Fool Portfolio Report
Monday, April 1, 1996

by David Gardner (MotleyFool) and Tom Gardner (TomGardner)

ALEXANDRIA, VA, April 1, 1996 -- The Fool Portfolio did OK today, rising mildly (.16%), though 'twas easily outpaced by a much stronger market. Running in a race that featured a snappy S&P 500 (up 1.27%) and a perky NASDAQ (up .47%), our parti-colored horsey ended up disappointing its win and place bettors Monday. Though it must be said, of course, that we absolutely delighted show bettors!

Today marks the beginning of the second quarter of 1996. Many companies closed their books over the weekend, and will be reporting March quarter results starting about April 15 (and lasting for about a month). In fact, as we at Fool HQ are here to serve, we've even compiled the expected announcement dates for each, along with earnings estimates and comparable year-before numbers (this is probably one to copy-'n'-paste) (our source for dates is Zacks, on the Web; earnings estimates come from First Call on AOL):

America Online

Date: 5/9 (after close)

3Q '96: 0.13e vs. 0.06 (+117%)

Applied Materials

Date: 5/16

2Q '96: 0.99e vs. 0.54 (+83%)


Date: 4/25

1Q '96: 0.80e vs. 0.61 (+31%)

The Gap

Date: 5/11

1Q '97: 0.45e vs. 0.35 (+29%)

Gen'l Electric

Date: 4/19

1Q '96: 0.91e vs. 0.81 (+12%)


Date: 4/18

1Q '96: 0.11e vs. minus 0.03 (N/A)

KLA Instruments

Date: 4/13

3Q '96: 0.60e vs. 0.43 (+40%)

Medicis Pharmaceutical

Date: 5/8

3Q '96: 0.31e vs. 0.07 (+342%)*

*Fool HQ internal estimates (no analysts following)


Date: 4/20

1Q '96: 0.35e vs. 0.29 (+21%)

Jeepers. Look at those numbers. You have expected percentage gains of 117%, 83%, 31%, 29%, 12%, infinity, 40%, 342%, and 21%, respectively. What you're looking at is strong expected earnings performance---the major reason we growth-stock investors bought these darn things in the first place.

So you probably figure we're going to have another great quarter, right? Well, not necessarily. Our newer readers should be reminded that EVEN IF THE COMPANIES REPORT THE EXACT NUMBERS ESTIMATED ABOVE, the stocks could still drop with the announcements and ultimately have a bad quarter. That's because these estimates are already part of the market's expectations (with the possible exception of Medicis), so that the stocks will react more off of how they do RELATIVE TO THESE EXPECTATIONS than anything else. The market generally expects companies to EXCEED their estimates, and plus, it's almost always looking more than a quarter ahead. There you have a basic growth-stock investment lesson to learn and keep in mind. It's what most of us learn repeatedly over the course of our investment careers when we own Joey's Whizbang Gadget (NASDAQ:BANG), and the company reports 150% EPS growth but the stock drops two points the day of. It's all part of the game.

(Later on, of course, we all learn that Joey's Whizbang Gadget actually caused cancer in prematurely born amoebae, killing sales and the stock as well. Again, the market always looks ahead.)

That said, we still stare proudly at the numbers displayed above because they evince so clearly the sort of company we're looking for. Robust growth. Strength. Brand-name. And in some cases, as we wrote about in last Friday's report (accessible by clicking that Past Reports button below), high short interest! Foolishness, all.

And so we close Monday, April 1st with no April Fool's joke for you, other than that we don't really have one. Between you and me. . . why? Hey, we're Fools EVERY DAY of the year. . . we'll leave it to the other guys on "our day." That said, we would like to close today's report with a slew of press releases. We're too cheap to foot the bill to actually release these on PR Newswire, so we just shot these out of Foolwire as of, oh, 5 seconds ago:


MF Dorphman joined The Motley Fool remote staff today. In today's Foolwire press release, Tom Gardner had this to say: "MF Dorphman's eloquence, his objectivity, and his substantial equity investment today in The Motley Fool all have us thinking great things about the road ahead. It's great FINALLY to have Dorph as part of the team."


In another release today, the Gardners announced they were too exhausted from their ongoing book tour publicity to continue to manage their portfolio responsibly. Selecting Fool standby reader Huibs pht to wear the belled cap for the next 12 months, David Gardner told this to Foolwire: "I'm too tired to say anything, really. Do what we do: Put much of it in the mechanical Dow approach, Huibs, and then wear the funny cap and rant and rave around Wall Street about how you're a genius."


Following up on a dramatic announcement earlier in the day, The Motley Fool claimed partial responsibility for the recent discovery of life on Jupiter. "We actually discovered the life, but AOL is responsible for all the legal ramifications of the announcement." AOL President Ted Leonsis earlier today criticized skeptics who called the annoucement "illegitimate," and Leonsis's use of the medium, "abuse."


Fool HQ today also announced it has opened up its first-ever Fool mutual fund, with a 6% up-front load. Every member of the MF staff has been charged with cold-calling readers on the Fool mailing list, and hawking the fund to their offline investment clubs. Tom Gardner (Foolwire): "Yeah, sure, it's a lot of money up front, but we're going to put it toward opening up a new magazine that will provide us a new forum and a new medium in which to shill for the fund."


In its last dramatic gasp on this dramatic day, Fool HQ also announced the stunning debut of its much-awaited IPO next week. David Gardner (Foolwire): "We think the VSE is a great way to bring the Fool public, where our stock will begin trading next Wednesday at the very affordable price of 17 cents per share. Plus, I'll finally get some use out of that mining equipiment I purchased some years ago."

Fool on!

Today's Numbers

AMER + 1/2 ...AMAT + 3/4 ...CHV + 1/8 ...GE +1 5/8 ...GPS - 7/8 ...IOMG - 1/8 ...KLAC - 1/4 ...MDRX - 1/4 ...S - 1/4 ... Day Month Year History FOOL +0.16% 11.23% 27.30% 137.70% S&P 500 +1.27% 2.08% 6.14% 42.61% NASDAQ +0.47% 0.59% 5.17% 53.65% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 56.63 678.58% 5/17/95 1005 Iomega Cor 5.04 25.50 406.16% 8/5/94 165 Sears 28.93 48.50 67.67% 4/20/95 155 The Gap 32.55 54.50 67.43% 8/11/95 95 GenElec 57.91 79.50 37.27% 8/11/95 110 Chevron 49.00 56.25 14.80% 1/29/96 250 Medicis Ph 27.86 23.75 -14.75% 8/24/95 100 AppldMatl 57.52 35.50 -38.29% 8/24/95 130 KLA Instrm 44.71 22.25 -50.24% Rec'd # Security Cost Value Change 8/5/94 680 AmOnline 4945.56 38505.00 $33559.44 8/24/95 100 AppldMatl 5752.49 3550.00 -$2202.49 5/17/95 1005 Iomega Cor 5063.13 25627.50 $20564.37 4/20/95 155 The Gap 5045.25 8447.50 $3402.25 8/5/94 165 Sears 4772.65 8002.50 $3229.85 8/11/95 95 GenElec 5501.87 7552.50 $2050.63 8/11/95 110 Chevron 5389.99 6187.50 $797.51 1/29/96 250 Medicis Ph 6964.99 5937.50 -$1027.49 8/24/95 130 KLA Instrm 5812.49 2892.50 -$2919.99 CASH $12147.13 TOTAL $118849.63