Fool Portfolio Report
Monday, December 9, 1996
by David Gardner (MotleyFool)
ALEXANDRIA, VA, December 9, 1996 -- Like Alaric's Visigoths sacking Rome in 410 AD, the market kept moving forward Monday, crushing anything in its wake. While one of the measly little competitors left behind it, half-broken and forgotten, was our dear Fool Portfolio. The FoolPort got doubled up by today's S&P 500 (up 1.37%) and tripled by El Nasdaq (up 2.22%) and so we have very little blustery bragging to do in today's writeup.
Reasons for our one-day bout with depression? Look at America Online and Iomega. They're our two biggest holdings (and two of the most shorted stocks on the New York Stock Exchange -- we eat this stuff up) and they were both somehow down Monday.
In America Online's case, we really don't have much to complain about. Its performance over the past two months has been outstanding, following the addition of Bob Pittman to the management team, its announcement of monthly flat rates, revision of accounting standard, and positive outlooks for earnings.
Iomega, on the other hand, has lacked some luster. In the midst of a strong move for the stock market, IOM's last two months have bounced between $20 and $26, splitting the difference as of market close today. (Iomega lost $1/8 to close at a last trade of $23 1/4.) The company has announced a number of new products (n.Hand, Zip for laptops, etc.) but we haven't seen earnings estimates much change... always a driver of a share price. Still, it's been another fine year in IOMland, with the stock up more than 200%.
We did have some respectable moves today. Our third and fourth biggest holdings, 3Com and General Motors, each rose impressively. 3Com closed at a bid of $80 for the first time ever. The stock was buoyed by a BUY rating from something called Utendahl Capital Partners, L.P. (that's for "limited partnership," I presume). Of note, we learn that, "3Com's recent acquisition of OnStream Networks offers one of the most innovative approaches to the WAN and remote access markets by enabling one product to replace the functionality of several access products with improved price/performance." Sounds good for margins. And as me ol' pappy used to say, "What's good for the margins is good for mar'gander." I'm sorry; that's terribly lame (ah, writing on a deadline...). So let's just stick to this, then: company profits create shareholder profits.
Remote access is of course the business involving hooking up one's "remote" computer (laptop on the road, or desktop at home) to one's main office "server" (that big computer that your friendly network administrator nurses like an infant). It's a huge business; I know I'd like to see my connection speed up in the coming years. As our CEO Eric Benhamou pointed out in 3Com's first quarter report, our company was a bit late on this market as others like Ascend and Shiva attacked and benefited most. However, with the acquisition of OnStream, you're going to see 3Com push out its market share into somebody else's waters, going forward.
I got an instant message over AOL from a friend this morning who asked, "What happened to 3Com?" Fearing the worst, I went in and checked the quote: up $15/16. "Whaddya mean?" I asked her. It was another nice day.
She came back with, "I have it down $8." I thought: Trois Com? Down eight?! Then I checked the daily low using AOL Quotes. The low was indeed listed as $70 and a fraction, which would've been down a whopping $8 at the time. A check elsewhere revealed that this quote was inaccurate, and my little story therefore a trifle. Reminds us that AOL's quotes are still not yet perfected... the network brain over in Reston does sometimes have synaptic misfires. That said, the quotes still come up faster than any other online system I've ever used, and are accurate the other 99.99% of the time....
General Motors moved up strongly, rising $2 1/2 to $59. This Dow kingpin, the Foolish Four stock that we doubled up on for '96-'97, continues to fare well. Dow sister 3M Corp. (the other half of the Trois Connection) has done even better on a percentage basis. Up $1 3/4 today to $83 3/8, it shows a gain of 27% since its August entrance to Foolishness.
Biggest Foolish dollar gainer for December 9, 1996? Write it down, trivia maniacs. It's KLA Instruments, tipping the scales for another $3 (or 9%) gain. The company had no news to report today, but the cyclical swing back into growth appears afoot in the semiconductor industry.
ATC Communications rose $1/8. I mention it tonight simply because I haven't mentioned it much recently. And insofar as it's been our poorest performer, I get e-mails asking me to mention it more. But the problem here is that you can only analyze so much. ATCT is not the sort of company that puts out press releases every day, or even every week. In fact, ATC's last press release came out on November 14th, and the company's only averaging one a month (three over the past three months). Absent the next earnings report and any meaningful announcements, the stock and the news wire are both flat.
To close, today's entrenched Wall Street establishment may in some aspects be compared to the declining Roman Empire. Both have failing business models, are past their prime, still have a lot of money, and revel in pomp and circumstance. (Nothing disappears overnight, though: Rome was sacked in 410 AD, while the Roman Empire didn't completely fall for another 66 years, when the German warrior Odoacer named himself King of Italy in 476, deposing Romulus Augustulus.) Though this isn't to say, of course, that the Wall Street establishment is destined to crumble into a pathetic collection of columns left standing only for the past it once represented.
But Insofar as most of the market forecasts I see from Wisdomville these days are bearish to very bearish, it's interesting to watch as the Gothlike market forces continue to run roughshod over all these pretty forecasts.
Fools that we are, we spend very little time trying to figure out who's right, or who'll win, in the short term: the Romans or the Goths. Over the long term, it's enough for us to know that the Goths win out; we've read about it, we've seen it, we believe it. Veni, vidi, vici. As individual investors, you and I have come, seen, and will continue to conquer when we retain our long-term faith in the stock market, and ignore the silly ones calling doom every six months.
Stock Change Bid ------------------- AOL - 3/8 38.50 T + 1/2 39.13 ATCT + 1/8 14.63 CHV --- 64.38 GM +2 1/2 59.00 IOM - 1/8 23.25 KLAC +3 37.88 LU - 1/8 49.00 MMM +1 3/4 83.38 COMS +1 1/8 80.00
Day Month Year History FOOL +0.79% 3.65% 62.12% 202.73% S&P 500 +1.37% -0.96% 21.73% 63.56% NASDAQ +2.22% 1.83% 25.10% 82.77% Rec'd # Security In At Now Change 5/17/95 2010 Iomega Cor 2.52 23.25 823.00% 8/5/94 680 AmOnline 7.27 38.50 429.36% 8/13/96 250 3Com Corp. 46.86 80.00 70.72% 8/11/95 125 Chevron 50.28 64.38 28.02% 8/12/96 110 Minn M&M 65.68 83.38 26.95% 8/12/96 280 Gen'l Moto 51.97 59.00 13.52% 10/1/96 42 LucentTech 47.62 49.00 2.91% 8/12/96 130 AT&T 39.58 39.13 -1.14% 8/24/95 130 KLA Instrm 44.71 37.88 -15.29% 10/22/96 600 ATC Comm. 22.94 14.63 -36.24% Rec'd # Security In At Value Change 5/17/95 2010 Iomega Cor 5063.13 46732.50 $41669.37 8/5/94 680 AmOnline 4945.56 26180.00 $21234.44 8/13/96 250 3Com Corp. 11714.99 20000.00 $8285.01 8/12/96 280 Gen'l Moto 14552.49 16520.00 $1967.51 8/12/96 110 Minn M&M 7224.44 9171.25 $1946.81 8/11/95 125 Chevron 6285.61 8046.88 $1761.27 10/1/96 42 LucentTech 1999.88 2058.00 $58.12 8/12/96 130 AT&T 5145.11 5086.25 -$58.86 8/24/95 130 KLA Instrm 5812.49 4923.75 -$888.74 10/22/96 600 ATC Comm. 13761.50 8775.00 -$4986.50 CASH $3870.12 TOTAL $151363.75 Transmitted: 12/9/96