Mexon, as we'd name it -- to one another, because these companies are similar in purpose and scope. Finally, we'll compare our favorite between BP Amoco and Mexon to standalone Pennzoil.

Following this we'll announce a favorite company. Whether or not we begin to buy it will depend on many factors, including our comfort level, which is still growing and is dependent on this final study to reach the -- DING DING DING DING -- level at which we'd be comfortable investing.

What will be next in Drip Port?

The oil study should be completed in plenty of time to consider the first quarter results from our companies as they're released, which will be on various dates in April (mid-April for Intel and Johnson & Johnson). Alongside this, Brian is going to announce his first Drip investment and explain how he's beginning it. As many of you know, Brian began this study not owning any stocks. He has been learning the past three months in order to comfortably begin investing. He'll share his pick, his reasons, and his method to begin as he addresses it.

Following that, we're going to revisit our investment philosophies and the merits of direct investment plans, which is the name we're giving to both Direct Stock Plans (DSPs) and Dividend Reinvestment Plans (DRPs). Whenever we say "direct investing" and "direct investment plans," we mean DSPs and DRPs. Direct investing is taking hold on the Internet and the individual investor is going to benefit most in the years ahead.

Following that we'll cover some of the changes taking place, including opportunities at NetstockDirect.com and a new company, BuyandHold.com. Following that, we'll move into a new industry. More on that later.

For now we're just keeping up on the message boards and being Foolish. Meanwhile, every e-mail and message board post that we read about new Fools beginning to invest for the first time with direct investing puts a smile on our faces. The purpose of this portfolio -- to help Fools get started to a successful investing career -- is being met each day. We're very happy to Foolishly help jump-start investing careers. Once people begin to invest, the community that helps them most, I believe, is on the message boards.

We appreciate your interest in Drip Port and we hope to see you on the Fool -- in the Fool community, on the message boards. It's spring weather here today and spring fever is striking some of us. We hope you're enjoying your March.

Fool on! [To discuss these columns, please visit the Drip Companies message board on the Web.]

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