Fool Portfolio Report
Monday, November 20, 1995
Well, we had two stocks drop MORE than 5 points, one stock rise $5 7/8, and a failed effort to ditch our SNIC shares. Today was a weird one, and ultimately a bad one, as the Fool Port lost a percentage point.
First things first brings up my Sonic story. The short of it is that I FORGOT to put in the sell order. I have no good excuse, other than to say that this is a reminder to you all that we are NOT a model of big-corporation efficiency. We remain your down-home bunch of Fool guys, screwing up things (like bad buys, and late sells) like anyone else. But I do owe you a clear explanation, which follows.
My feeling all weekend was not to sell the stock at market open, since the last time we traded (August) both of our multibillion-dollar market cap buys opened higher! Not wishing to get stuck by market makers or heavy immediate downside volume, I resolved to wait later in the day to trade Sonic per our sell report over the weekend.
Went out to lunch, and got back late for a 2 PM meeting. Was thinking completely about the meeting. Meeting ended at 4:05 PM. I then sat down at the computer to do the stock report and my jaw dropped. I had completely forgotten to sell Sonic! So the latest story in the SNIC chapter has been writ: The Fool, already down 50%, failed even to cash out on the day it had planned to.
Suffice to say that I immediately entered the trade for tomorrow morning at market open, so any market maker who would like to drop the price temporarily to $4 3/4 to lap up our 340 shares may feel free to do so. I apologize deeply to any readers who may somehow have felt misled; it was my complete intention to cash out today just as we have cashed out the day after all of our OTHER reports. We neither sought nor did we gain any advantage in this error, as the high price of the day came at market open, and the stock closed down $5/8 to a bid of $6 3/8. I simply offer again my personal apology for blowing it.
Now, normally a story like that would be far more interesting than anything else that could happen with the portfolio. Not so, Monday. Let's lead off, Foolishly, with our losers. America Online, for starters, dropped $5 5/8 to $72 1/2, settling below our five-bagger mark. Considering the NASDAQ was off 16 points, AMER's move---and today's other horrible ones---have to be seen in the light of that very bad day for the NASDAQ. But America Online did worse than most, and we can probably look at one of today's Dow Jones articles for the reason. Specifically, DJ reported that the Microsoft Network had reached the 525,000 subscriber mark, which hurt AMER stock upon the announcement.
That means that Microsoft's online service is currently attracting new customers at a rate of 175,000 a month. America Online, the same analyst pointed out, is now bringing on people at a rate of 240,000 a month (without a Windows95 advertising dialog box and free button). So obviously, if anything we see win-win situation happening right here. But the market has tended to view good news for Microsoft as bad news for everyone else, and thus AMER investors may fairly infer that today's Microsoft announcement sapped their investment returns.
KLA Instruments did not have any specific news to account for its drop. (Please see today's Evening News, which you can access via our Daily Fool button on the main screen, for more on semiconductor stocks.) Its drop? How about $5 1/4, to $30 1/2? KLAC is now off 32% for us overall. Keep in mind, just two weeks ago we showed a positive return on this stock of 4%, at $46 1/2. A market panic about semiconductor chip overproduction has since set in, dropping these shares an astounding 34%.
Applied Materials, following the same basic trend, dropped $3 3/4 to $42 3/4.
And now, the good news. Because, you see, you gotta figure that if America Online dropped $5 5/8, KLA Instruments dropped $5 1/4, and Applied Materials dropped $3 3/4, and we were down JUST one percent (beating the NASDAQ), that something went right.
In a word, Iomega.
Making its single greatest one-day dollar move, IOMG rocketed $5 7/8 to a new all-time high of $40. The previous all-time high? $34 7/8. So today was a very, very strong move. The most obvious reason we can find for the huge move are analyst comments from H.D. Brous coming right after a good week at Comdex (Jaz and Zip drives won awards last week). The H.D. Brous analyst said he expected to raise his fourth-quarter and 1996 estimates from $0.35 and $2.12, respectively. Those are of course way below the estimates of some other analysts, most notably Joe Besecker at Emerald (featured analyst at our Iomega auditorium event several weeks ago). So we're not surprised by this news.
With its move today, Iomega bumped past RIDE into second place for Fool stock performance, now up 165% since our May purchase. We believe the stock has quite a long way to go, as our little company from Roy, Utah continues to revolutionize the storage technology industry. So if you want some shares, you ain't gonna get ours!
Hope you had a chance to read the week of Comdex reports from our man BYTEUP, who, Fool cap in hand, attended the trade show and watched Iomega very closely. In fact, in a new auditorium event tomorrow night at 11 PM ET, we'll have BYTEUP along with our other Iomega analysts up on stage to answer your questions about Comdex, the new products, the estimates, the stock price, the future. As always, an engaging and informative Fool auditorium event. Further details available tomorrow, where you can read about it in this space or sign on at 11 PM ET and enter the auditorium through links in our main-screen listbox.
Tomorrow, you will, I GUARANTEE, read about our Sonic sell right here. And maybe Iomega will rise 20 points to $60.
David Gardner, November 20, 1995
AMER -5 5/8 AMAT -3 3/4 CHV --- GE - 1/2 GPS - 5/8 IOMG +5 7/8 KLAC -5 1/4 RIDE + 5/8 S + 3/8 SNIC - 5/8
Day Month Year History FOOL -1.04% 4.14% 67.97% 86.50% S&P 500 -0.54% 2.64% 29.96% 30.20% NASDAQ -1.49% -0.64% 36.90% 42.95% Rec'd # Security In At Now Change 8/5/94 340 AmOnline 14.55 72.50 398.43% 5/17/95 335 Iomega Corp 15.11 40.00 164.66% 5/23/95 510 Ride Inc. 9.91 25.38 156.14% 4/20/95 155 The Gap 32.55 48.63 49.39% 8/5/94 165 Sears 28.93 39.63 36.99% 8/11/95 95 GenElec 57.91 66.38 14.61% 8/11/95 110 Chevron 49.00 50.00 2.04% 8/24/95 100 AppldMatl 57.52 42.75 -25.68% 8/24/95 130 KLA Instrm 44.71 30.50 -31.78% 12/23/94 340 SonicSol 14.48 6.38 -55.98% Rec'd # Security Cost Value Change 8/5/94 340 AmOnline 4945.56 24650.00 $19704.44 5/17/95 335 Iomega Corp 5063.13 13400.00 $8336.87 5/23/95 510 Ride Inc. 5052.44 12941.25 $7888.81 4/20/95 155 The Gap 5045.25 7536.88 $2491.63 8/5/94 165 Sears 4772.65 6538.13 $1765.48 8/11/95 95 GenElec 5501.87 6305.63 $803.76 8/11/95 110 Chevron 5389.99 5500.00 $110.01 8/24/95 100 AppldMatl 5752.49 4275.00 -$1477.49 8/24/95130 KLA Instrm 5812.49 3965.00 -$1847.49 12/23/94 340 SonicSol 4924.18 2167.50 -$2756.68 CASH $5969.86 TOTAL $93249.24