Fool Portfolio Report
Friday, January 16, 1998
by Paul Larson (

CHICAGO, IL (Jan. 16, 1998) -- Before I dig into the news of the day, let me remind everyone that the exchanges are closed Monday in observance of Martin Luther King, Jr.'s birthday. While I was counting sheep late last night, I was thinking to myself that Martin Luther King was a Fool. He stood up to the establishment and fought for those being mis-served by it. His life's work had to do with leveling the playing field for all. Let's all try to remember his message on Monday when the ticker tapes run silent.

It goes without saying that what Martin Luther King was fighting for is far more noble and important than what we as Fools are fighting for in the financial industry. But still, the similarities between his mission and ours at the Motley Fool are there. We are working hard to level the playing field between the individual investor on Elm Street and those in the ivory towers of Manhattan. By educating and sharing information about personal finance and investing, the Fool (and all of its regular visitors and contributors like you) hopes to help the Fools out there take their financial futures into their own hands and out of the establishment's.

Allow me to hop off my soapbox now and get busy reporting how the Fool Portfolio performed today. Hmm, how to put as positive a spin on this as I can? For the week, the Fool port was up 4.57% versus rebounds of 3.65% and 3.97% for the Nasdaq and S&P, respectively. Nine of our fifteen positions rose today. Cheery good news, right? Not exactly. We may have won the game, but our play stunk in the fourth quarter when the blowout week turned into a close race at the end. One of those nine stocks that rose today just happened to be the one stock we have short. More on that in a moment.

Not a whole lot of meaningful news from the portfolio stocks today. You have junk mail and even the dreaded junk email now. Those of us watching the market closely have junk press releases. An important timesaving skill in observing stocks is to know what is a meaningful press release and what's junk. Earnings releases are important. Guidance about the future is important. What crossed the wire today can be ignored.

Here's a small sample of the inconsequential things that hit the wire today. "Chevron Appoints Presidents of Two Operating Companies." Oh, that's nice. "AT&T Offers Disaster-relief to disaster Victims of Ice-Storms." Very good for them. Excellent. Every day I wade through dozens of these things.

There was nary a peep out of Trump (NYSE: DJT) today. Trump has been on a nice run lately that continued today, up a full buck to $8 3/4. Good news for The Donald. Not so good news for those short the stock, such as the Fool Port, which saw the position flip from black to red on paper this morning. Why the strength lately?

One factor behind Trump's resurgence has been the recent strength in the gaming sector as a whole. The most widely followed index in the gaming industry, the GAX, has risen 8.4% in the past two days. I don't think I need to tell anyone that this is an absolutely huge move for an index in such a short time frame. (That is, unless you live in Hong Kong.) In any case, I think the old saying that a "Rising tide raises all ships" applies to even the Steamship Donald.

Another of the forces behind the rise has been increased merger and acquisition activity in the industry. The "urge to merge" has been so great in the casino sector that you would think they are pumping romantic music along the Atlantic City boardwalk and the Las Vegas strip. In the past month alone, four companies in the industry have bought rings and announced their engagements. Can Trump be feeling a little lovesick and courting a mate to increase his cash flow? Can Donald be wearing his best threads to attract a larger sugar-mommy to refinance his debt at lower rates? I wouldn't rule it out.

Furthermore, there's a larger, force behind why the gaming industry as a whole and Trump in particular has been taking a skyward trajectory -- the casino world and the world of Real Estate Investment Trusts (REIT) are colliding. In addition to the marriages I just spoke of, there have been three rather large mergers announced between a REIT company and a gaming company in the past six months. Today's announcement that Crescent Real Estate (NYSE: CEI) was buying Station Casinos (NYSE: STN) sent Station's stock flying 36.2% to $15 1/2, a far cry from the stock's November low of $6 1/8. This is a news item that Trump-watchers need to pay close attention to.

Let me describe some parallels between Station and Trump to illustrate why Trump's stock is showing strength. Station Casinos operates four casino resorts in Las Vegas and two riverboat complexes in Missouri. Trump operates three casino resorts in Atlantic City and one riverboat complex in Indiana. Both Trump and Station are highly leveraged gaming companies that have debt exceeding their annual revenues. Both companies have more red ink than black on their income statements. I guess what I'm trying to say is that if such good fortune can be bestowed upon debt-ridden Station, the chance that it may also happen to Trump should certainly be taken into consideration.

If any Fools out there want more information, take a peek at the Foolish financial snapshot on our website for both Station Casinos and Trump, and then cruise over to the Trump Web message board (where most of the discussion has been taking place) or to our AOL board on Trump. The daily discussion has heated up, and I can answer any questions Fools might have about the issue. David might pop into the Web folder between signing books, too.

Speaking of signing books, the Motley book-signing tour invades Houston on Saturday, Los Angeles on Monday, and San Francisco on Wednesday. (The Fool sincerely apologizes for the earlier mistake of listing Houston as being on Friday. The event is on Saturday at 2 p.m. Again, our apologies.) So if you're in the area and want to hear a brief presentation about the Foolish investing philosophy, stop on by. Tom and Dave would love to meet you.

Have a great weekend, everyone.

-Paul Larson

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Stock Change Bid ---------------- AMZN -2 1/8 57.25 AOL + 11/16 93.50 T + 3/16 65.06 CHV + 11/16 76.75 DJT +1 8.75 GM -1 1/4 57.25 INVX - 1/4 21.50 IOM - 1/16 12.06 KLAC -1 1/2 36.94 LU + 1/16 75.31 MMM + 3/4 83.25 RTN.A + 1/8 49.63 COMS - 1/16 33.38 TDFX + 1/4 25.25 SPY +1 15/64 96.22
Day Month Year History FOOL -1.13% -2.79% -2.79% 226.23% S&P: +1.13% -0.92% -0.92% 109.75% NASDAQ: +1.02% -0.48% -0.48% 117.01% Rec'd # Security In At Now Change 8/5/94 355 AmOnline 7.27 93.50 1185.60% 5/17/95 1960 Iomega Cor 1.28 12.06 842.08% 8/12/96 130 AT&T 39.58 65.06 64.39% 10/1/96 42 LucentTech 47.62 75.31 58.17% 8/11/95 125 Chevron 50.28 76.75 52.63% 9/9/97 290 38.22 57.25 49.78% 8/12/96 110 Minn M&M 65.68 83.25 26.76% 8/12/96 280 Gen'l Moto 48.74 57.25 17.45% 1/8/98 115 S&P Depos. 95.91 96.22 0.33% 1/8/98 425 3Dfx 25.67 25.25 -1.63% 4/30/97 -1170 *Trump* 8.47 8.75 -3.32% 12/19/97 17 Raytheon 53.21 49.63 -6.74% 8/24/95 130 KLA-Tencor 44.71 36.94 -17.39% 6/26/97 325 Innovex 27.71 21.50 -22.41% 8/13/96 250 3Com Corp. 46.86 33.38 -28.78% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 33192.50 $30610.63 5/17/95 1960 Iomega Cor 2509.60 23642.50 $21132.90 9/9/97 290 11084.24 16602.50 $5518.26 8/12/96 130 AT&T 5145.11 8458.13 $3313.02 8/11/95 125 Chevron 6285.61 9593.75 $3308.14 8/12/96 280 Gen'l Moto 13647.92 16030.00 $2382.08 8/12/96 110 Minn M&M 7224.44 9157.50 $1933.06 10/1/96 42 LucentTech 1999.88 3163.13 $1163.25 1/8/98 115 S&P Depos. 11029.25 11065.16 $35.91 12/19/97 17 Raytheon 904.57 843.63 -$60.95 1/8/98 425 3Dfx 10908.63 10731.25 -$177.38 4/30/97 -1170*Trump* -9908.50 -10237.50 -$329.00 8/24/95 130 KLA-Tencor 5812.49 4801.88 -$1010.62 6/26/97 325 Innovex 9005.62 6987.50 -$2018.12 8/13/96 250 3Com Corp. 11715.99 8343.75 -$3372.24 CASH $10740.46 TOTAL $163116.11