Fool Portfolio Report
Wednesday, May 15, 1996
(FOOL GLOBAL
WIRE)
by David Gardner
ALEXANDRIA, VA, May 15, 1996 -- The Fool Portfolio rose and fell with the market today, but still managed to close with a minor gain. Foolishness reported an uninteresting Wednesday return of 0.42%, vs. losses of 0.03% and 0.07% for the S&P 500 and NASDAQ, respectively.
America Online demonstrated on an individual stock level what occurred with the overall market. Opening up, and rising almost two points by midday, AMER closed unchanged. The NASDAQ, which topped out at a gain of 8 points during the day, closed with a loss.
Hey, about The Gap? GPS hit a new high today, up $7/8 to $33 7/8, extending its strong recent gains. Last week, you'll recall, the company announced a sales jump of 26% for April, over April of a year ago. Same-store sales were up 9%, vs. a gain of 3% last April. And for the quarter ended May 4, Gap did in excess of $1.1 billion in sales, up 28% over a year ago. No surprise, perhaps, that the houses of Morgan Stanley and Alex Brown sent out BUY announcements last week. The aftershocks are probably still being felt.
The Wall Street Journal reported yesterday that our company's CEO, Millard Drexler, landed one of the sweeter stock options deals among U.S. executives last year. Drexler received more than four million Gap shares in options, now the equivalent of more than a hundred million bucks. Amazin'. At the same time, every dollar per share that GPS appreciates kicks in another $287 million of market value. So what do you think. . . is Drexler worth it. . . is he worth 3/8 of a point? YOU MAKE THE CALL. The Gap folder (accessible from hitting the Gap link in the listbox to your right) awaits your input.
Former Fool holding Applied Materials dropped fairly sharply today, off $2 7/16 to a last trade of $37 5/8. The company yesterday announced record numbers for its second quarter, with sales up 67% over last year's 2Q to $1.1 billion, and earnings per share up 98% to $1.01. However, CEO James Morgan cautioned investors he expected flatness in quarters three and four, meaning about $1 earnings per share for both. And he was unwilling to make projections for 1997, stating further that the company's $1.9 billion backlog will mostly be filled this fiscal year.
Trading down in sympathy (as usual), KLA Instruments was our bum stock of the day, off $1 1/4 to a bid of $29 1/2.
We would like to apologize for an inaccuracy in our Applied Materials sell announcement a couple weeks ago. We said that the company was moving too slowly toward producing the larger next-generation 200-300 millimeter wafers. However, it was then quite rightly pointed out by some of our readers who work in the industry that AMAT has been producing and selling a 200 millimeter wafer for some time now. Further, they contend that the industry doesn't expect to see the 300 millimeter wafer show up for a while, and when it does, many think that industry leader Applied Materials will be going great guns with an AMAT 300 mm product. We shall see.
For our part, however, we stand by our original INVESTMENT thinking. That entailed, first of all, a belief that we could find better investments for the short-to-intermediate term. (AMAT is now more than a couple of points below our selling price.) But second, we ALSO consider this stock a long-term keeper for those who understand this business better than we. In future, we're not going to mess with cyclical growth stocks as much, because the Fool Port has suffered---shall we say---from its flirtations with the semiconductor industry.
Hey, wait! Was that Medicis Pharmaceutical with an uptick today? This sleepy stock, down 9% from our January buy, rose $3/8 Wednesday. A month ago, it hit an intra-day high of $31 following a strong earnings report. Since then, it seems to have been pretty much forgotten about. Check out, if you will, the stock's (decreasing) volume and closing price over the past month, below. (This was obtained using AOL's Historical Quote feature, available to Windows users---and Mac users in a few months---via hitting The Motley Fool's SEARCH button below.)
MEDICIS (MDRX)DATE VOLUME LAST
04/15/96 39,200 26 5/8
04/16/96 194,600 27 1/2
04/17/96 139,500 28 1/4
04/18/96 383,300 28 3/4
04/19/96 181,100 28
04/22/96 113,300 27 3/4
04/23/96 43,200 28
04/24/96 104,000 28 1/4
04/25/96 97,300 28 1/4
04/26/96 107,000 28
04/29/96 94,100 29 1/4
04/30/96 27,400 29
05/01/96 143,000 28 1/4
05/02/96 162,200 26 3/8
05/03/96 111,400 25 3/4
05/06/96 31,900 26 3/4
05/07/96 76,100 25
05/08/96 28,400 24 3/4
05/09/96 22,400 24 3/4
05/10/96 71,600 25 1/2
05/13/96 25,100 25 5/8
05/14/96 31,600 25
05/15/96 65,300 25 5/8
Notice that the stock did over 100,000 shares of volume for 10 of the first 15 days in the table above. Since? Volume hasn't even approached 100,000, and has been below 30,000 three times in the past six days. The price has languished around $25 and a fraction.
This can be good or bad.
Is Medicis the uncut gem that stockpickers everywhere have begun to pass over, lugging their pickaxes in search of the newest Web search engine IPO? (Giggle.) Or is Medicis slowly growing the distinctive snout of little Sonic Solutions, our greatest Fool Portfolio dog ever, which sagged and eventually died in '95? (To be resurrected in '96. . . dang thing's back to $10, now.) We shall see.
Stay Foolish!
---David Gardner, May 15, 1996
Transmitted: 5/15/96
Today's Numbers
Day Month Year History
FOOL +0.42% 5.46% 77.15% 230.79%
S&P 500 -0.03% 1.72% 8.04% 45.16%
NASDAQ -0.07% 3.62% 17.24% 71.28%
*Scroll down or expand screen for full portfolio accounting
AMER ---...CHV - 1/4 ...GE - 1/8 ...GPS + 7/8 ...IOMG + 5/8 ...KLAC -1 1/4 ...MDRX + 3/8 ...S - 5/8 ...
Rec'd # Security In At Now Change
5/17/95 1005 Iomega Cor 5.04 66.63 1222.47%
8/5/94 680 AmOnline 7.27 57.50 690.61%
4/20/95 310 The Gap 16.28 33.88 108.14%
8/5/94 165 Sears 28.93 50.00 72.86%
8/11/95 95 GenElec 57.91 78.75 35.98%
8/11/95 110 Chevron 49.00 59.00 20.41%
1/29/96 250 Medicis Ph 27.86 25.38 -8.92%
8/24/95 130 KLA Instrm 44.71 29.50 -34.02%
Rec'd # Security Cost Value Change
5/17/95 1005 Iomega Cor 5063.13 66958.13 $61895.00
8/5/94 680 AmOnline 4945.56 39100.00 $34154.44
4/20/95 310 The Gap 5045.25 10501.25 $5456.00
8/11/95 95 GenElec 5501.87 7481.25 $1979.38
8/11/95 110 Chevron 5389.99 6490.00 $1100.01
1/29/96 250 Medicis Ph 6964.99 6343.75 -$621.24
8/24/95 130 KLA Instrm 5812.49 3835.00 -$1977.49
8/5/94 165 Sears 4772.65 8250.00 $3477.35
CASH $16434.53
TOTAL $165393.91
