<FOOLISH WORKSHOP>

BSP Performance Update      

by Ethan Haskel ([email protected])

(FOOL GLOBAL WIRE)
Baltimore, MD (April 7, 1999) -- I just returned from a sun- and sand-filled extended weekend on the North Carolina coast, so excuse me if the brain's a little waterlogged.

We haven't spent a lot of time discussing the individual stocks in the Beating the S&P (BSP) Portfolio. Part of the reason is that here at BSP Central we like to concentrate on long-term performance rather than short-term stock prices. I usually leave the play-by-play announcing to the talking heads at CNBC, trying to keep focused on the important stuff. Periodically -- ideally, quarterly -- I'd like to give a little update on how our portfolio stocks are doing.

First, let's recognize that the Official 1999 BSP Portfolio stocks represent an arbitrary five stocks that just happened to be on the current stock list as of the first day of the new year. The current stocks can (and do) change from week to week and, indeed, from day to day. One's own portfolio results may be completely different from the official portfolio's. For instance, as of yesterday evening, the current BSP stocks were BankOne <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ONE)") else Response.Write("(NYSE: ONE)") end if %>, Xerox <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: XRX)") else Response.Write("(NYSE: XRX)") end if %>, Bristol-Myers Squibb <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BMY)") else Response.Write("(NYSE: BMY)") end if %>, Ford <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %>, and Fannie Mae <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FNM)") else Response.Write("(NYSE: FNM)") end if %>. Of these five, only one -- Ford -- was a current stock at the beginning of the year.

As of the close of trading Tuesday, here are the year-to-date returns (including dividends):

BSP 2 Schlumberger <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLB)") else Response.Write("(NYSE: SLB)") end if %> +25.2%
BSP 3 Kimberly-Clark <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KMB)") else Response.Write("(NYSE: KMB)") end if %> -9.3%
BSP 4 Campbell Soup <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPB)") else Response.Write("(NYSE: CPB)") end if %> -24.4%
BSP 5 Ford Motor <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: F)") else Response.Write("(NYSE: F)") end if %> +0.0%
BSP 6 BankAmerica <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAC)") else Response.Write("(NYSE: BAC)") end if %> +16.5%
BSP2-6 (The Official Portfolio) +1.6%

Standard & Poor's 500 Index +7.5%
Dow Jones Industrial Average +8.9%
Nasdaq +16.9%

Let's not mince words. The Official BSP Portfolio had a lousy quarter, losing to the S&P 500 handily. It's also not too hard to find the scapegoat here. Without Campbell Soup's singularly dismal showing, the Portfolio actually would have outperformed the S&P, rising 8.1%. Then again, if my cat could bark, she'd be my dog!

Workshop readers might be aware that Campbell is one of four stocks that comprise the Drip Portfolio, which also has suffered the slings and arrows of this company's outrageous misfortune this year. Whatever comments I might have about Campbell's past performance and outlook for the future would be dwarfed by Jeff Fisher's eloquent commentary. Presently the company appears to be very fairly valued compared to the rest of the market.

Is all hope lost for Campbell Soup shareholders? For moral support, let's look back to the same time last year, when Anheuser-Busch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BUD)") else Response.Write("(NYSE: BUD)") end if %> was trailing the market by a large margin. Few investors would have predicted then that the company would go on a tear the rest of the year, surging about 52% for 1998, compared to the S&P 500's return of 29%.

Then again, let's keep the big picture in mind. Since 1987, a time period that in general has been a lousy one for the so-called "value" style of investing that BSP prefers, the Beating the S&P Portfolio stocks have outperformed the surging S&P 500 by a compound annual growth rate of almost two and a half percentage points (20.4% versus 18.0%). Since 1993, the BSP has not lost out to the S&P 500 in any individual year. It has gained an average of 25.5% versus the S&P's 22.0% (1997 was a virtual dead heat). All this performance with nary an America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>, Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: Dell)") else Response.Write("(Nasdaq: Dell)") end if %>, or "dot-" anything on the list!