THE WIRED INVESTMENT PORTFOLIO
Even with our big guns in tow, picking stocks in this market leaves me feeling like a foot soldier in the first scene of Saving Private Ryan. Before we bravely push ahead with our big-is-beautiful strategy, I'm going to take this opportunity to cut some of the fund's losses. CellPro lost its patent fight with gorilla pharma Baxter, so it's a good time to sell shares in the smaller outfit. Remedy's stock has yet to rally, and I'd rather watch its fall product launch from the sidelines. As with other microcap names, Fusion Medical probably won't rise in this environment, so I'm getting out. These moves free up some cash for investing in companies likely to survive the recent bloodletting.
America Online has corrected 23 percent since we bought in, but at these prices, I can't resist purchasing an additional 1,000 shares in the blue-chip Internet stock. The other big market-cap company I'm adding is SAP. As with the rest of the DAX, the German enterprise application juggernaut has struggled, but I still believe this is a great time to own the stock. Even with an exuberant P/E ratio, SAP is viewed as a software company on par with Microsoft, and it has a client list that is second to none.
I'm willing to take one flier on a smaller company this month: Advanced Fibre Communications traded above 40 before it missed its second-quarter earnings estimate. The company deploys high-speed networks in rural communities in partnership with larger telcos. New product introductions, as well as more effective penetration internationally, should push the stock up from its current 6. Watch for new contracts this fall to see if a rebound is likely.
– Jeffery Wardell (jwardell@hamquist.com)
| Company| Primary Business| Symbol| Shares| Last Trade 9/1| Current Value| Since Purchase
HOLDING
| America Online | Online services | AOL | 2,000 | 85 | $170,000 | – 23%
| BioChem Pharma | Pharmaceuticals | BCHE | 8,000 | 16 7/8 | 135,000 | – 20%
| Cisco Systems | Network hw/sw | CSCO | 3,000 | 90 | 270,000 | + 49%
| Intel | Microchips | INTC | 3,000 | 76 | 228,000 | + 66%
| Microsoft | Software | MSFT | 2,000 | 101 1/4 | 202,500 | + 21%
| MMC Networks | Microchips | MMCN | 7,500 | 18 1/4 | 136,875 | – 25%
| Pfizer | Pharmaceuticals | PFE | 1,500 | 96 3/4 | 145,125 | – 2%
| Power Integrations | Microchips | POWI | 10,000 | 8 1/2 | 85,000 | 0%
| Qwest | Telecom | QWST | 3,000 | 25 11/16 | 77,063 | – 34%
SELLING
| CellPro | Biotech medical dev | CPRO | 30,000 | 21/32 | 19,688 | – 82%
| Fusion Medical | Medical eqpt | FSON | 45,000 | 3 1/4 | 146,250 | – 26%
| Remedy | Help-desk sw | RMDY | 7,500 | 9 7/16 | 70,781 | – 57%
BUYING
| Advanced Fibre | Telecommunications | AFCI | 5,000 | 6 | 90,000
| America Online | Online services | AOL | 1,000 | 85 | 85,000
| SAP | Software | SAP | 2,500 | 49 5/8 | 124,063
Cash| $| 212,562
Portfolio Value 9/1| $| 1,961,188
Portfolio Value 8/3| $| 2,304,125
One-Month Portfolio Performance-14.9%Russell 2000 Index| -15.79%
Legend: This fund started with US$1 million on December 1, 1994. We are trading on a monthly basis, so profits and losses will be reflected monthly, with profits reinvested in the fund or in new stocks.
The Wired Investment Portfolio (formerly TWIT$) is a model established by Wired, not an officially traded portfolio. Jeffery Wardell is a senior vice president executive financial services representative for Hambrecht & Quist LLC and may have a personal interest in stocks listed in the WIP. The opinions expressed herein are those of the author and not necessarily those of H&Q's research department. H&Q has not verified the information contained in this article and does not make any representations to its accuracy and completeness. Wired readers who use this information for investment decisions do so at their own risk.
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