<THE RULE BREAKER PORTFOLIO>
What Happened to Fool Port?
Amazon Does the Splits
...and welcoming Harry
By Paul Larson ([email protected])
CHICAGO, IL (Jan. 4, 1999) -- The Rule Breaker portfolio wasted no time today in recapturing the lead in the race to outperform the general market. In the first day of trading in 1999 the portfolio jumped forward 2.04% while the rest of the market, which couldn't decide whether or not it wanted to be up or down, ended mixed with the S&P down .09% and the Nasdaq popping up .70%. It's a good start to a year that we only hope turns out half as well as 1998 did (up 199%) for this portfolio.
In the news for the day, we show that Amazon (Nasdaq: AMZN) was the primary reason for today's good numbers as it moved up nearly $34 to close at $354.94. Perhaps speculators are excited that the company splits its stock tomorrow, or it might be excitement about the company's exploding sales. Regardless, before the split the Rule Breaker owned 440 shares, and after the split there will be 1320 shares in the portfolio at roughly a third the price. It's interesting to note that even after the stock splits three-for-one that Amazon will still be one of the highest priced stocks in the portfolio.
Splits don't really affect the valuation of the company, and the portfolio isn't really getting any "more" Amazon than it had yesterday. It's almost like getting two $10 bills for a twenty, or two nickels for a dime. (If anyone out there has an analogy that works better for a 3-for-1 split, please help us out and post your idea!)
Some will argue that splits are beneficial because they signal that the company's management is confident about future performance. I won't argue against that point, but I will remind that Iomega (NYSE: IOM), one of Rule Breaker's former high-flyers, split its stock repeatedly right before losing three-quarters of its value. The stock has since recovered somewhat, yet it is still far below where the last split occurred. The bottom line is that we're thankful about the Amazon split because it means the stock has performed well in the recent past, but we certainly aren't looking upon the split as any sort of "buy signal."
Amazon also announced today that it was entering an agreement with SportsLine USA (Nasdaq: SPLN) in which the company will be the exclusive retailer to one of the largest providers of sports information on the Internet. In short, Amazon is continuing to create an awesome ring of partners, and dislodging Amazon from its prime parcels of Internet real estate is going to be no small task.
In other news that I think bears repeating, America Online (NYSE: AOL) announced last week that it has retained over 15 million members. It was little more than a month ago that we were discussing the company passing 14 million members, and the extra million folks using the service makes those of us using membership-based valuation techniques smile. No doubt the movie You've Got Mail helped the cause as did the Christmas holiday. Keep in mind that AOL also has another 2 million users over on the CompuServe side of the community, bringing total membership under AOL's wings to somewhere near 17 million members. Any guesses when AOL will announce 16 million members? Post 'em to the AOL message board!
AOL also announced today that its members had purchased over $1 billion in goods and services over the holiday season. Last year AOL barely surpassed $1 million a day in sales on its best day of the season, while this year the busiest day brought in over $36 million in revenue. Can you say "growth?" There's no doubt about it; online shopping is here to stay. If AOL was able to post such impressive e-tail figures, I sure can't wait to see the top line when Amazon, arguably the leader in electronic commerce, reports earnings. In any case, AOL was down almost $7 on the day to close at $149 after a scorching week last week.
Finally, I'd like to welcome to the portfolios team our newest staff member -- Harry Jones. Harry will be starting and running his very own portfolio here in the Hall of Portfolios, and we are all very excited to be working along side him. We're so excited about retaining Harry's services that we've even agreed to name the new portfolio in his name -- The Harry Jones Portfolio. Harry's investment ideas have outperformed somewhere near 90% of the mutual funds this past year, and we are very stoked about the skills Harry brings to The Fool. Welcome aboard, Harry!
Make sure to check out The Fool's newest portfolio by clicking here: http://www.fool.com/portfolios/HarryJones/HarryJones.htm
See you on the boards!
-- Paul Larson
Stock Change Bid ---------------- AMZN +6 3/16 124.50 AMGN - 3/8 107.00 AOL -2 1/2 146.50 T +1 3/4 79.63 ATHM +1 1/4 80.25 DJT + 3/16 4.38 DD +1 7/16 56.81 XON - 3/4 71.88 IP + 15/16 42.81 IOM + 3/8 8.00 LU - 3/16 114.00 SBUX -1 7/8 52.00 TDFX + 1/8 13.88 |
Day Month Year History Annualized
R-BREAKER +1.29% 3.36% 3.36% 937.44% 69.79%
S&P: +1.36% 1.26% 1.26% 171.55% 25.37%
NASDAQ: +1.96% 2.67% 2.67% 212.60% 29.42%
Rec'd # Security In At Now Change
8/5/94 1100 AmOnline 1.82 146.50 7959.64%
9/9/97 1320 Amazon.com 6.58 124.50 1792.32%
5/17/95 1960 Iomega Cor 1.28 8.00 524.80%
10/1/96 84 LucentTech 23.81 114.00 378.83%
8/12/96 130 AT&T 39.58 79.63 101.19%
4/30/97 -1170*Trump* 8.47 4.38 48.34%
12/4/98 450@Home Corp. 56.08 80.25 43.10%
12/16/98 290 Amgen 85.75 107.00 24.78%
2/20/98 200 Exxon 64.09 71.88 12.15%
2/20/98 215 DuPont 59.83 56.81 -5.05%
7/2/98 235 Starbucks 55.91 52.00 -6.99%
2/20/98 270 Int'l Pape 47.69 42.81 -10.23%
1/8/98 425 3Dfx 25.67 13.88 -45.94%
Rec'd # Security In At Value Change
9/9/97 1320 Amazon.com 8684.60 164340.00 $155655.40
8/5/94 1100 AmOnline 1999.47 161150.00 $159150.53
5/17/95 1960 Iomega Cor 2509.60 15680.00 $13170.40
12/4/98 450@Home Corp. 25236.13 36112.50 $10876.37
10/1/96 84 LucentTech 1999.88 9576.00 $7576.12
12/16/98 290 Amgen 24867.50 31030.00 $6162.50
8/12/96 130 AT&T 5145.11 10351.25 $5206.14
4/30/97 -1170*Trump* -9908.50 -5118.75 $4789.75
2/20/98 200 Exxon 12818.00 14375.00 $1557.00
2/20/98 215 DuPont 12864.25 12214.69 -$649.56
7/2/98 235 Starbucks 13138.63 12220.00 -$918.63
2/20/98 270 Int'l Pape 12876.75 11559.38 -$1317.38
1/8/98 425 3Dfx 10908.63 5896.88 -$5011.75
CASH $39332.55
TOTAL $518719.49
</THE RULE BREAKER PORTFOLIO>
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