Fool Portfolio Report
Wednesday, February 28, 1996

by David Gardner (MotleyFool)

WINSTON-SALEM, NC, Feb.28 -- Good day for The Fool Portfolio, and that's DESPITE our top dog acting like, well, a dog.

It was one of those "you take the high road, and I'll take the low road" days, as three Fool stocks ROSE $1 1/2 or more and three Fool stocks DROPPED $7/8 or more. Fortunately, when you type it all into our cheapo Excel spreadsheet which keeps track of these things, the numbers come out looking lovely: the FOOL rose 0.69%, easily outpacing its rivals (with the NASDAQ up 0.12% and the S&P 500 DOWN 0.39%).

Leading the charge today was Iomega, which crashed through previous levels to a new high, up $1 1/2 to $18 1/4. The stock touched $19 1/4 in mid-afternoon. Iomega announced a new financing deal yesterday for 40 million bucks, offered through Hambrecht & Quist. My personal take on the whole thing is that it couldn't have been difficult to raise that money, given the outstanding products, prospects, and management over in Roy, UT. But the market never likes uncertainty, so the uncertainty regarding Iomega's financing had held the stock back, and the story served as fodder for market journalists, many of whom (like the Wall Street Journal) were warning readers off the stock back at $6, 200% returns ago.

We are also given to understand that Iomega's Zip drives will be internalized and included in the new Hewlett Packard HP Pavilion 7110Z model coming out this spring. Very nice.

Looking back, the smart money has been long in this stock all the way from the beginning, and the smart money continues to be rewarded lavishly, as bears and the short sellers watch and weep. As a shareholder, I'm obviously biased, since we've held the stock for about a year now and we're holding a three-bagger. But hey, we've been right. My Foolish advice to those who have not: start trying to LEARN from the Iomega experience, rather than try to convince people that this is all wrong (it isn't---it's very right). The lessons are obvious, but we'll repeat a few again: (1) great consumer-oriented companies that are well-managed always win, (2) don't step in front of a speeding train, especially repeatedly, and of course (3) Foolish little-guy investors doing homework in their own backyards and SHARING it with others across the nation can and WILL continue to beat Wall Street at its own game. We write about it in our book, and it's only become truer and truer since the book was published. Way to go, Fools.

Medicis had a good day today, too. MDRX cruised northward $1 3/4 to bid $26 1/2, retracing some of yesterday's wayward steps.

We saw a bunch of messages in the Medicis folder today seeking some sort of explanation from Fool HQ for the stock's recent drop (after dropping badly yesterday, it was down 2 bucks in morning trading as well). Of course, we have no explanation to offer, but it does occasion the need for us to remind some of our readers a couple of things. First is, we are only average investors like you---we don't have a Bloomberg terminal, we have no ties to Wall Street, and we don't brush up against the cigar-chewing guys who concoct "rumors on the floor." Second, as we wrote from the beginning, Medicis is a volatile stock, up AND down. . . please don't hold the stock if you can't afford a substantial loss in it. Obviously, we're shooting for substantial gains. . . more days like today. But we're prepared for anything with EVERY stock we buy. . . if you're not, you shouldn't be buying stocks, ESPECIALLY small-cap growth stocks.

No news on Medicis this week.

The Gap had another great day, following the announcement late yesterday of a 2-for-1 stock split (on April 10th) and a 25% hike for its dividend. Gotta love it. . . the first Gap stock split since 1991. GPS shares put up another buck fifty in profits in Wednesday trading, closing at $53 3/4. New High City. And the company reports earnings tomorrow. In fact, we'll be on hand for the conference call at the crack of dawn tomorrow (well, 8 AM anyway, which is close), and will provide a full report in our Evening News and a summary right here tomorrow night.

On the downside, two of our Dow heavyweights were served a helping of Market Lite today, as GE (off $1 1/2) and Chevron (off $7/8) slimmed down amid profit-taking. America Online, off as much as $4 in the morning, dropped $1 5/8. The stock remains under pressure following yesterday's AT&T Internet access announcement. An online acquaintance of mine summed up my own feelings well when he wrote:

"Fools should consider that this is the marketing superpower that bought NCR, developed the video phone, bought the Interchange online system for $50 million, produced the big-selling AT&T personal computer, and competes so well with MCI. This is the firm that is laying off 40,000 workers and therefore paying its chairman as much as $16 million for his astute leadership."

To summarize an excellent comment made by our own MF BudFox in the America Online message folder (one of my favorite folders in Fooldom---if you need directions to it, e-mail MF Bogey), only a fool would ignore the threat of new competition, but it may take a Fool to see through this one.

In closing, we'd like to thank Netscape's Marc Andriessen for singling out The Motley Fool at this week's Jupiter Online Conference. He mentioned us---that's not me, that's YOU and me and the entire Foolish community---as perhaps the clearest example of company that had actually managed to carve out an online brand name. Fool on, Marc. . . and everyone else!

Today's Moves

AMER -1 5/8
AMAT + 1/8
CHV - 7/8
GE -1 3/8
GPS +1 1/2
IOMG +1 1/2
KLAC - 3/4
MDRX +1 3/4
S - 1/4

Today's Numbers

Day Month Year History FOOL +0.69% 6.59% 13.02% 111.04% S&P 500 -0.39% 1.37% 4.68% 40.65% NASDAQ +0.12% 4.50% 5.26% 53.79% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 47.25 549.67% 5/17/95 1005 Iomega Cor 5.04 18.25 262.25% 4/20/95 155 The Gap 32.55 53.75 65.13% 8/5/94 165 Sears 28.93 45.50 57.30% 8/11/95 95 GenElec 57.91 76.13 31.44% 8/11/95 110 Chevron 49.00 54.75 11.73% 1/29/96 250 Medicis Ph 27.86 26.50 -4.88% 8/24/95 100 AppldMatl 57.52 38.38 -33.29% 8/24/95 130 KLA Instrm 44.71 25.75 -42.41% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 32130.00 $27184.44 8/24/95 100 AppldMatl 5752.49 3837.50 -$1914.99 5/17/95 1005 Iomega Cor 5063.13 18341.25 $13278.12 4/20/95 155 The Gap 5045.25 8331.25 $3286.00 8/5/94 165 Sears 4772.65 7507.50 $2734.85 8/11/95 95 GenElec 5501.87 7231.88 $1730.01 8/11/95 110 Chevron 5389.99 6022.50 $632.51 1/29/96 250 Medicis Ph 6964.99 6625.00 -$339.99 8/24/95 130 KLA Instrm 5812.49 3347.50 -$2464.99 CASH $12147.13 TOTAL $105521.51