Fool Portfolio Report
Friday, December 15, 1995
Well, the IOMG cards reversed, closing a bad week for The Fool Portfolio in a bad way. Thursday, as regular readers will recall, a hot Iomega kept the Fool Portfolio boat afloat, even though we were taking on some serious water. Friday, with several of our stocks up, Iomega turned down, hard, and sunk our dear portfolio.
Friday's $5 1/8 drop put Iomega at $45 5/8, down $2 1/4 for the week. Iomega had hit over $52. There was indeed news today to account for the drop. As you'll recall from Thursday's report, Iomega is issuing 5.25 million shares more to raise cash for its business. The offering is being managed by two Wall Street firms with no former ties to the company (to my knowledge), Hambrecht & Quist and Montgomery Securities. Today, a story on the Dow Jones newswire reported that both of them had revealed their earnings estimates for Iomega's fourth quarter, and 1996, and those numbers were well below other published estimates.
But you know what? We now understand those numbers to be a fabrication---a Street rumor that Dow Jones picked up and printed! In fact, neither H&Q nor Montgomery Securities made a comment in the DJ story. Thus the fall in Iomega stock may be an artificial one. Things should straighten themselves out over the weekend, and Fools will look on in wonder at the shenanigans of Wall Street. For now, Iomega stock loses 10% on the "news."
Overall, for the week, The Fool Portfolio lost just over 3%, driving us below our 90% mark. Technology stocks have been extremely weak for the past 10 days, and like many aggressive investors, we have felt it. The Fool Portfolio, which peaked over a 100% total return a week and a half ago, closed this week up 88.73% since inception. And we're now down for the month of December, traditionally a good month for small stocks.
So long as we lost money today overall, and lots in Iomega, we might as well go on about our losers, and celebrate failure. So let's do it. Let's continue with our very worst stock, which is beginning to reach SNICesque proportions! (For new readers, Sonic Solutions---SNIC---was our worst investment ever.) KLA Instruments lost another point today to $28 1/2, following all the semiconductor stocks even lower. It's off 36%. You know, the market just despises these issues right now. Applied Materials, another outstanding American public company, lost $1 1/8 to $41 7/8, further torching the Fool Port.
Anyone starting to think these stocks are getting cheap? Anytime I see analysts and traders dump all over ANYTHING this badly, I begin to see light at the end of the tunnel. Micron Technology has been MORE THAN CUT IN HALF from the mid-$90's to its close today at $44 7/8. Amazing. So what if DRAM prices are coming down a bit? I'm just a Fool, of course, but I don't think the situation is this dire.
So OK, let's close with a little good news. . . a tad of holiday cheer. For one thing, General Electric hit a new high today, up $1 1/8 to $72 3/8. Why? Well, one reason is that the company HIKED ITS DIVIDEND today, 12%, from 41 cents per quarter to 46 cents per quarter. Gotta love it. Further, the company announced that it had bought back $3 billion worth of its stock in 1995, and EXPANDED the amount of money allotted to overall buybacks to $9 billion, leaving $6 billion more that could be purchased over the next two years. That makes it possible to buy back $3 billion more next year, and $3 billion the year after.
Basically, we're talking about a classical, sweet Dow Dividend play, and it's paid off 25% since August.
And finally, for those who have an interest and live in the D.C. metropolitan area, this Sunday I am reading the part of Ebenezer Scrooge in a dramatic reading of "A Christmas Carol." If you have an interest in attending, it's from 5-7 PM at the Old Presbyterian Meeting House in Old Town Alexandria. The address is 316 South Royal Street, and the phone number is 703-549-6670. If you'd like directions, just e-mail me (MotleyFool). By the way, it's free, and childcare is provided!
Here's to a better week next week. Fool on!
---David Gardner, December 15, 1995
AMER - 1/4 AMAT -1 1/8 CHV + 1/4 GE +1 1/8 GPS + 3/4 IOMG -5 1/8 KLAC -1 S - 1/8
Today's Numbers
Day Month Year History FOOL -1.97% -1.32% 69.98% 88.73% S&P 500 -0.09% 1.81% 34.20% 34.45% NASDAQ -0.74% -2.71% 37.04% 43.09% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 37.75 419.05% 5/17/95 335 Iomega Corp 15.11 45.63 201.88% 4/20/95 155 The Gap 32.55 47.00 44.39% 8/5/94 165 Sears 28.93 40.25 39.15% 8/11/95 95 GenElec 57.91 72.38 24.97% 8/11/95 110 Chevron 49.00 52.13 6.38% 8/24/95 100 AppldMatl 57.52 41.88 -27.21% 8/24/95 130 KLA Instrm 44.71 28.50 -36.26% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 25670.00 $20724.44 5/17/95 335 Iomega Corp 5063.13 15284.38 $10221.25 4/20/95 155 The Gap 5045.25 7285.00 $2239.75 8/5/94 165 Sears 4772.65 6641.25 $1868.60 8/11/95 95 GenElec 5501.87 6875.63 $1373.76 8/11/95 110 Chevron 5389.99 5733.75 $343.76 8/24/95 100 AppldMatl 5752.49 4187.50 -$1564.99 8/24/95130 KLA Instrm 5812.49 3705.00 -$2107.49 CASH $18981.96 TOTAL $94364.46