Fool Portfolio Report
Wednesday, February 25, 1998
by Jeff Fischer (JeffF@fool.com)

ALEXANDRIA, VA (Feb. 25, 1998) -- Cozy up, Fools. There are many great things to read tonight.

The Fool Port edged out the S&P 500 despite the fact that both America Online and Iomega slipped. For the trailing 52 weeks, the Fool is up 40% while the S&P is up 29%. For the last three years and six months, the portfolio has an annualized return of 42% vs. the S&P's 25% annual return. Once the portfolio is five years old, and then ten years old, we'll have much more meaningful data for comparison, but we're off to a market-splattering start.

Oh, yeah. For 1998 the portfolio is losing to the S&P.

Hey, little newsflash: We don't actively manage this portfolio to win on a year-by-year basis. Attempting that would cause incessant brow sweating and take forced effort, which would probably result in consistent market underperformance just as it does for over 80% of mutual funds. We strive to outperform over the long term -- which is what matters. If we aimed to outperform in the short term, we'd probably consider selling America Online (NYSE: AOL) right now.

AOL's stock is up 40% since January 1, and 250% from one year ago. The stock might not rise for the rest of the year -- who knows? -- but, no, we won't consider selling it. We continue to believe that AOL's stock has a good chance to beat the market over the coming years, no matter what happens in the near term following this rapid ascent.

At $120 per share the company is valued at over $12 billion. It's still a mid-cap and it trades at 6 times sales. That's not all bad for a company growing at this pace, profitably, and leading without peers in an industry that promises to continue expanding as quickly as any in the world. And cyberspace is a world within a world. AOL is going to be a commerce, content, service, and community conglomerate, with revenue coming from many steady streams.

Today America Online announced that it has reached the one million member mark in Europe after only two years.

Amazon.com (Nasdaq: AMZN) soared to a new high yesterday before closing flat, as TMF Cheeze reported in a Titanic of a Fool column. Word is that Amazon is preparing to enter the potentially lucrative online music-selling business. This isn't a shock -- it's been discussed in the past. The company could begin selling CDs by the end of 1998.

Amazon scored a new closing high today. At $65 per share the company is valued at nearly $1.6 billion, or 10.8 times trailing revenue of $147 million. Certainly first quarter sales won't impress in the way that fourth quarter sales did, but for the year I have a feeling that the sales growth will surprise most people. Institutions now own 12% of Amazon's stock and the short interest on Amazon is fairly high, too. (For more on shorting stocks, please see the 11th Step to Investing Foolishly.)

Amazon is today's featured company on Hoover's service. Being the Company of the Day, all of the detailed information on Amazon is free, though come Thursday this will no longer be the case. You'll need to be a subscriber to get the detailed info after today. So, enjoy reading about Amazon this evening if you're interested.

The markets continue to make record highs but many of our stocks don't. KLA-Tencor (Nasdaq: KLAC) rose over $3 today and is at least in positive territory for the Fool Port again -- positive territory after more than two years, so it's nothing to really celebrate. The stock is losing badly to the market since it was purchased, though KLAC has crushed the market over the past five years. The stock has gained 43% annualized since 1993 vs. the S&P at 17%. The Fool bought KLAC high and "late." It means that we need to wait longer, perhaps. The business is strong.

Iomega (NYSE: IOM) hovered and finally closed down a fraction. The storage company is featured in this week's Dueling Fools. Give it a read and cast your vote with the Duelist of your choosing -- Bull or Bear. IBM Japan announced that it is shipping the Zip in new Aptiva PCs today.

Other Topics. Tonight in the Drip Port I'm wrapping up a long review of Intel (Nasdaq: INTC) by asking readers for thoughts on the business. If you have knowledge about Intel and you would like to share it (readers' mail will be shared in tomorrow's Drip Port column when possible), please send your Intel insight along. Especially folks who live in Santa Clara or thereabouts. Ha.

Finally, tonight Robert is sharing the results of a study on the Dow Dividend Approach that takes into account both 12-month and 18-month holding periods. This is highly relevant, of course, for any Fools using the Foolish Four or Dogs of the Dow investment approach. We'll be reporting on the results here, too. I haven't even seen them yet. I'm off!

Have a Foolish evening!

--Jeff Fischer

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TODAY'S NUMBERS

Stock Change Bid ---------------- AMZN + 13/16 65.69 AOL - 1/8 118.94 T - 3/16 61.81 DD +1 1/8 59.81 DJT - 1/4 9.81 XON - 1/8 62.63 INVX + 5/8 23.19 IP + 3/8 47.38 IOM - 3/16 9.06 KLAC +3 5/16 45.88 LU -1 7/8 106.13 COMS +2 1/2 35.13 TDFX + 15/16 23.50 SPY +1 9/32 104.53
Day Month Year History FOOL +1.24% 9.92% 3.54% 247.49% S&P: +1.20% 6.39% 7.47% 127.51% NASDAQ: +1.60% 9.09% 12.49% 145.28% Rec'd # Security In At Now Change 8/5/94 355 AmOnline 7.27 118.94 1535.36% 5/17/95 1960 Iomega Cor 1.28 9.06 607.78% 10/1/96 42 LucentTech 47.62 106.13 122.88% 9/9/97 290 Amazon.com 38.22 65.69 71.86% 8/12/96 130 AT&T 39.58 61.81 56.18% 1/8/98 115 S&P Depos. 95.91 104.53 8.99% 8/24/95 130 KLA-Tencor 44.71 45.88 2.60% 2/20/98 215 DuPont 59.83 59.81 -0.04% 2/20/98 270 Int'l Pape 47.69 47.38 -0.66% 2/20/98 200 Exxon 64.09 62.63 -2.29% 1/8/98 425 3Dfx 25.67 23.50 -8.44% 4/30/97 -1170*Trump* 8.47 9.81 -15.87% 6/26/97 325 Innovex 27.71 23.19 -16.32% 8/13/96 250 3Com Corp. 46.86 35.13 -25.05% Rec'd # Security In At Value Change 8/5/94 355 AmOnline 2581.87 42222.81 $39640.94 5/17/95 1960 Iomega Cor 2509.60 17762.50 $15252.90 9/9/97 290 Amazon.com 11084.24 19049.38 $7965.14 8/12/96 130 AT&T 5145.11 8035.63 $2890.52 10/1/96 42 LucentTech 1999.88 4457.25 $2457.37 1/8/98 115 S&P Depos. 11029.25 12021.09 $991.84 8/24/95 130 KLA-Tencor 5812.49 5963.75 $151.26 2/20/98 215 DuPont 12864.25 12859.69 -$4.56 2/20/98 270 Int'l Pape 12876.75 12791.25 -$85.50 2/20/98 200 Exxon 12818.00 12525.00 -$293.00 1/8/98 425 3Dfx 10908.63 9987.50 -$921.13 6/26/97 325 Innovex 9005.62 7535.94 -$1469.68 4/30/97 -1170*Trump* -9908.50 -11480.63 -$1572.13 8/13/96 250 3Com Corp. 11715.99 8781.25 -$2934.74 CASH $11233.54 TOTAL $173745.95