HEROES
FLORIDA PANTHERS HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PUCK)") else Response.Write("(Nasdaq: PUCK)") end if %> gained $1 7/8 to $28 1/4 after the company made another acquisition which belies its National Hockey League name. In a reprise of its Pier 66 and Bahia Mar Beach resort acquisition announced last December, the company today said it has signed an agreement to acquire the Boca Raton Resort & Club, situated on 356 acres on the Intracoastal Waterway in Palm Beach County, Florida. The resort has 963 guestrooms and is in the process of expanding capacity with $40 million in capital expenditures. The deal calls for the issuance of 4.9 million Florida Panthers shares and nearly one million warrants, Chairman Wayne Huizenga's favorite form of acquisition currency.
Small-cap auto parts company and raceway owner THE COLONEL'S INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COLO)") else Response.Write("(Nasdaq: COLO)") end if %> was one of the big winners on the Nasdaq today, gaining $1 1/2 to $9 1/2 after it announced that it has signed a deal to acquire the Patsy Lou Williamson Group of Auto Dealerships in Flint, Michigan. The dealership includes the company's recently opened used-car "Mega-lot" and has been the Buick sales volume leader for the last three years, which isn't surprising since Flint is such a strong GENERAL MOTORS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> town. The deal is valued at $60 million, contingent upon valuation of debt the dealerships hold.
Florida-based SYKES ENTERPRISES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYKE)") else Response.Write("(Nasdaq: SYKE)") end if %> gained $5 3/4 to $30 3/4 after the teleservices company (which conducted a well-received IPO almost a year ago at $18 per share) announced that it is virtually doubling its capacity in Bismarck, North Dakota with a new facility to be added to its current call center. The new facility will support PC manufacturers and software companies. In addition, Sykes will acquire a Dutch company, Traffic NV, which specializes in the banking services market, a market the company has identified as an attractive avenue for growth. Investors welcomed both announcements, as some had become skeptical of the prospects for the entire teleservices sector. Sykes' management has been too busy to worry much about the skeptics, though -- they've been making acquisitions of software companies with the IPO and secondary offering cash that's been sitting in the bank.
QUICK TAKES: Systems integrator and consultancy TECHNOLOGY SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TSCC)") else Response.Write("(Nasdaq: TSCC)") end if %> gained another $3 3/4 to $27 after yesterday's earnings report... Consumer video conferencing company C-PHONE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CFON)") else Response.Write("(Nasdaq: CFON)") end if %> jumped $4 5/8 to $11 3/8 after the "Nobody Beats the Wiz" chain of consumer electronics stores said it will sell the company's wares... GT BICYCLES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GTBX)") else Response.Write("(Nasdaq: GTBX)") end if %> regained $1 to $9 after yesterday's earnings warning... Voice response systems company PERIPHONICS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PERI)") else Response.Write("(Nasdaq: PERI)") end if %> rose $2 15/32 to $17 23/32 on reporting Q3 earnings per share (EPS) of $0.22, beating estimates of $0.21, on revenues of $29.6 million... HDSL networking equipment vendor PAIRGAIN TECHNOLOGIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PAIR)") else Response.Write("(Nasdaq: PAIR)") end if %> surged $4 to $30 3/8 after Lehman Brothers raised its rating on the company following the endorsement of xDSL technologies from MCI COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %>... HALIFAX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: HX)") else Response.Write("(AMEX: HX)") end if %> added $1 1/4 to $11 7/8 after the technology services company was awarded an Army contract worth up to $29.5 million.
GOATS
The second day of spring brought a bumper crop of earnings warnings today as the quarter draws to a close. Cases crowding the emergency room included wireless telecom software company GEOWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GWRX)") else Response.Write("(Nasdaq: GWRX)") end if %>, which fell $4 3/4 to $7 1/4 after forecasting lower-than-expected revenue growth; RIGHT MANAGEMENT CONSULTANTS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RMCI)") else Response.Write("(Nasdaq: RMCI)") end if %>, downsized $6 1/2 to $9 1/2 after the employee outplacement company said it will miss EPS estimates of $0.39 and take a charge for restructuring; and networking equipment company SYNC RESEARCH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SYNX)") else Response.Write("(Nasdaq: SYNX)") end if %>, falling $2 1/4 to $4 after saying it will take a loss greater than this quarter's revenues of $5.6 million.
Moving to the less-seriously wounded list, OUTBACK STEAKHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OSSI)") else Response.Write("(Nasdaq: OSSI)") end if %> was hit for a $4 5/8 loss to $19 after announcing that its core restaurants were showing weak results for the quarter. LONE STAR STEAKHOUSE/SALOON <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STAR)") else Response.Write("(Nasdaq: STAR)") end if %> fell $2 3/8 to $25 5/8; LOGAN'S ROADHOUSE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RDHS)") else Response.Write("(Nasdaq: RDHS)") end if %> lost $1 7/8 to $20 1/2; and APPLEBEE'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: APPB)") else Response.Write("(Nasdaq: APPB)") end if %> fell $1 7/8 to $25 1/4. In an unrelated earnings warning, BEN & JERRY'S <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BJICA)") else Response.Write("(Nasdaq: BJICA)") end if %> melted $1 5/8 to $11 5/8 on warning of a first quarter loss. The company said that it "...anticipates a return to profitability for the remainder of 1997."
Gold exploration company BRE-X MINERALS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BXMNF)") else Response.Write("(Nasdaq: BXMNF)") end if %> lost $1 5/8 to $11 after the company's exploration manager in Indonesia apparently committed suicide by jumping out of a helicopter after learning he had hepatitis B. Bre-X employees on-site said there was no foul play in the geologist's death, and that it had nothing to do with the due diligence process now going on with prospective production partner FREEPORT MCMORAN GOLD & COPPER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FXC)") else Response.Write("(NYSE: FXC)") end if %>. Freeport has not commented on its due diligence involving Bre-X and its Busang gold deposit.
QUICK CUTS: EASTMAN KODAK <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> fell $9 1/4 to $79 after it announced flat January and February sales growth due to dollar strength and price cuts... Financial guarantee insurance company CAPMAC HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KAP)") else Response.Write("(NYSE: KAP)") end if %> lost $3 to $26 1/2 after announcing expectations for Q1 EPS of $0.30 to $0.33, below the estimate of $0.56, due to lower fee income... PIA MERCHANDISING SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PIAM)") else Response.Write("(Nasdaq: PIAM)") end if %> fell $3 to $5 5/8 after pre-announcing a loss of $0.15 to $0.20 for its first quarter... Needle-free syringe company MEDI-JECT CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MEDJ)") else Response.Write("(Nasdaq: MEDJ)") end if %> fell $1 1/4 to $4 despite reinitiation of coverage from Rodman & Renshaw, which put a price target of $13 on the shares... UNION ACCEPTANCE CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UACA)") else Response.Write("(Nasdaq: UACA)") end if %> fell $4 3/8 to $14 3/8 after the auto lending company said its loan delinquencies have ticked up and that it will tighten up its credit standards... Semiconductor and circuit board design software company ORCAD INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OCAD)") else Response.Write("(Nasdaq: OCAD)") end if %> lost $1 1/4 to $7 3/4 after Needham & Co. lowered its rating to "hold" from "buy"... FIRST MERCHANTS ACCEPTANCE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FMAC)") else Response.Write("(Nasdaq: FMAC)") end if %> slid $1 1/2 to $9 3/8 after the used car financing company said yesterday that it expects to report break-even Q1 results... Hospital and healthcare facility operator COLUMBIA/HCA HEALTHCARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COL)") else Response.Write("(NYSE: COL)") end if %> lost $2 3/4 to $38 1/2 after FBI agents searched the company's facilities for a second day, possibly looking for government billing records... Cigarette companies LOEWS CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LTR)") else Response.Write("(NYSE: LTR)") end if %> and PHILIP MORRIS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> both lost more ground today after BROOKE GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGL)") else Response.Write("(NYSE: BGL)") end if %> yesterday said it will turn over documents damaging to the rest of the industry and pay damages to states and the federal governments... Generic drug maker IVAX CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: IVX)") else Response.Write("(AMEX: IVX)") end if %> slumped $1 3/4 to $10 5/8 after merger talks were broken off with drug distributor BERGEN BRUNSWIG CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BBC)") else Response.Write("(NYSE: BBC)") end if %>, which said it will sue Ivax.
FOOL ON THE HILL
An Investment Opinion by MF
Templar
The Gnome of Zurich
This morning you woke up with a strange tingling sensation. A strange, mystical electricity flowed through your body, dancing from the balls of your feet to the tip of your nose. Shaking off the sensation of weightlessness you felt when you got out of bed, you trudged downstairs into the kitchen to fix yourself breakfast. Passing by the front door of the house, you chanced upon a single envelope that had been slipped through the mail slot. Puzzled as to why the mail had come so early today, you picked up the envelope and examined it closely. A crisp, lily-white affair, the envelope seemed fresher than any other envelope that had ever been delivered to you. Tearing it open, inside you discovered a statement from your bank with a Post It note attached.
"To Whom It May Concern:
I have picked your name at random out of the phone book to inherit my vast, multi-billion dollar fortune. Enclosed is your bank statement, updated for the substantial sum of money I deposited there from Zurich, Switzerland, this morning. Have fun.
Sincerely,
A Gnome of Zurich"
Hurriedly unfolding the bank statement, your eyes focused on the account balance -- the substantial account balance. Initially, your mind rejected the specific number, forcing you to count zeros in order to figure out exactly how much money was now there. Losing count at twelve zeroes, you counted again.
It was quite a lot of money.
The immediate problem of what exactly to do with it occurred to you. But, of course, you knew what you would do with your billions. You would find quality businesses with the ability to offer better returns on the money than would bonds, and then buy these companies outright. You would look for businesses that seemed cheap relative to their intrinsic value and hold them until you believed the actual dynamic of the business had changed enough that you could no longer anticipate above average returns -- and then use the proceeds to purchase businesses you believed could offer a better deal. Taking out the Almanac of World Businesses you keep in your study, you read and highlighted the corporations you wanted to examine with the possibility of buying them outright: American Express, Coca-Cola, Disney, General Electric, Intel, Microsoft...
Like we said, it was quite a lot of money.
~~~~~~~~
The most difficult thing for many investors to understand is that very often
the framework from which they approach the entire problem of investing is
skewed by the short-term focus in which the media delights. If instead of
thinking in terms of the amount of your meager portfolio, you were to imagine
investing hoards of capital so vast that purchasing names like Coca-Cola
outright would be possible, it could conceivably change the way you look
at investing.
Imagine for a moment that you are deploying billions in cash to buy businesses outright. Every dollar of earnings they generate would go into your coffers, after your substantial personal income tax of course. What characteristics would you look for when you were purchasing a business? Certainly the value that other people placed on the business at any given moment would become irrelevant, as your task would be to buy something generating a lot of cash for a reasonable price. Certain fits of popularity would not sway your purchase decisions; you would remain focused on a single measure: "What kind of return can I expect on the money I invest?"
If you were out prowling the world to buy businesses, would you worry about the current valuations on all of the other businesses in the world? Would the fact that every other business in the world was overvalued stop you from buying the one business you could find that was undervalued? Of course not. Again, your entire focus would be on the return that the money you invest could generate. Who would care if every other single business in the world were overvalued by a factor of 1000? If you could find one business that would spew out twenty-five cents a year for every dollar you invested, of course you would snap it up in a heartbeat and dance with joy at your success.
For some reason, consumers who use this same value discipline every day in retail stores completely forget about it when they approach the stock market. If you were shopping in some over-priced Mecca-like Tiffany's and saw some beautiful piece of jewelry selling for a mere fraction of what it was worth, would you suddenly glance around the jewelry counter to assess whether all of the jewelry was overvalued? That is what investors do every day when they talk about whether or not the market is overvalued. "Wow, look at how high the Dow is. I should not buy any stocks?" Do these same people leave a bargain on the table at Tiffany's because the prices on everything else are too high?
So, imagine for a moment that you are not investing the small amount of money that you are. Instead, picture yourself investing billions, scouring the world for the one business that is underpriced relative to the substantial returns that it can give its owner. Whether you have billions to invest or merely ten bucks, the core discipline remains the same: Look for businesses that sell for low valuations relative to the kind of returns they can generate.
If it helps you avoid the pitfall of worrying about what is happening to every other business in the country or whatever sort of nonsense those focused on what will happen next week are promoting, imagine buying the entire company as if the scenario above had happened to you. Not only will this save you the grief of short-term changes in your holdings, it will raise the bar to buying a company incredibly high as well. When you are purchasing a business and not making a trade, the same fortitude you show in buying a house or a car might eke into buying a stock, substantially increasing your returns while decreasing your level of anxiety.
CONFERENCE CALLS
NIKE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NKE)") else Response.Write("(NYSE: NKE)") end if %>
(800) 633-8284 (reservation # 2559993) -- replay
BRODERBUND SOFTWARE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BROD)") else Response.Write("(Nasdaq: BROD)") end if %>
(800) 642-1687 (reservation # 301115) -- replay avail through 3/23
3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %>
available after 7:00 PM EST through 7:00 PM EST on 3/21
(800) 633-8284 (reservation # 2468610) -- replay
SUNGLASS HUT INT'L <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RAYS)") else Response.Write("(Nasdaq: RAYS)") end if %>
(800) 475-6701 (access code: 334838) -- replay through midnight 3/27
UNISOURCE WORLDWIDE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UWW)") else Response.Write("(NYSE: UWW)") end if %>
(904) 549-9134 -- available until 3/22
ROSS STORES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ROST)") else Response.Write("(Nasdaq: ROST)") end if %>
(402) 222-9905 -- replay available through 3/25
COLUMBIA LABORATORIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: COB)") else Response.Write("(NYSE: COB)") end if %>
(update of the company's operations)
replay available through 5:00 PM EST on 3/24
(800) 633-8284 (reservation # 2606604)
ANOTHER FOOLISH THING
Arizona Stock Analysis
Why Arizona? Because, like Delaware, many companies are chartered there, taking advantage of the beneficial business environment. Small, under-followed emerging Arizona growth companies were a terrific place to invest over the past few years and MF Yon, the Editor of "Arizona Stock Analysis," believes this will continue in the future. His strategy of identifying winners before the Street catches on has been most profitable, with his average selection up an annualized 236% through February. Obviously, there can be no assurance that future selections will enjoy the same returns, but Yon believes there is considerable merit to picking up the winners before the Street's analysts pile on. Yon began sharing his views online in the fall of 1995 in the "Folly in Arizona" folder (part of the 50 states boards) and his analysis has led to the publication of the Arizona Stock Analysis, a monthly newsletter available by e-mail or fax. If this piques your interest, check it out at keyword: FoolMart or here on our website, or e-mail [email protected].
MORE FOOLISHNESS
Better than a Secret Handshake
It's finally here! A way for you to slyly convey to the cognoscenti that you, too, are a member of Club Fool. For lapels, hats, scarves, ties, and coats, it's our new sterling silver Jester Pin! Specially-crafted for the Fool, it can perk up almost any Wise outfit, from navy blue suit lapels to a well-worn sweater. The Jester Pin measures approximately 1" x 1" and is available at keyword: FoolMart or on our website at http://www.fool.com. It comes in two fun styles -- sterling silver or a combination of sterling silver and copper. It makes a terrific gift for that special Fool in your life!
Randy Befumo (MF Templar),
a Fool
Fool On the Hill
Dale Wettlaufer (MF Raleigh), another
Fool
Heroes & Goats
Brian Bauer (MF Hoops), one more Fool
Editing
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