Fool Portfolio Report
Wednesday, June 18, 1997
by David Gardner
(MotleyFool)
ALEXANDRIA, VA, June 18, 1997 -- The Fool Portfolio reversed the tide of a downed Wall Street today, turning in a mild gain with help from minor rises in America Online and Iomega. That keeps us up above the averages for another explosive market month, now ahead 5.8% vs. gains in the S&P 500 and Nasdaq of 4.8% and 2.3%, respectively. For the year, of course, we remain two percentage points down to the Nasdaq and 11 points down to the S&P 500. We call that "striking distance."
I get to play the role of storyteller today, to narrate a very telling event that occurred this morning in the world of financial journalism.
Specifically, let's look at The Wall Street Journal's "Inside Track" column. (Last week, I wrote about the irrelevance of insider selling at America Online, which was reported on in that column.)
As today's "Inside Track" states, the president of WorldCom (Nasdaq:WCOM), a Mr. Bernard J. Ebbers, bought one million shares of his company's stock on April 9-10 at an average price of $23.60. Good move. At today's closing price of $31.50, in just a couple months the man has made a cool $8 millionish. But there may be a little problem here, points out "Inside Track" writer Bridget O'Brian: "No paperwork detailing the transaction made it to the Securities and Exchange Commission until June 2."
As you may or may not know, when a company manager buys or sells company stock he must file with the SEC. That filing is expected within 30 days, at which point it becomes public information and is reported as official "insider trading." But Mr. Ebbers's filing apparently came several weeks late, and was listed as an "amended filing" even though no original filing exists to be amended.
Do I care much about this? Not really. The truth will come out eventually -- it always does -- and I have no idea whether Mr. Ebbers is particularly honest or dishonest. I suspect honest, because WorldCom is such a top-flight operation and I've been taught to expect the best of people. (Yes, I'm aware of how perilously contrary this mentality is to our contemporary journalism; but ain't I refreshing?) The real story -- my story -- lies a few sentences below these revelations. The Journal prints:
"Yet while no official word of Mr. Ebbers's purchase was emanating from Washington or the company, there was talk about it on such online gossip sites as the Motley Fool on America Online.
"A May 29 posting on that site by a subscriber identifying himself as 'Cabo Eddy' said, 'There was a story going around today that Bernie bought an additional 1 million shares a few weeks ago... The story has not hit any wire so I have not confirmed it, but I heard it a couple times from good sources."
Sure enough, you can read it right there in our WorldCom folder on AOL, dated (as listed) 5/29/97. And as it turns out, of course, Cabo Eddy was right on the money.
The best information was right here in Fooldom.
How shocking, the uninformed reader might think, given that this all appeared in an "online gossip site." Now, I'd never accuse the Journal of stooping so low as to indulge in name-calling, but hey, you be the judge. I have a few good friends at The Wall Street Journal that I'm dying to ask about that. Or indeed... why bother? I hear an answer loud and clear from the several hundred thousand of you who come to Fooldom in some cases several times a day for education, straight talk, camaraderie, Fool News, and even to follow the world's only real-money, total-accountability stock portfolios.
If we're all about gossip, then let me be the first to suggest that the world needs one heck of a lot more of it.
Let it rain! You know, the sort of gossip where you pay a few dimes to visit a popular online area, learn how to invest, meet large numbers of other people across the country who share your interests, and read something there that is true and useful and that the Wall Street Journal and SEC might not find out until weeks later.
With a humorous glint in my eye, may I share some irony here? Off the top of my head, I can recall two separate instances in just the past several weeks where the Journal has made a big deal of printing rumors that have since turned out (for now, anyway) to be completely fruitless. Remember how AOL was going to buy out Compuserve? Still waiting? OK, how about the big merger between AT&T and SBC Communications?
This begs the question, "How would you stack up Cabo Eddy's 'gossip' against these, eh?"
Hypo-... hypoc--... hypocrit--... achoo!
We need more of this stuff they call online gossip.
Click into our WorldCom folder on AOL today and you'll find the virtual equivalent of high-fives being exchanged between its readers. "Let's all give Cabo Eddy a big RIGHT ON!" writes RDEMONEY. "Hey Cabo, you're famous! Way to go!!!" says NEILWEST1. Cabo Eddy, for his own part, is not sheepish about it. Responding, he writes, "Was that famous or infamous? I've been a long-term holder of WCOM and things have never looked better. If this market will hold, I think WCOM will head much higher. Bernie's purchase was common knowledge at one of the brokerages I trade with; if anything else 'public' comes to my attention I'll post it here." Unable to help himself, and evincing the ready wit that characterizes so much of why we love Fooldom, Eddy ends the note, "Psst. Blue Horseshoe Loves WCOM."
This is followed up by another quip, from an ambitious Atl63 who no doubt is picturing getting written up in the Journal himself: "I heard that Bernie may have purchased a second one million block."
To close, does this mean I like rumor? Do I want contributors to Fooldom to inject worthless notes of fabrication about things that will never happen? Please, no. But Winston Churchill surely has something to say to us -- or at least, some members of our press -- when he opined, "There are a lot of lies going around this world. The worst of it is, half of them are true."
In that spirit, let's continue to gossip our way into the history books together, and gossip Wall Street out of its many vices. One of those vices -- the regular sharing of inside information that smaller shareholders are not privy to -- is already coming down. All it takes is guys like Cabo Eddy to print Street whispers in a place where anyone can read them. The result? A sudden and profound leveling of the playing field that many traditional media sources continue to misunderstand and feel threatened by.
Go Fools!
--- David Gardner, June 18, 1997
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Stock Change Bid -------------------- AOL + 1/8 60.88 T - 3/8 37.50 ATCT - 1/16 5.25 CHV -1 7/8 74.25 DJT --- 11.75 GM - 1/4 56.75 IOM + 1/4 22.63 KLAC - 5/16 48.25 LU + 1/4 70.25 MMM - 1/8 99.88 COMS - 5/16 46.94Day Month Year History FOOL +0.14% 5.79% 8.52% 189.61% S&P: -0.60% 4.81% 20.03% 93.96% NASDAQ: -0.74% 2.29% 10.95% 98.90% Rec'd # Security In At Now Change 5/17/95 980 Iomega Cor 2.52 22.63 797.82% 8/5/94 355 AmOnline 7.27 60.88 737.35% 8/12/96 110 Minn M&M 65.68 99.88 52.07% 8/11/95 125 Chevron 50.28 74.25 47.66% 10/1/96 42 LucentTech 47.62 70.25 47.53% 8/12/96 280 Gen'l Moto 51.97 56.75 9.19% 8/24/95 130 KLA Tencor 44.71 48.25 7.91% 8/13/96 250 3Com Corp. 46.86 46.94 0.17% 8/12/96 130 AT&T 39.58 37.50 -5.25% 4/30/97 -1170 *Trump* 8.47 11.75 -38.74% 10/22/96 600 ATC Comm. 22.94 5.25 -77.11% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 21610.63 $19028.76 5/17/95 980 Iomega Cor 2594.53 22172.50 $19577.97 8/12/96 110 Minn M&M 7224.44 10986.25 $3761.81 8/11/95 125 Chevron 6285.61 9281.25 $2995.64 8/12/96 280 Gen'l Moto 14552.49 15890.00 $1337.51 10/1/96 42 LucentTech 1999.88 2950.50 $950.62 8/24/95 130 KLA Tencor 5812.49 6272.50 $460.01 8/13/96 250 3Com Corp. 11714.99 11734.38 $19.39 8/12/96 130 AT&T 5145.11 4875.00 -$270.11 4/30/97 -1170*Trump* -9908.50 -13747.50 -$3839.00 10/22/96 600 ATC Comm. 13761.50 3150.00-$10611.50 CASH $49631.21 TOTAL $144806.71
