Fool Portfolio Report
Thursday, February 1, 1996
***Dallas Fools! The Gardner boys will be riding into town at HIGH NOON. That's right, they'll be signing books at the Borders Books and Music in Plano on Preston Road. From 12 noon until 1:30 PM, you can meet David, Tom and other Texas Fools. Maybe MF Flyer will show up....nah!***
By MF Bogey (David Forrest)
--(Cranston, RI, Feb. 1)-- Fools the world over, tomorrow is Groundhog Day! Somewhere in Punxsutawney, PA, a furry little rodent named Phil will pop his head out from the hole, lick one digit on his hairy claw, hold it up to the wind and tell us whether or not winter will continue for 6 more weeks or whether spring is around the corner.
As luck, or "bad" luck would have it, at just about the time the little guy wakes from restful slumber and peeks outside, his "house" should be getting slammed with another Nor'Easter winter snow storm. My guess is that our friend Phil may not even show up for the blessed event. Rumor has it, he's got a new Toshiba paw-top and will be e-mailing his regrets while slogging down some hot chocolate.
The reason I even mention Phil is because it struck me that it would be pretty neat to be able to predict the stock market based on something like this. Maybe we could have Dorfman put on the woodchuck costume and pop his head out in the storm. If the snow freezes to his eyebrows, we go higher for six weeks, if not, down, down, down....
On to more Foolish matters....
*****THIS JUST IN**********
Iomega Corp. (IOMG) has postponed their secondary offering of 5.2 million shares. CEO Kim Edwards said in the press release that confusion in the marketplace and volatility in the stock, along with the advice of their investment bankers, prompted them to postpone the secondary. Now what does this mean for IOMG shareholders?
Fundamentally it means two things, one good, one bad. The bad thing is that they need money to continue to finance their incredible growth and without the secondary, they will have to "explore other avenues" for financing. This generally means taking on more debt via bond offerings or additional lines of credit. We'll have to wait and see how they choose to proceed.
The good thing is that the EPS will not be diluted if a secondary isn't done. Some fears in the market were that doing a secondary would dilute the earnings and make it more difficult on a per share valuation basis. So, what happened today? The stock rose to a split-adjusted $16 5/8 at one point, and settled back to close at $15 1/4, up $1/2 for the day.
The coming days and weeks should be interesting as we watch to see how IOMG plans to finance their growth. Stay tuned to the IOMG folder!!!
With the Iomega news, I almost forgot to tell you all the best thing today. The Fool Portfolio jumped back over the 100% marker again!!! Is that a reason for a momentary "Hip Hip Hooray!"? Sure, but that isn't the end of the battle. We plan on being here for years and years in order to watch that puppy climb over the 1000% mark. Glad you're here to join us.
Helping prop us up over the "two-bagger" mark were shares of America Online (AMER) up $7/8 to $45 1/2. As you all know, America Online has been our best performer. Itself up over 500% since we bought it back in August of 1994, AMER shows us all how profitable it can be to let your winners run. [Note: MF Czar reported that AMER was a 5-bagger yesterday. We generally don't let Czar touch them thar expensive electronic calculators, so please forgive his math skills. Obviously a "6" bagger for da Fools!]
What do I mean when I say "let your winners run?" I don't mean to keep it because it's up. Remember, just because a stock has gone higher doesn't mean it's a "winner." I mean identifying, buying, and holding companies that continue to do the right things, to make the right moves. For example: just today, America Online purchased a privately held company called Johnson-Grace, which specializes in data compression.
You know how long it takes sometimes to get all that neat artwork to download, or to download that GIF file? Well, Johnson-Grace has come up with an amazing technology called ART. ART, like a JPG, GIF, or BMP file, is another way to create graphics or to compress existing ones. What are the benefits? Fast, fast, FAST! These graphics that normally have 85k can be compressed with little or no loss of clarity, to maybe a 12k file. Saves a ton of space and is just as effective. Very innovative.
America Online, seeing the benefits of this type of technology, bought the whole shootin' match for 1.6 million shares of AMER. Doing the right things. We would all do well to pay attention to how AMER has evolved.
AOL also lured away a top executive from Federal Express, William Razzouk, to be the President and Chief Operating Officer of our beloved online service.
The rumor mills were also cranking today. Quoting, or perhaps misquoting a Bertlesman executive, Reuters mentioned that he thought AMER and NSCP could be talking about alliances that could get as serious as some sort of merger. Who knows, who cares? Que sera, sera.
Applied Materials was up strongly today to $39 7/8 after the Wall Street Journal reported that Fidelity was back buying them again. They like it, they hate it, they like it, they hate it. All this in 2 quarters? Wow. Nonetheless, we're pleased our stock is heading in the right direction!
That was it on the news front today. Most of the other stocks were quiet with the exception of Chevron. It closed up $7/8 to $52 7/8.
Have a great night and watch out tomorrow for any large furry rodents with snow stuck to their eyebrows!
AMER + 7/8 AMAT +2 7/8 CHV + 7/8 GE + 1/8 GPS - 1/8 IOMG + 1/2 KLAC + 5/8 MDRX - 3/8 S - 1/8
Day Month Year History FOOL +1.46% 1.46% 7.58% 100.87% S&P 500 +0.39% 0.39% 3.66% 39.28% NASDAQ +0.91% 0.91% 1.65% 48.50% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 45.50 525.61% 5/17/95 1005 Iomega Corp 5.04 15.25 202.70% 4/20/95 155 The Gap 32.55 47.00 44.39% 8/5/94 165 Sears 28.93 41.38 43.04% 8/11/95 95 GenElec 57.91 76.88 32.74% 8/11/95 110 Chevron 49.00 52.88 7.91% 1/29/96 250 Medicis Pha 27.75 27.75 0.00% 8/24/95 100 AppldMatl 57.52 39.88 -30.68% 8/24/95 130 KLA Instrm 44.71 29.75 -33.46% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 30940.00 $25994.44 8/24/95 100 AppldMatl 5752.49 3987.50 -$1764.99 5/17/95 1005 Iomega Corp 5063.13 15326.25 $10263.12 4/20/95 155 The Gap 5045.25 7285.00 $2239.75 8/5/94 165 Sears 4772.65 6826.88 $2054.23 8/11/95 95 GenElec 5501.87 7303.13 $1801.26 8/11/95 110 Chevron 5389.99 5816.25 $426.26 1/29/96 250 Medicis Pha 6962.49 6937.50 -$24.99 8/24/95 130 KLA Instrm 5812.49 3867.50 -$1944.99 CASH $12147.13 TOTAL $100437.13