Fool Portfolio Report
Wednesday, November 8, 1995
A truly wacky day for Foolish investors saw Iomega rise $3 3/4, America Online drop $3 3/4, and the Fool Portfolio close with a slight gain. Sadly, this was a white-ribbon day, as both of our competing market indices did us in.
We hold 340 shares of America Online, and 335 of Iomega, so when they make identical, opposite moves, it's pretty much a wash. What ended up making us profitable Wednesday was strength in our NYSE stalwarts, as Sears leapt $1 7/8 to a new 52-week high, and GE and Gap also caught nice gains.
So what were the stories behind all this madness? Well, in America Online's case, I could find no story. As regular readers will recall, yesterday AMER announced earnings of 16 cents per share vs. 8 cents for the first quarter of last year. . . on a 248% sales gain. I wrote last night that I fully expected AMER to drop today, a prediction which looked quite inaccurate all morning and much of the afternoon; America Online shares were up about three bucks most of the day. But lo and behold, what should happen but a nosedive at the end of the day, as AMER closed bidding $78.25. . . a swing of a full seven points?! So Mr. Short-Term Predictions has done it again. (The previous day, I accurately advised readers to short The Fool Portfolio for a day, leading to a hypothetical 2.45% gain.) (Hope everyone realizes that's tongue-in-cheek.)
But there's no news on AMER. I mean, it did announce new international connections to the service via keyword AOLGLOBALnet, but I hardly think that sunk the stock. So whaddaya think. . . profit-taking following earnings? Was Mr. Short-Term Predictions' rationale correct after all?!
Iomega, on the other hand, went up. . . way up. IOMG closed within a fraction of its all-time high on news that Micron Electronics (NASDAQ:MUEI), the PC maker majority-owned by Micron Technology (NYSE:MU), will incorporate the full suite of Iomega storage technologies in ALL its new PCs. That's as of December. So if you purchase a Micron, you can now have them install at the factory a Zip drive, a Ditto tape backup, AND the newest thing, the Jaz removable hard drive. (Not that you'd want all three---unless you're a shareholder!) The market obviously loved this news, causing more than 3.3 million shares to change hands. It is news and excitement just like this that had us buying this stock at $15, back in May. Now up 94%, we think we've proven various naysaying Wall Street Journalists quite wrong following the occasional bearish rants we've encountered in the pages of the Wise.
You have to figure the market was looking ahead at least a little bit to other similar deals that Iomega might sign. The Micron deal alone wasn't worth four points, but Micron plus a few other PC manufacturers and. . . sure. Four points, and probably then some.
Sears (up $1 7/8 to new high of $38 5/8) and Gap (up $7/8 to bid $43 3/4) both benefited from a Johnson Redbook same-store sales report showing improved growth for a bunch of retail companies, including our own dear picks. Their gains were registered at about 2% for October, but considering the numbers have been flat for a few months, the rise may indicate an intermediate turn uptrend. Shareholders like us look to be the beneficiaries, as both stocks are now up about 35% from our cost.
Over a hundred participants showed up for our Ride Inc. auditorium event, which featured both the CEO and Chairman of the company. Many questions were answered, and the hour was a very informative one. We'll be putting together and posting a transcript of the show for those who missed it. Details about that to follow tomorrow. RIDE dropped a quarter today.
David Gardner, November 8, 1995
AMER -3 3/4
AMAT - 7/8
GE +1 1/4
GPS + 7/8
IOMG +3 3/4
KLAC - 3/4
RIDE - 1/4
S +1 7/8
SNIC - 1/8
Day Month Year History FOOL +0.21% 2.66% 65.59% 83.85% S&P 500 +0.92% 1.76% 28.84% 29.08% NASDAQ +0.39% 1.15% 39.36% 45.51% Rec'd # Security In At Now Change 8/5/94 340 AmOnline 14.55 78.25 437.96% 5/23/95 510 Ride Inc. 9.91 24.13 143.52% 5/17/95 335 Iomega Corp 15.11 29.25 93.53% 4/20/95 155 The Gap 32.55 43.75 34.41% 8/5/94 165 Sears 28.93 38.63 33.53% 8/11/95 95 GenElec 57.91 64.75 11.80% 8/11/95 110 Chevron 49.00 48.00 -2.04% 8/24/95 130 KLA Instrm 44.71 39.75 -11.10% 8/24/95 100 AppldMatl 57.52 47.75 -16.99% 12/23/94 340 SonicSol 14.48 8.00 -44.76% Rec'd # Security Cost Value Change 8/5/94 340 AmOnline 4945.56 26605.00 $21659.44 5/23/95 510 Ride Inc. 5052.44 12303.75 $7251.31 5/17/95 335 Iomega Corp 5063.13 9798.75 $4735.62 4/20/95 155 The Gap 5045.25 6781.25 $1736.00 8/5/94 165 Sears 4772.65 6373.13 $1600.48 8/11/95 95 GenElec 5501.87 6151.25 $649.38 8/11/95 110 Chevron 5389.99 5280.00 -$109.99 8/24/95130 KLA Instrm 5812.49 5167.50 -$644.99 8/24/95 100 AppldMatl 5752.49 4775.00 -$977.49 12/23/94 340 SonicSol 4924.18 2720.00 -$2204.18 CASH $5969.86 TOTAL $91925.49