Fool Portfolio Report
Tuesday, March 18, 1997
by Jeff Fischer (MF BudFox)

ALEXANDRIA, VA, (March 18, 1997) -- Since the high reached in mid-January, the Nasdaq Composite has fallen ten percent, the correction having dripped through a slow strainer over the past eight weeks. Meanwhile, the S&P has only sunk three percent off its high.

The Nasdaq has fallen three percent in March alone, while the Fool has managed a small-meaning 0.65% gain this month. In cadaverous trading today, the Fool lost 0.60% as America Online and General Motors fell on no news. The S&P dropped 0.76% and the Nasdaq shed 0.79%. The Fool was less pale than the others. Ha ha!

The few mutual funds I've respected over the past years are suffering as well. The following high-growth funds have steadily outperformed the market in the past, but as of yesterday, the well-known PBHG Growth fund was down 14% for the year; while the Putnam OTC Emerging Growth fund was down 12%, and the Aim Aggressive Growth fund has lost 9%. The Fool Portfolio is equally aggressive and weighted in technology, with America Online, Iomega, and 3Com accounting for more than 50% of the portfolio. The weak performance of late isn't surprising given the Fool's holdings, while ATC Communications hasn't helped. Considering the story over the past two months, I'm surprised the Fool is doing as well as it is. The "decent" performance is probably due to the portfolio's Foolish Four stocks.

"What?" you say. "The Foolish Four are down a few percent this year, and underperforming the S&P!"

True. Tom and David have lost a few percentage points in the Foolish Four since January, but if that $41,000 wasn't strapped onto those Dow stocks there's no doubt it would be in other stocks, and it would probably be faring more poorly, judging past luck of late.

Um. Does that sound all right to say?

No matter. You know what I mean. The Nasdaq has done poorly all around.

There was little news and less time to write the recap tonight, so we'll be a bit short, but make up for it some other time, certainly.

BARNES & NOBLE (NYSE: BKS) opened shop on AMERICA ONLINE (NYSE: AOL), selling boks at a discount. Press releases rolled out, news hit the wires, the media did a story on the "hot competition" this presents to other online book sellers, and so I investigated the Barnes & Noble site and was not very impressed. I entered AOL's keyword "Barnes & Noble" and it kicked back a single page which states, "Barnes and Noble Bookstore... under Construction." Your only option is to hit "Cancel" and check out -- book-less. A somewhat disappointing grand opening.

America Online has purchased more modems and today offered more access numbers for 48 cities. The company plans to have capacity for 400,000 simultaneous users come June this year, while keeping the subscriber number around eight million. This represents a 20-to-1 customer-to-line ratio, while the industry average is 10-to-1. AOL will continue to trail the industry ratio significantly, but doubling to 20-to-1 should remedy much of the current "busy-line" syndrome.

3COM (Nasdaq: COMS) is set to announce earnings after the market closes Thursday. $0.46 is expected. If the company meets the estimate trailing earnings will total $1.70 compared to $1.66 currently, so the stock will still trade at a price to earnings ratio of 19. Expectations for the quarter are not high. I don't know what the stupid "whisper number" is yet (what are we, children?), but I doubt it's great.

Expectations for ORACLE CORP (Nasdaq: ORCL) were poor last week, too. The published estimate called for thirty-one cents in earnings per share, but the whisper number (shhhhh!) was only twenty-five cents. The stock fell more than 20% going into earnings. When the second largest software company announced estimate-matching earnings of thirty-one cents, the stock gapped up 10%, and Oracle has since risen 20% from the low reached prior to earnings.

US ROBOTICS (Nasdaq: USRX), the pending bride of 3Com, will announce earnings during the third week of April.

Finally, first mentioned Friday, 3M's (NYSE: MMM) O-Cel-0 sponge is shipping again! The EPA had ordered a halt on sales of the kitchen sponge last week. Pending new packaging, the product will now continue to sell as normal! Unbelievably, 3M's stock lost seventy-five cents on the news.

Just as a person should pay detail to the small news in life, you should also read Buffett's shareholder letter. This short recap is a blessing. Perhaps you have time to read Buffett now. David linked the letter in the recap last night, but -- in case you missed it. If you want, skim down to the areas where he talks about individual investors and investing. But reading the letter in its entirety, you gain something much more: you see his personality, style, and humor, all of which combine to make a great investor. His mind-frame is long-term, relaxed, and he's comfortable with each purchase -- knowing the businesses well -- while being humorous, ready to admit mistakes, and all the while enjoying himself on many different levels.

Foolishly -- dare I say?


Stock Change Bid -------------------- AOL -1 1/8 42.75 T + 1/8 35.38 ATCT - 3/16 7.00 CHV - 1/8 66.88 GM -1 1/4 56.75 IOM + 1/8 14.75 KLAC +1 5/8 38.50 LU - 3/4 52.13 MMM - 5/8 89.38 COMS + 1/2 33.75
Day Month Year History FOOL -0.60% 0.65% -8.47% 144.28% S&P: -0.76% -0.15% 6.60% 72.26% NASDAQ: -0.79% -3.03% -1.68% 76.25% Rec'd # Security In At Now Change 8/5/94 680 AmOnline 7.27 42.75 487.80% 5/17/95 2010 Iomega Cor 2.52 14.75 485.56% 8/12/96 110 Minn M&M 65.68 89.38 36.08% 8/11/95 125 Chevron 50.28 66.88 32.99% 10/1/96 42 LucentTech 47.62 52.13 9.47% 8/12/96 280 Gen'l Moto 51.97 56.75 9.19% 8/12/96 130 AT&T 39.58 35.38 -10.62% 8/24/95 130 KLA Instrm 44.71 38.50 -13.89% 8/13/96 250 3Com Corp. 46.86 33.75 -27.98% 10/22/96 600 ATC Comm. 22.94 7.00 -69.48% Rec'd # Security In At Value Change 8/5/94 680 AmOnline 4945.56 29070.00 $24124.44 5/17/95 2010 Iomega Cor 5063.13 29647.50 $24584.37 8/12/96 110 Minn M&M 7224.44 9831.25 $2606.81 8/11/95 125 Chevron 6285.61 8359.38 $2073.77 8/12/96 280 Gen'l Moto 14552.49 15890.00 $1337.51 10/1/96 42 LucentTech 1999.88 2189.25 $189.37 8/12/96 130 AT&T 5145.11 4598.75 -$546.36 8/24/95 130 KLA Instrm 5812.49 5005.00 -$807.49 8/13/96 250 3Com Corp. 11714.99 8437.50 -$3277.49 10/22/96 600 ATC Comm. 13761.50 4200.00 -$9561.50 CASH $4909.01 TOTAL $122137.64