Fool Portfolio Report
Wednesday, August 27, 1997
by David Gardner
([email protected])
ALEXANDRIA, VA (August 27, 1997) -- Let's start off today's portfolio recap -- and a happy one it is, indeed, as the Fool Port rocked the market -- with a quick quiz.
This is a quick quiz, so no peeking. Close your eyes!
(Aha... I've already caught you cheating, you rascal.)
OK, keep your eyes open but don't check an Iomega quote. And tell me this: What is Iomega's 52-week high?
Nah, nah, nah, nah, nah, nah, NAH... (Jeopardy music)... nah, nah, nah, nah, NAH -- nah-nah-nah-nah-nah nah -- OK, I'll stop.
Answer? One dollar and nineteen cents above where it closed today.
I was somewhat surprised by that figure when I first noticed it. It does seem as if Iomega hasn't been near a high forever, as if the stock has been stagnant, as if the piles of money were all made in 1995-6, and maybe never again....
Oh yeah?!
Since hitting a bottom below $15 in March of this year, IOM has been on a steady rise boosted by record-setting earnings reports, company revenues approaching $2 billion, and a host of new products coming soon that look to further increase IOM's lead over its fading present competition.
The stock rose Wednesday $1 15/16, trading 6.6 million shares (average daily volume is 2.9 million shares). The close was at $25 13/16, touching $26 briefly before market close. And the interesting thing was of course that there was NO NEWS.
NO NEWS. Hmmmmm.
I read our message boards and didn't come away with much, tonight. Everyone seems fairly confused (confused and happy -- not a bad state, really). BradE448 on AOL reported that CNBC's "technical analyst" John Murphy reported bullishly after market close. This was Brad's transcript of Murphy's comments: "IOM jumped late in the day and just going back a year or so you notice that stock hit a new high for this particular year in 1997. We closed just shy of 26 and also it was the third most actively traded stock on the Big Board which is a good sign. Notice that that puts us right against the high that was set in the fourth quarter of last year right around 26. My guess is that we are going to eventually take that out. That would complete this entire basing pattern that has been going on for almost a year. This stock peaked at 55 early last year and looks like if we can close above 26 we could move up to those higher levels. Looks like stock could be on the verge of completing a long term bottoming pattern."
Perhaps you see some insight there, dear reader. I of course do not, mainly because I believe little to no insight can come from looking at a past price graph and projecting future price movements off of it (omitting any reference to a company's business, industry, competition, etc.). Not that I don't think Mr. Murphy's a nice guy -- really, he comes off as one of the nicest guys on the tube. And not that I wouldn't be happy if Mr. Murphy were right, and the stock (following its "close above 26") ran straight to the $50's in a matter of weeks. Ah, these "technical analysis" guys.
Nothing on the news wires, nothing really on the boards, so it's always a pleasure to visit our hosted daytime chats on AOL with the likes of TMF Karen, TMF Spirit, and the many other TMFs who drop by. In this case, TMF Jeanie was pointing out to chatters that today was the first day in months that Iomega had made a big move WITHOUT ANY ATTRIBUTION TO RUMORS. She's quite right. This time, nobody's reporting anything about how "rumors on Wall Street" are that "Hewlett-Packard is interested in buying Iomega out," or whatever. The idea with these things, by the way, is that when the rumor DOESN'T happen, the implication is that the share price should drop again after it turns out HP isn't purchasing Iomega stock. Etc.
FONZ 1921, also in the room, typed, "Smith Barney is calling it a technical breakout" (this following a talk with his full-service broker). Technical, technical, technical, eh? Has the world gone technical? (Answer: Yes, whenever there's no news.)
In absence of any news or rumors to explain why Iomega surged and carried the Fool Port up more than 1% today (easily surpassing the market averages), I myself have a rumor. As with any rumor, I find that I must share it with you. And I do of course encourage you to pass this on to as many people as you possibly can over the next 24 hours. I'm hoping this can reach as many people around the world as quickly as possible, particularly because I think it holds more insight than any of the other explanations I'm encountering. Here it is:
PSSSSST!
THE RUMOR ON FOOL STREET SAYS THAT MORE PEOPLE ARE BUYING THAN SELLING.
In our upcoming second book from Simon & Schuster (coming in January), we pen a nifty little appendix called "The Iomega Retrospective." In it, we look back at what actually happened with Iomega, as opposed to what the financial media and Wall Street were saying about it -- and still say about it, in many cases.
Some may even be changing their tune.
Barron's ran a story last weekend on our Fool Ratio (no attribution, but you take what you can get). "Morgan Stanley analyst finds best performers have low P/E-to-growth ratios," read the subtitle... something we've been teaching anyone who cared to listen for several years now. And what's "Most Attractive" today? Number 11 on the list of "this important measure" is Iomega, which the writer nevertheless considers "quite controversial."
If you understand what the controversy is, please let me know. I still don't, and never really have. I'm darn glad to be a shareholder, though, and we'll just keep holding that initial position established at $2.52 (split-adjusted) a couple of years ago. Those were different days... long before the Wise knew about Iomega, the Zip drive, or the Fool Ratio.
Stay Foolish.
--- David Gardner, August 27, 1997
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Stock Change Bid ---------------- AOL - 1/2 65.50 T + 3/16 40.06 ATCT + 1/16 4.44 CHV +1 5/8 79.94 DJT - 5/16 11.00 GM - 13/16 64.19 INVX + 11/16 35.38 IOM +1 15/16 25.81 KLAC - 1/8 70.88 LU -1 5/8 80.63 MMM - 1/4 91.50 COMS -2 1/8 47.31Day Month Year History FOOL +1.09% 2.54% 18.50% 216.26% S&P: +0.07% -4.26% 23.35% 99.32% NASDAQ: +0.27% 0.11% 23.59% 121.55% Rec'd # Security In At Now Change 5/17/95 980 Iomega Cor 2.52 25.81 924.31% 8/5/94 355 AmOnline 7.27 65.50 800.96% 10/1/96 42 LucentTech 47.62 80.63 69.32% 8/11/95 125 Chevron 50.28 79.94 58.97% 8/24/95 130 KLA-Tencor 44.71 70.88 58.52% 8/12/96 110 Minn M&M 65.68 91.50 39.32% 6/26/97 325 Innovex 27.71 35.38 27.66% 8/12/96 280 Gen'l Moto 51.97 64.19 23.50% 8/12/96 130 AT&T 39.58 40.06 1.22% 8/13/96 250 3Com Corp. 46.86 47.31 0.97% 4/30/97 -1170 *Trump* 8.47 11.00 -29.89% 10/22/96 600 ATC Comm. 22.94 4.44 -80.65% Rec'd # Security In At Value Change 5/17/95 980 Iomega Cor 2594.53 25296.25 $22701.72 8/5/94 355 AmOnline 2581.87 23252.50 $20670.63 8/11/95 125 Chevron 6285.61 9992.19 $3706.58 8/12/96 280 Gen'l Moto 14552.49 17972.50 $3420.01 8/24/95 130 KLA-Tencor 5812.49 9213.75 $3401.26 8/12/96 110 Minn M&M 7224.44 10065.00 $2840.56 6/26/97 325 Innovex 9005.62 11496.88 $2491.26 10/1/96 42 LucentTech 1999.88 3386.25 $1386.37 8/13/96 250 3Com Corp. 11714.99 11828.13 $113.14 8/12/96 130 AT&T 5145.11 5208.13 $63.02 4/30/97 -1170*Trump* -9908.50 -12870.00 -$2961.50 10/22/96 600 ATC Comm. 13761.50 2662.50-$11099.00 CASH $40625.59 TOTAL $158129.65
