<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (May 11, 1998) -- A mediocre day after a great start for the Dow Jones Industrial Average today, but for one component in particular, it was terrific. In fact, DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> alone was responsible for a large chunk of the overall Dow gain.

Why the big jump (some 8%) for DuPont? The term, I believe, is "maximizing shareholder value," and the reality is that DuPont wants to get out of the lower-margin, high-capital-investment energy business (its Conoco division) and focus its attention on the less-capital-intensive, higher-growth-and-margin life sciences business.

Consequently, DuPont announced today that it's starting by placing a 20% initial public offering of Conoco by the end of 1998 and then will continue to divest the remainder of Conoco in the form of additional stock offerings or a spin-off to shareholders.

Much of DuPont's debt will go with Conoco, and the cash from the initial public offering is reported to be earmarked for a life-sciences acquisition -- a possible deal with Monsanto <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MTC)") else Response.Write("(NYSE: MTC)") end if %>? But even for Conoco, the split will give it more flexibility to pursue partnerships or mergers within its own industry instead of being linked to DuPont.

Analysts cheered the news, believing that by splitting DuPont up, the actual value of all the parts will be significantly higher than its current share price of $80. In fact, Salomon Smith Barney raised its target price on DuPont from $85 to $100 and Merrill Lynch boosted its near-term rating as well. Both rate the stock a long-term "buy."

Many of you undoubtedly have DuPont as one of your Foolish Four stocks right now; it's been in and out of the rankings this year. This is just another example of a relatively out-of-favor or undervalued stock making a move in a way that the real value can be realized. While DuPont's not been one of the most flea-ridden of the Dogs lately, it certainly was spruced up by the groomers as a result of today's news. Fool on!

Current Dow Order | 1998 Dow Returns

[Robert Sheard is the author of the The Unemotional Investor (Simon & Schuster, 1998) available now at Amazon.com and your local bookseller.]

TODAY'S NUMBERS
Stock  Change   Last 
 -------------------- 
 UK   +1  1/2   53.81 
 IP   +   5/8   53.00 
 MO   -   3/8   38.25 
 EK   +   7/16  71.94 
 
 
                    Day   Month    Year 
         FOOL-4   +1.07%   3.60%  13.54% 
         DJIA     +0.40%   0.31%  14.96% 
         S&P 500  -0.14%  -0.46%  14.04% 
         NASDAQ   -0.88%  -1.09%  17.68% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  291 Union Carb    42.94     53.81    25.33% 
  12/31/97  289 Int'l Pape    43.13     53.00    22.90% 
  12/31/97  206 Eastman Ko    60.56     71.94    18.78% 
  12/31/97  276 Philip Mor    45.25     38.25   -15.47% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  291 Union Carb 12494.81  15659.44  $3164.63 
  12/31/97  289 Int'l Pape 12463.13  15317.00  $2853.88 
  12/31/97  206 Eastman Ko 12475.88  14819.13  $2343.25 
  12/31/97  276 Philip Mor 12489.00  10557.00 -$1932.00 
  
  
                              CASH    $415.96 
                             TOTAL  $56768.52