<THE RULE BREAKER PORTFOLIO>
Rule Breakers Hit the Movies
by Rick Aristotle Munarriz ([email protected])
MIAMI, FL (July 6, 1999) -- With patriotism swelling and the last of the clearance bin fireworks exploding overhead, we kick off this abridged trading week not with a bang but a whimper. After soaring earlier in the day, the market buckled late leaving the major market indices just ticks below where they started. Both the S&P 500 and Nasdaq fell by a scant 0.2%. Meanwhile, the Rule Breaker bucked the trend and shot ahead 2.4% on the heels of a 'Net-hungry market.
Then again, maybe after the long weekend you're not ready for numbers. I trust you were able to take some time to celebrate freedom. I took the time to become the last person in the country to take in the Austin Powers sequel.
I was amused as Rule Breaker holding Starbucks (Nasdaq: SBUX) set up shop at Dr. Evil's empire. I don't even want to consider the potty possibilities of dubbing the fictional Number Two a Fool. Still, it's entertaining to think of Starbucks java fueling Evil. Last week investors probably felt the same way. Shares of the Seattle-based beancounters did their best impression of Evil's Mini Me -- essentially the same company as the original but at two-thirds its market size. While our own Dale Wettlaufer covered this perfectly I wanted to look back and --
Dr. Evil: Zip It!
Alright so the earnings shortfall is old news still --
Dr. Evil: Zip It! Zip It! Zip It!
I was going to talk about the lifestyle portal and how --
Dr. Evil: Zip It D-Doo-Dah! Zip It D-Day! Zip It!
Fine. Speaking of Zip, Iomega (NYSE: IOM) traded lower today after the New York Times bearishly highlighted how the only two analysts still sticking to "buy" ratings on the company were those who have served as past underwriters. Biased investment bankers? News? Then again, the same Times also had a glowing review of America Online (NYSE: AOL) and how Steve Case expects subscriber growth to double even from these levels. Oh no. The obvious bad cliche is coming up. It was the best of Times, it was the worst of Times. It was --
Dr. Evil: A Zip. A Zop. A Zip-It to the Zip-It.
Right. Let's move on shall we? No! Let's push the corny factor to eleven tonight. Maybe I'm reading too much into this season of celluloid, but as a Foolish casting director I think I could have landed some of our Rule Breaker buddies into some of the summer box office flicks. You don't believe me?
Big Daddy starring America Online (NYSE: AOL). Okay, so this role is doled out titularly rather than based on subject matter. Still, while the world's most popular online service has little resemblance to this Adam Sandler dud, no doubt about it, this is the Internet's big daddy. If you want proof, you need to look no further than the news out today that drkoop.com (Nasdaq: KOOP) will pay the online behemoth $89 million over four years -- with stock warrants to boot -- for the right to provide content to America Online. E-payola? You decide. The bottom line is, who would bet against AOL right now? Next trailer please.
Tarzan starring Amazon.com (Nasdaq: AMZN). Again, I could go titular but this one works on many other levels. Like the loin-clothed animated hero, this King of E-Commerce has traveled vine to vine, product category to product category, to become so much more than just the leading online bookseller. It's true, I might not be the most bullish of Fools on the company, but I'm glad to have been wrong every step of the way. Today the company is even taking on free music haven MP3.com, offering digital downloads of exclusive cuts from the likes of David Byrne and Sheryl Crow. You might be asking, why would a music label, or a performer for that matter, give away their music? When Amazon.com unveiled the free area last month, four of the top five best selling music CD's that day were those of the acts giving away select cuts.
Even more koopesque was Amazon.com picking up a 40% stake in drugstore.com on the cheap back in February. Now the ginseng and band-aid cyberpharmacist is gearing up to go public. At the high end of the filing price range it values Amazon's piece at close to $200 million. If drugstore.com were to vault past $60 at the open -- and stranger things have happened -- Amazon would be holding onto a billion dollar stake in the upstart. E-payola? It works yet again!
Wild Wild West starring Excite@Home (Nasdaq: ATHM). The fireworks started last month in the Western state of Oregon -- challenging Excite@Home's right to exclusive fiber optic access. Others like the San Francisco Public Utilities Commission have continued to pave the way for open access. Now, it's a gold rush. Don't worry, few think this $20 billion company will ride off into the sunset anytime soon.
Limbo co-starring the Foolish Four. Why limbo? Stick around, we'll get around to that answer once a year.
The Mummy starring Amgen (Nasdaq: AMGN). Okay, so the never-ending bandages bring back medical images. Still, if it were ever possible to bring entombed Egyptians back to life, don't you think biotech giant Amgen would have some role to play in the matter?
The Thirteenth Floor with a brief, nay, short, cameo by Trump Hotels & Casinos (NYSE: DJT). I'm pretty sure Donald's high-rise lodgings skip from floor 12 to 14, but that doesn't mean bad luck galore has befallen this company. Some call it bad karma. We call it insurmountable debt. Same difference. Glad the port is short this horror thriller. It's scary stuff.
Looking ahead to the rest of the summer movies, I'm sure I can find minor roles for Iomega in Lake Placid, Inspector Gadget, or Mystery Men. And of course, the Wise will always have a walk-on in Eyes Wide Shut.
Until next time, I'll see you at the movies.
- Rick Aristotle Munarriz ([email protected])
07/06/99
Close
Stock Change Bid ------------------ AMGN -1 15/16 59.00 AMZN +2 15/16 127.00 AOL +6 1/8 121.38 ATHM +2 56.94 CAT -2 5/8 59.31 CHV +2 1/16 98.31 DD - 1/8 70.75 DJT + 11/48 5.17 EBAY -2 7/8 140.75 GT - 3/4 57.25 IOM - 3/16 4.50 SBUX -1 26.56 TDFX - 1/4 15.13 |
Day Month Year History Annualized
R-BREAKER +2.36% 2.92% 32.40% 1228.91% 69.23%
S&P: -0.22% 1.11% 13.50% 217.08% 26.45%
NASDAQ: -0.15% 1.89% 24.82% 280.03% 31.19%
Rec'd # Security In At Now Change
8/5/94 2200 AmOnline 0.91 121.38 13254.79%
9/9/97 1320 Amazon.com 6.58 127.00 1830.31%
5/17/95 1960 Iomega Cor 1.28 4.50 251.45%
12/4/98 900 Excite@Hom 28.04 56.94 103.06%
2/26/99 300 eBay 100.53 140.75 40.01%
4/30/97 -1170*Trump* 8.47 5.17 38.99%
12/16/98 580 Amgen 42.88 59.00 37.61%
2/23/99 300 Caterpilla 46.96 59.31 26.29%
2/23/99 180 Chevron 79.17 98.31 24.18%
2/20/98 260 DuPont 58.84 70.75 20.23%
2/23/99 290 Goodyear T 48.72 57.25 17.52%
7/2/98 470 Starbucks 27.95 26.56 -4.98%
1/8/98 425 3Dfx 25.67 15.13 -41.07%
Rec'd # Security In At Value Change
8/5/94 2200 AmOnline 1999.47 267025.00 $265025.53
9/9/97 1320 Amazon.com 8684.60 167640.00 $158955.40
12/4/98 900 Excite@Hom 25236.13 51243.75 $26007.62
2/26/99 300 eBay 30158.00 42225.00 $12067.00
12/16/98 580 Amgen 24867.50 34220.00 $9352.50
5/17/95 1960 Iomega Cor 2509.60 8820.00 $6310.40
4/30/97 -1170*Trump* -9908.50 -6045.00 $3863.50
2/23/99 300 Caterpilla 14089.25 17793.75 $3704.50
2/23/99 180 Chevron 14250.50 17696.25 $3445.75
2/20/98 260 DuPont 15299.43 18395.00 $3095.57
2/23/99 290 Goodyear T 14127.38 16602.50 $2475.13
7/2/98 470 Starbucks 13138.63 12484.38 -$654.25
1/8/98 425 3Dfx 10908.63 6428.13 -$4480.50
CASH $9924.87
TOTAL $664453.62
Note: The Rule Breaker Portfolio was launched on August 5, 1994, with $50,000. Additional cash is never added, all transactions are shared and explained publicly before being made, and returns are compared daily to the S&P 500 (including dividends in the yearly, historic and annualized returns). For a history of all transactions, please click here.
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