Tonight we'll begin a special new series for those of you on AOL-- an AOL auditorium event on the first of Thirteen Steps to Investing Foolishly, hosted by David and Tom Gardner. Don't miss this exciting and informative discussion, which will begin at 9 PM and can be accessed from our AOL main screen. Today's Lunchtime News featured a look at Broderbund's flagging prospects.
You'll find all our Special Sections, FoolWires, and earnings reports, on either the Evening News or Stock Research screens. In tonight's Fool on the Hill, MF Templar focuses on Foolish Philosophy and wealth building. Enjoy!
US OFFICE PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: OFIS)") else Response.Write("(NASDAQ: OFIS)") end if %>
1-800-839-3011
An article in Barron's, and possibly heavenly intervention, caused DATAWORKS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DWRX)") else Response.Write("(NASDAQ: DWRX)") end if %>, a maker of enterprise resource planning software, to soar $4 1/2 to $24 3/4. The article covered the small-cap, Lutheran investors only, "Lutheran Brotherhood Opportunity Growth Fund" and its manager, Michael Binger. Binger believes that DataWorks can beat 1997 estimates by 70%-80% and has the potential to be a $40 stock.
SGS-THOMSON MICROELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: STM)") else Response.Write("(NYSE: STM)") end if %> announced today that it has, along with the Macrovision Corporation, developed one of the first integrated circuits that will protect digital video systems, such as the forthcoming DVD players, from copyright pirates who illegally copy films, music and other material. This news caused the stock to jump $3 7/8 to $43 3/4. The anti-copy system, called Macrovision 7.0, works by modifying the video signal so that it can be viewed on a TV set but not recorded on a VCR.
News that AMERCO INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AMOO)") else Response.Write("(NASDAQ: AMOO)") end if %>, the holding company for U-Haul International, would repurchase 4,041,924 of its common shares from Katabasis International Inc. caused Amerco's stock to fly up $3 to $31 3/4. The buyback stems from a $461.8 million settlement between Amerco and and the family of U-Haul founder, L.S. Shoen. Samuel Shoen, son of L.S., is the sole voting shareholder of Katabisis. An additional 6 million shares will be repurchased by October 1 to finalize the agreement.
QUICK TAKES: DIANA CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DNA)") else Response.Write("(NYSE: DNA)") end if %> popped up $3 3/4 to $45 1/2 on news that a fund manager who was previously short on the stock was buying 20,000 share for his own account... Word that DANKA BUSINESS SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DANKY)") else Response.Write("(NASDAQ: DANKY)") end if %> would be purchasing EASTMAN KODAK's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> office imaging business pumped Danka's stock up $6 5/8 to $36 1/2... The FDA will speed up the marketing review of falloscopes manufactured by CONCEPTUS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: CPTS)") else Response.Write("(NASDAQ: CPTS)") end if %>, which was up $2 to $10 3/4... BIG B <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BIGB)") else Response.Write("(NYSE: BIGB)") end if %> shot up $3 1/4 to $15 7/8 on news that it would be acquired by REVCO DS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RXR)") else Response.Write("(NYSE: RXR)") end if %> in a $15 per share cash bid... Montgomery Securities initiated coverage of INFERENCE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: INFR)") else Response.Write("(NASDAQ: INFR)") end if %> with a "buy" rating, pushing the stock up $2 to $17... PEGASYSTEMS INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PEGA)") else Response.Write("(NASDAQ: PEGA)") end if %>, a recent IPO (Initial Public Offering), was up $4 1/8 to $22 3/8 on no news that we could find.
DAKA INTL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: DKAI)") else Response.Write("(NASDAQ: DKAI)") end if %> reported Fuddruckin' awful earnings today, at least in the eyes of the market. Same-store sales at its Fuddruckers restaurants decreased for the quarter and the year and the company foresees EPS falling between $0.70 and $0.80 for fiscal 1997. The decrease in same-store sales accelerated, from down 8% to down 5%, in the last quarter while food service contract retention fell below the company's historical norm. Zack's indicated only "buys" and "recommended" analysts' ratings, so we expect a slew of downgrades to hit Daka following the news and the conference call.
WACKENHUT CORRECTIONS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHC)") else Response.Write("(NYSE: WHC)") end if %> was smacked down nearly 7.75%, or $1 3/4, to $21 1/4, possibly in connection with a blurb in Barron's this weekend, which mentioned a recent compilation of the General Accounting Office (GAO) studies. The GAO compilation reiterated inconclusiveness on private-prison corporations' cost-savings abilities compared to the public sector. Skepticism over the P/Es of similar corporations such as CORRECTIONS CORP. OF AMERICA <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CXC)") else Response.Write("(NYSE: CXC)") end if %>, WHC's own P/E of 75.9, and huge institutional ownership make the stock susceptible to such beatings from time to time.
TECHNITROL INC <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: TNL)") else Response.Write("(AMEX: TNL)") end if %> opened the day down on an order imbalance and continued to weaken through the day, finishing at $25, down from Friday's $30 1/4 close. While there was no news to explain the move, XIRCOM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: XIRC)") else Response.Write("(NASDAQ: XIRC)") end if %> recently completed the sale of its stake of wireless LAN company Netwave, of which Technitrol is the majority holder. In addition, Technitrol has recently installed a poison pill, so the following explanations for today's move seem plausible: 1) somebody's unhappy that Technitrol got saddled with a turkey of a investment, or 2) somebody's unhappy that they won't be able to buy the company at the price they wanted.
AST RESEARCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: ASTA)") else Response.Write("(NASDAQ: ASTA)") end if %> scrolled down $11/16 to $4 1/2 today on heavy volume, as the company announced the resignation of its CFO, only two weeks after the sudden resignation of its CEO... REX STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RSC)") else Response.Write("(NYSE: RSC)") end if %> got wrecked for $1 7/8 to $11 5/8 as their second quarter EPS dropped to $0.16 from $0.27 last year, while same store sales dropped 15.5%... TECNOL MEDICAL PRODUCTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: TCNL)") else Response.Write("(NASDAQ: TCNL)") end if %> fell $3 1/2 to $12 3/4 as the company announced a charge for a settlement involving allegations of securities improprieties -- the company also pre-announced Q3 EPS that will fall short of analysts' estimates... BRODERBUND <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BROD)") else Response.Write("(NASDAQ: BROD)") end if %> stayed weak throughout the day on revelations of a poor Q4 performance. Broderbund's shares finally settled in for the night at $23 1/4, down from yesterday's $27 5/8 close... Another software concern, this one LOGAL EDUCATIONAL SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: LOGLF)") else Response.Write("(NASDAQ: LOGLF)") end if %>, shed some more market capitalization. Logal dropped $2 to $5 1/8.
An Investment Opinion
by Randy Befumo (MF Templar)
FOOL ON THE HILL
Between Fools and Darkness
The great-souled investor is one that not only produces market-beating returns consistently, but one that creates wealth. A strange collection of men boasting names like Buffett, Munger, Templeton and Fisher has but one thing in common -- a philosophy about investing that is only a part of an overall vision of life. One of the best interviews ever done with Charles Munger appeared in a publication called Outstanding Investor Digest.
Munger, who represents half of Berkshire Hathaway's investing genius, talked for a good twenty pages about the education required to turn out a world-class investor. He emphasized a full grounding in the classics, a willingness to explore other fields of intellectual endeavor and a need to develop an approach to investing that was an outgrowth of the individual's approach to life. Munger openly scoffed at the notion that business school helped at all, and emphasized that an investor who was consumed with chasing short-term gains would not ultimately find very much happiness in life.
An oft-heard truism is that no traders have ever amassed substantial fortunes. People who hold this position will point to all of the wealthy men that attained their money through asute investment or by founding world-renowned companies, saying that the ranks of the super-rich are conspicuously short of traders. Quite frankly, this is poppycock. Whether George Soros or Jim Rogers, there are plenty of guys and gals who have made tons of money in options, commodities, futures, derivatives and other sundry securities.
The reason why you do not hear much about them is not because they are not there, but because there is not all that much to write about. What makes a Soros and Rogers interesting, where many of their peers are not, is because they actually do interesting things with that wealth -- wonder of wonders, they seem to have interesting personalities. They have devoted a good portion of their time and effort to developing a full philosophy on life and communicating that to the rest of the world. Although not likely to hook up with Berkshire Hathaway anytime soon, they are nonetheless attempting to be great-souled investors. As a result, their names are known while many of their peers remain in darkness.
Wealth-creation is the element of investing that is most often lost in our go-go, short-term performance-oriented world. Detractors of the Fool from day one have focused inaccurately on the Fool Portfolio as the core of Fooldom, nit-picking and armchair-quarterbacking every decision (or lack thereof), while the portfolio managed with the least amount of effort, has gone on to rack up market-beating returns. The idiotic perception that the Fool purchased its two best-performing stocks (America Online and Iomega) at the top aside, it alternately fills me with regret and bemusement when arrogant claims of superior money-managing ability are made on the message boards.
One of the more cranky detractors of the Fool has recently outlined his own money management approach on the "Short-term Trading Board" -- it's a complex medley of orders that must consume almost all of his day. Profit is his goal, and he has dedicated his life on that altar. Frequent trading, stop-loss orders, contracts, hedging and options are for this investor the most efficient way to amass money.
Fooldom, for better or worse, has a different take on what investing should be about. A philosophical stance that emphasizes wealth-creation and the rest of your life over a pure, frenzied dedication to making money strikes many of the Wise as naive, silly and unprofessional. But in the end, it is something between you and darkness. There is a certain dignity, integrity and honor accorded to becoming an owner of a company and a long-term participant in its journey to create wealth for all who work for it and work with it that is lacking in a world of portfolio churning and frequent trading. Anyone who has read word one about Warren Buffett knows that his personality and his approach to good investing has him establishing long-term relationships with companies.
Thinking like an owner is so much his philosophy that he becomes an owner even when he does not have to be. It is a pointless exercise to recount the reams of paper from various business columns dedicated to asking whether or not Buffett's latest investment is the one where he has screwed up because he got sentimental. That he can relate to a company as an owner and not as a speculator is simply a matter of applying to the specific field of investing a general philosophy about how one should live.
It is not that other ways of investing are bad ipso facto -- because they are not. Despite many citations to the contrary, no one has ever categorically stated that using things like options or technical analysis cannot make you more money. In fact, it has often been stated that they can -- they simply do not fit in our philosophical framework. In the end, becoming an owner in the best companies in America and having the rest of your life free to live seems a better choice that relentlessly dedicating yourself to the pursuit of profit.
Certainly no one in Fooldom will ever dispute that you might be able to make more money if you dedicated your entire life to managing your portfolio. The fact remains that comparatively high rates of return are no more an indication of true virtue than comparatively high test scores, high IQs or high speeds set on your spedometer while driving. We don't like approaches like technical analysis because quite simply they are not who we are -- and consequently we think they are bad ideas. Call it closeminded and silly, but they rank up there with dozens of other bad ideas that while they might be more efficient, might make you more powerful or potentially earn you a greater status in life, in the end seem to be unfulfilling.
There is more to life than running a market-beating portfolio. This may come as a surprise to some of the more dedicated market afficionados out there, but in the end the ability to make money in and of itself is not a redeeming quality. The Motley Fool was founded on the premise that individuals banded together and sharing information could enable one another to create wealth -- a wealth that in the end was as much spiritual or intellectual as it was material.
Investors who enter the Fool should get more out of the experience than stock tips. Quality writing, good humor, and cameraderie are but a few of the benefits that being a Fool should convey. Certainly, creating wealth that enables you to stop selling your time for money, to spend more of your time with your loved ones and to retire in security are all important. However, these are goals that can be met with a certain measure of dignity and not by resorting to the investment equivalent of hustling.
In the final analysis, having only 100% or 200% annualized returns between you and darkness will be a small comfort. The time you have spent away from your portfolio creating money and instead invested into your life creating true wealth is going to be the only comfort you draw upon when darkness is nigh. The Fool is about creating wealth by becoming the owner in quality businesses and using the rest of your life to live.
If yours is another path, there are places for you as well -- on AOL - Bizinsider, The Shark Attack or Decision Point Timing & Charts. These are the places to go if you find the Foolish notion of becoming an owner in a company rather than a speculator quaint. These are the places where you will find a home if you want to lambast "the Fools" for getting emotionally attached to their investments or being close-minded about "other approachs." These are the places where you may find your philosophy of life applied to investing if you do not find it reflected very well here. In the end, the Fool simply stands for wealth creation, and an end to selling one's time for any amount of money and the freedom to be fully human. These are things that bring comfort when you are surrounded by darkness -- all the other noise others stress affords no protection.