Fool Portfolio Report
Wednesday, June 12, 1996
Wednesday, June 12, 1996
(FOOL GLOBAL
WIRE)
by David
Gardner
ALEXANDRIA, VA, June 12, 1996 -- The Fool Portfolio drifted lower Wednesday, following more share-dumping of America Online. AMER dropped $2 7/8, pretty much dashing our hopes of keeping up with a rising NASDAQ (up 0.38%), and a cheaper S&P 500 (off 0.29%). It was a day replete with news announcements from our companies, almost all of them good. The lesson -- and it's always a great one for Fools to be reminded of -- is that stocks don't always move in the obvious direction that news reports should send them. The market can be very complex, sometimes... a primary reason why we're not short-term investors. If you play for the short term, you weave incredible randomness into your investment returns.
In fact, it's not terribly unlike betting on the Cleveland Indians tomorrow. Which is a better bet... that the Indians will win TOMORROW (Yankees, at Yankee Stadium, for those keeping track), or that they'll win more games than they lose through the end of the season? Well, as the Tribe is currently the best team in baseball (at 41-21, that's a winning percentage of .661), the likelihood is that they'll win tomorrow's game AND that they'll win more than they lose the rest of the season. But which is MORE likely? If you had a hundred bucks, which bet would you rather take?
The answer is the same for the Indians as it is for the stock market: you'd bet for the long term. It's easier, smarter, takes less time, less luck, etc. I mean, America Online can announce a wide-ranging partnership with Macromedia for online tools, and it can sound great, but the stock sells off on that day (just like today, in fact). Over the long term, of course, the companies benefit and so should their stock prices. That's why we write our stuff, day in and day out, for LONG-TERM investors.
So yeah, anyway, America Online did announce a strategic alliance to work with Macromedia in bringing Shockwave to AOL later this year, and a bunch of smaller other things (like co-packaged products, etc.). Shockwave, you may recall, is the plug-in that debuted last December 5th, enabling content developers to bring dynamism (animation, graphics, sound, etc.) to the normally static Web. "Shocked" sites, which are currently available to Web surfers using Netscape 2.0, will due to this new alliance come right to AOL users. That means, from our point of view, more engaging Foolishness than ever before.
AOL is also holding its semiannual partners conference today, which a number of financial analysts attended. Our own MF Templar was in their midst, and while I haven't gotten to talk to Randy yet about what he saw, perhaps analysts were underwhelmed by the discussion. I have no idea. Anyway, AMER stock dropped just short of 3 bucks today. It's been smoking us, recently.
The Gap dropped $3/8. Only thing to note here is that Director William A. Hasler sold 8,500 shares on May 20th at $33 1/8. That leaves him with 2,500 left.
Hey, come on, Bill! What's up? Losin' the faith? What are we doing holding onto this company's stock when you're bailin' on us? Geez. Oh... oops. It's higher than that, now.
This occasions mention of our standard point about insider selling, of course. Namely, it's pretty meaningless, especially isolated "small change" trades like Mr. Hasler's above. Don't get us wrong: Mr. Hasler sold a position 27.4 times in excess of our own, but in the grander scheme (288 million shares outstanding) that don't count fer much. Remember, my fellow Fools, that insider stock sales outpace insider buys by a ratio of 10 to 1... the only way any of these people can buy their third house in Pyrenees is to sell. Unless we see hot and heavy selling from a whole pack of insiders, we just use this stuff for fodder for second-rate jokes.
OK, next up is General Electric. But let's back up a sec. You know about Fidelity Magellan, right? Biggest darned mutual fund in the U.S. of A. Latest net assets over there were upward of $56 billion, owned by some one million shareholders. Exit Jeff Vinik, the troubled former manager, and call in a man named Bob Stansky, who had been running The Fidelity Growth Company fund to superior returns for a decade. And lookie there: Stansky's FORMER fund's top five holdings included GENERAL ELECTRIC (caps mine), Fannie Mae, Philip Morris, Oracle, and Citicorp.
Now, what might a Fool suppose Mr. Stansky's new fund, Magellan, might have been buying lately, eh? Hmmmmmmm. Well, here's a long shot: General Electric has risen better than 10% over the past several weeks, and that continued today as GE rose $5/8. Donald Dion, editor of The Fidelity Independent Adviser newsletter (not affiliated with Fidelity), was predicting higher prices for this stock a few weeks ago due to the "Stansky" factor, and he's been dead-on right. Interesting to note.
Iomega was down a bit in the morning until the company announced another OEM agreement at 1:30 this afternoon. The stock shot up a quick three points, before selling off at the close... down $1/8 for the day. NEC announced plans to include internal models of the Zip drive in "selected future models" of its NEC Ready (consumer) and PowerMate Pro (commercial) PCs starting in the third quarter. As the Zip drive continues its quest to replace the 3.5" floppy, we note the words of NEC's VP of desktop systems, Murali Dharan, who had the following to say in today's release:
"Because we consider Iomega to be the emerging standard in removable storage, it was easy for us to work together with Iomega to meet the future storage needs of our consumer and corporate customers. Our customers, whether in the office or at home, are demanding more storage. Zip is simply the best solution."
You heard it from NEC today... you heard it in Fooldom more than a year ago. (But they're going to make a few bucks more off the Zip than we have with our stock!)
(I dunno: sometimes don't you think we should maybe just close down this whole Fool shop and pour the company's resources into a new PC line?)
Finally, a San Francisco paper today highlighted a new initiative by Foolish-owned Chevron. In an article entitled "Big Oil Meets Big Mac," we learn that Chevron has had regional success with 22 "McChevrons," a joint initiative with McDonald's to create combination service station/fast-food diners. At the new McChevron coming to Oakland, CA, one reads, "Customers should be able to charge Big Macs and Quarter Pounders on their Chevron credit cards."
In the next five to ten years, a consultant opines, most fast food should be "attached to a gas pump."
Ah, our changing world.
Chevron rose $1/4 today, on its journey back to $60. Have a good McDay!
As a postscript, we'll be appearing on CBS This Morning just past 8 AM ET tomorrow. Should be an amusing five-minuter with Harry Smith. Schedules on these shows are always subject to change, so don't sue us if you set the VCR and end up with even MORE shots of the Oscar Mayer Wiener kid. (Fool regulars will remember that this little fella was the one who pre-empted us on a Good Morning America appearance in January; he's the bane of our existence.)
Finally, this week's Time Magazine article by Jonathan Abbey (page 47) on Fooldom is indeed one to savor. And if by now you -- like me -- are sick of looking at us, just show it to a friend!
Fool on!
---David Gardner, June 12, 1996
Transmitted: 6/12/96
Day Month Year HistoryFOOL -1.28% -6.08% 89.64% 254.11%
S&P 500 -0.29% -0.01% 8.62% 45.95%
NASDAQ +0.38% -0.65% 17.42% 71.54%
*Scroll down or expand screen for full portfolio accounting
AMER -2 7/8 ...CHV + 1/4 ...GE + 5/8 ...GPS - 3/8 ... IOMG - 1/8 ...KLAC +1 1/4 ...MDRX - 3/4 ...S - 1/4 ...
Rec'd # Security In At Now Change
5/17/95 2010 Iomega Cor 2.52 41.63 1552.46%
8/5/94 680 AmOnline 7.27 46.88 544.52%
4/20/95 310 The Gap 16.28 33.88 108.14%
8/5/94 165 Sears 28.93 51.38 77.61%
8/11/95 95 GenElec 57.91 85.25 47.20%
8/11/95 110 Chevron 49.00 59.63 21.68%
1/29/96 250 Medicis Ph 27.86 32.25 15.76%
8/24/95 130 KLA Instrm 44.71 26.00 -41.85%
Rec'd # Security Cost Value Change
5/17/95 2010 Iomega Cor 5063.13 83666.25 $78603.12
8/5/94 680 AmOnline 4945.56 31875.00 $26929.44
4/20/95 310 The Gap 5045.25 10501.25 $5456.00
8/5/94 165 Sears 4772.65 8476.88 $3704.23
8/11/95 95 GenElec 5501.87 8098.75 $2596.88
8/11/95 110 Chevron 5389.99 6558.75 $1168.76
1/29/96 250 Medicis Ph 6964.99 8062.50 $1097.51
8/24/95 130 KLA Instrm 5812.49 3380.00 -$2432.49
CASH $16434.53
TOTAL $177053.91