Toasted Trump
Friday, April 3, 1998
by Paul Larson ([email protected])
CHICAGO, IL (April 3, 1998) -- The Dow Jones Industrial Average broke the 9,000 mark for the first time ever today, but could not manage to hold above the so-called "psychological barrier." What's the significance here? Um, not much!
Yesterday, the Fool Port was for the first time in 1998 ahead of both the Nasdaq and S&P 500 in year-to-date performance. Sadly, just like Dow 9K, the lead against the Nasdaq had a rather limited half-life. Hampered by profit taking in Amazon.com (Nasdaq: AMZN) and continued weakness in KLA-Tencor (Nasdaq: KLAC), the Fool Port limped along at Fool Downs today for a 0.58% loss in its net value. The annual rate of return for the Fool Port since its inception almost four years ago still remains right above 45%, a quite astonishing mark to be sure. While we report with baited breath the daily performance here in this column, it's the long-term performance that we really care about.
Let's take a look at two of the recently down-n-out stocks in the portfolio this evening. First, Iomega (NYSE: IOM) was featured in today's Daily Trouble. Ouch. Let's hope in the future that no other stocks in the Port get highlighted in this feature! (Save Trump, of course.) Personally, I think you can put butter on Iomega's stock and call it toast, but there are others among the Fool Port ranks with much less bearish opinions that believe in the long-term future of the company. Time will tell who's correct. In the short run, nevertheless, Iomega was today truncated an eighth to $6 7/8, managing to settle right at its yearly low.
Speaking of toast, Trump (NYSE: DJT) was in the news today, and not for a good reason. It was reported in today's Press of Atlantic City that citywide gaming revenues dipped 1.7% in the month of March. All three of Trump's properties posted negative comparisons to March of 1997. Trump Marina really threw up a brick (doink!) with a whooping 18.2% decline against the year-ago period. This is on top of significant company-wide declines in January and February for both New Jersey and Indiana.
Of even more interest is that one of the most ardent and vocal bulls around Fooldom concerning Trump, the one and only Brigam, posted on the AOL gaming message board today that he sold a large portion of his DJT shares after seeing the disappointing results. Maybe when the previously strong bulls start selling it is a contrarian signal, but I think it has more to due with a downright gloomy forecast for Trump.
Several factors are to blame for the softness in revenues, and not many of them are transient. Atlantic City as a whole, and Trump's casinos in particular, are seeing a significant decline in table-game play from Far East patrons. Yes, the Asian situation has even affected the casino industry. Of more concern for Trump is the increased competition coming from the casino "boats to nowhere" operating near Manhattan and the tribes operating casinos in Connecticut. It also looks like Trump can look forward to even more competition from Delaware race tracks, such as Dover Downs (NYSE: DVD), which are looking to significantly increase the number of slot machines on their properties in the next couple months. The competition continues to grow.
Altogether, it looks like Trump should report approximately a 6% decline in top-line revenues for the first quarter compared to last year. Not far from the loss of $0.59 per share posted last year, the current average analyst estimate calls for the company to lose merely $0.66 per share in the first quarter. Dream on, I say. I will be the first Fool to call those estimates much too optimistic. I am expecting Trump to post at least a dollar per share loss when the numbers are released in three weeks. If I am right, it would certainly be good news for the Fool Port's short position. Again, time will tell if my guesstimate is correct.
It appears that the Fool Port's short of Da Donald has gone from a nail-biting position to one to be confident in. In short, Trump's stock looks like it could be ready for the butter, too. The market, however, shrugged the news off and bid the toasty stock up a sixteenth to close at $9 1/16. C'est la vie.
Just like Iomega, not all staff members here at the Fool have the exact same opinion concerning Trump. While we may agree on basic investing philosophies, our opinions on individual stocks are all over the board. As I always love to say, "That's what makes a market." And that's also why we have features such as Dueling Fools to highlight both sides of the story. Look for a Duel about Da Donald's company in the coming weeks. I'll be facing off against Dale Wettlaufer (TMF Ralegh) of Evening News fame.
Enjoy the spring weekend, Fools.
-Paul Larson
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TODAY'S
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Day Month Year History FOOL -0.58% 4.71% 17.54% 294.47% S&P: +0.24% 1.90% 15.69% 144.92% NASDAQ: +0.13% 1.07% 18.15% 157.63% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 74.50 1948.71% 5/17/95 1960 Iomega Cor 1.28 6.88 436.94% 10/1/96 84 LucentTech 23.81 72.88 206.09% 9/9/97 290 Amazon.com 38.22 93.13 143.65% 8/12/96 130 AT&T 39.58 66.31 67.55% 1/8/98 115 S&P Depos. 95.91 112.38 17.17% 2/20/98 215 DuPont 59.83 68.94 15.22% 2/20/98 200 Exxon 64.09 69.31 8.15% 1/8/98 425 3Dfx 25.67 26.88 4.70% 2/20/98 270 Int'l Pape 47.69 49.31 3.40% 6/26/97 325 Innovex 27.71 26.50 -4.37% 4/30/97 -1170*Trump* 8.47 9.06 -7.01% 8/24/95 130 KLA-Tencor 44.71 38.44 -14.03% 8/13/96 250 3Com Corp. 46.86 34.13 -27.18% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 52895.00 $50313.13 9/9/97 290 Amazon.com 11084.24 27006.25 $15922.01 5/17/95 1960 Iomega Cor 2509.60 13475.00 $10965.40 10/1/96 84 LucentTech 1999.88 6121.50 $4121.62 8/12/96 130 AT&T 5145.11 8620.63 $3475.52 2/20/98 215 DuPont 12864.25 14821.56 $1957.31 1/8/98 115 S&P Depos. 11029.25 12923.13 $1893.88 2/20/98 200 Exxon 12818.00 13862.50 $1044.50 1/8/98 425 3Dfx 10908.63 11421.88 $513.25 2/20/98 270 Int'l Pape 12876.75 13314.38 $437.63 6/26/97 325 Innovex 9005.62 8612.50 -$393.12 4/30/97 -1170*Trump* -9908.50 -10603.13 -$694.63 8/24/95 130 KLA-Tencor 5812.49 4996.88 -$815.62 8/13/96 250 3Com Corp. 11715.99 8531.25 -$3184.74 CASH $11233.54 TOTAL $197232.85
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