OFF WALL STREET
FINAL ISSUE NOTICE
On 4/3/98 Russell Equity Management ceased publication of OFF WALL STREET.
Mr Hulbert made his last stock recommendation on 6/23/97, (FORBES 7/7/97),
almost 10 months ago. During that time period the SP500 advanced roughly
25%.
OFF WALL STREET
Volume 3, Issue 14.
04/03/98
Copyright (C) 1998, RUSSELL EQUITY MANAGEMENT
All Rights Reserved
www.russellequity.com
Introduction:
The styles of growth and value investing are supported by a large and
creditable body of research that has proven their viability. However the
merits of low P/E versus high P/E stocks continue to be debated, leaving
many newcomers to the art/science of common stock investing, bewildered and
confused.
Growth investors argue that P/E Ratios are irrelevant, that the rate of
earnings growth and the consistency of that rate over time are paramount.
Value investors maintain that the financial strength of a company and the
price payed per dollar of earnings (i.e. P/E ratio) are the primary factors
in determining long-term investment success.
In the classic "Common Stocks Uncommon Profits", the father of growth
investing Philip Fisher, developed a comprehensive and successful strategy
for investing in growth companies. Several points are clear after digesting
Mr. Fisher's work.
1. In its purest form, growth investing is labor intensive, requiring
significant amounts of time and effort to research financial,
operating, management, and industry details. John Trains words echo
clearly, "Knowledge is the key to it all. You have to know more than
the man from whom you are buying the stock, and yet you cannot afford
to develop and maintain the necessary degree of knowledge except about
small number of very interesting situations."
2. With time limits imposed via #1 above, adequate portfolio
diversification is not possible. The most capable individuals
working full-time will only be able to properly follow 8 to 12
companies within 1 or 2 closely related industry groups.
3. Looking for a slight competitive edge, successful growth investors
usually pick growth industries in which they have developed keen
insight or knowledge through actual work experience or advanced
education.
4. Successful growth investors are highly curious and inquisitive
individuals who posses superior configural analytical abilities.
In the classic "The New Contrarian Investment Strategy", David Dreman
offers a wonderful explanation of configural analysis and its pitfalls.
In the process Mr. Dreman develops a lucid and convincing argument for low
P/E stocks. Several points are clear after digesting Mr. Dreman's work.
1. Value investing is not a labor intensive process if one focuses on the
P/E ratio (i.e price payed for a company's earnings) and the financial
strength of that company.
2. Rare mental abilities, previous work experience or advanced education
are not requisites for successful investing via low P/E stocks.
As a result investors can enlarge their field of vision to encompass
more than one or two industries, thus properly diversifying their
portfolios.
3. The primary focus of low P/E investing is risk management not the
forecasting of potential returns. Low P/E investors focus more on the
present downside risk surrounding a company rather than its future
upside earnings potential.
OBJECTIVE:
OFF WALL STREET's primary objective is to discover LOW RISK investment
opportunities in common stocks through the implementation of an investment
screen that focuses on low P/E stocks. In the process OFF WALL STREET will
show that in the long run, low P/E stocks outperform high P/E stocks on both
a risk-adjusted and non-risk-adjusted basis.
A secondary objective is to prove that money can be made by following the
advice of investment newsletters, if one follows a LOW RISK value investment
strategy.
DISCOVERY:
One must recognize that the first step in the investment process is not
analysis but discovery. However, "Very few readers will be able to collect
potentially interesting stocks on their own. The time and experience they
can bring to the task will get them nowhere against the millions of dollars
a year of outstanding talent deployed by their professional competitors. So
the easy way is to get ideas from first-class competitors ....", John Train.
Being tired of and uninspired by Wall Street bromides, let us look off Wall
Street to a rich and varied source of ideas and opinions, namely those of
the investment newsletter community.
In order to minimize the time spent on the discovery of ideas, we will
utilize the outstanding advice of a professional newsletter rater. Anyone
who reads investment newsletters has no doubt encountered the name Mark
Hulbert, publisher and editor of The HULBERT FINANCIAL DIGEST, the
preeminent source of objective performance statistics for investment
newsletters. Mr. Hulbert also writes for FORBES magazine and within his
column "WALL STREET IRREGULAR" he highlights stock recommendations made by
various newsletter editors who have over time proved themselves capable of
beating the market on a risk-adjusted basis.
STRATEGY:
OFF WALL STREET's investment screen will require the following tools.
1. Forbes magazine
2. Barron's
3. Standard & Poor's Stock Guide
4. paper and pencil.
The following five portfolios will be created using the common stock
selections highlighted by WALL STREET IRREGULAR.
PORTFOLIO A = All Wall Street Irregular Stocks followed
PORTFOLIO B = High PE-Ratio Stocks from Portfolio A
PORTFOLIO C = Low PE-Ratio Stocks from Portfolio A
PORTFOLIO D = Low PE-Ratio/Higher Cap Stocks from Portfolio C
PORTFOLIO E = Low PE-Ratio/Higher Cap Stocks/Rated (B) or better by
Standard & Poor's from Portfolio D.
HOW TO CONSTRUCT THE PORTFOLIOS
---------------------------------
1. Read the WALL STREET IRREGULAR and record on paper the stocks noted.
2. Using Barron's, look up and record each stocks P/E ratio and last
price, scratching entries from the list that:
a. are not listed in Barron's
b. have no common shares
c. have a P/E ratio less than zero
d. have no P/E ratio listed
3. Using Barron's find the SP500 Index P/E and record after rounding to
the nearest integer. (note 19.49 rounds to 19, 19.50 rounds to 20).
4. Compare each stock's P/E ratio to the rounded SP500 Index P/E ratio.
LOW P/E stocks will be those whose P/E ratio is equal to or less than
the (rounded SP500 Index P/E ratio - 1). Prefix all LOW P/E stocks
with an "L". Stocks not prefixed as LOW P/E will be classified as HIGH
P/E stocks. Prefix all HIGH P/E stocks with an "H"
5. Portfolio A will consist of hypothetical $1,000 investments in each of
the stocks remaining after #2 above.
6. Portfolio B is Portfolio A minus the Low P/E stocks.
7. Portfolio C is Portfolio A minus the High P/E stocks.
8. Open Standard & Poor's Stock Guide, for each low P/E stock (e.g.
those prefixed by "L", record the number of common shares
outstanding from the column labeled (Capitalization, Shs. 000, Com.)
9. From Standard & Poor's Stock Guide, for each low P/E entry record the
S & P rating from the column labeled (Com. Rank. & Pfd. Rating).
10. For each low P/E stock, multiply the number of common shares
outstanding by its last price and record. This is the common stock
capitalization.
11. Using Portfolio C, scratch all entries from the list if their common
capitalizations are less the $375 million or if they are not listed
in Standard & Poor's. The remaining entries constitute Portfolio D.
12. Portfolio E is Portfolio D minus all entries that have S & P ratings
less than B.
Portfolio E contains LOW RISK INVESTMENT IDEAS. Perusing Portfolio E's
%Return on Investment and Sharpe Ratio, (both listed below), confirms we are
on the right path to becoming a superior value investor.
Our journey of discovery is now complete. Next, we turn to the exciting and
wonderfully satisfying process of analysis, and with it our quest to become
a truly world-class value investor begins.
READERS CHALLENGE:
Some of the stocks listed in Portfolio E did not represent "above average
values" on their purchase dates. Using the eclectic approach to value
investment analysis outlined on page 178 of "The New Contrarian Investment
Strategy", written by David Dreman, draw from the IDEAS of Portfolio E and
construct "Portfolio F -- Low Risk Value Stocks with Superior Price
Appreciation Potential".
HINTS
In classifying a stock's P/E as high or low we have made a relative
comparison to the SP500 Index. Benjamin Graham would label a low P/E stock
as one whose current P/E is less than 40% of its highest P/E over the last 5
years. Also, during the evaluation of Indicator #2, page 179 of "The New
Contrarian Investment Strategy", one might consider looking closely at
quarterly price-to-cash flow and price-to-sales ratios.
If "your" Portfolio F can outperform OFF WALL STREET's Portfolio E over the
long run (minimum of 5 years), I guarantee you will be outperforming 85% of
all professional investment advisors on earth.
The clock is running, good luck!
Russell Thomas 1-1-96
OFF WALL STREET assumptions:
1. dividend payments will not be followed.
2. for portfolio reporting purposes, stock selections that are delisted
will be carried forward at their last quote.
OFF WALL STREET is posted to our website for registered users, on weekends
no later than Sunday 12 midnight EST.
=============================================================================
THE BENCHMARK
Date SP500 Return
-------- ------ ------
12/18/95 606.81
04/03/98 1122.70 + 85.01%
============================================================================
PORTFOLIO A
TOP FIVE STOCKPICKS
T Symbol Description Quantity $ Cost Mkt Price $ Value Val%
- --------- --------------- ---------- ----------- --------- ----------- ----
S DELL L-Dell Computer 271.1864 1000.00 67.3750 18271.18 11%
S PSFT H-PeopleSoft 80.4021 1000.00 55.6250 4472.37 3%
S MSFT H-Microsoft 32.0320 1000.00 93.0000 2978.98 2%
S CNC L-Conseco 51.9480 1000.00 56.7500 2948.05 2%
S AMES L-Ames Departme 122.1374 1000.00 21.7500 2656.49 2%
===========================================================================
PORTFOLIO B
STOCKS WITH HIGH PE-RATIOS ON PURCHASE DATE
T Symbol Description Quantity $ Cost Mkt Price $ Value Val%
- --------- --------------- ---------- ----------- --------- ----------- ----
S COMS H-3-Com 26.9360 1000.00 34.1250 919.19 1%
S ABT H-Abbott Labs 15.8103 1000.00 78.1870 1236.16 2%
S ATVI H-Activision 72.0721 1000.00 11.1870 806.27 1%
S AHP H-American Home 18.4544 1000.00 97.1870 1793.53 3%
S ANDW H-Andrew Corp 88.2352 1000.00 19.8750 1753.68 3%
S ABX H-Barrick Gold 32 1000.00 22.5000 720.00 1%
S BMCS H-BMC Software 26.2295 1000.00 85.5000 2242.62 3%
S BA H-Boeing 22.1914 1000.00 54.9370 1219.13 2%
S BROD H-Broderbund So 18.1818 1000.00 19.4370 353.40 1%
S CSCC H-Cascade Commu 13.5593 1000.00 27.6250 374.58 1%
S CHIR H-Chiron 53.3333 1000.00 21.5620 1149.97 2%
S CSCO H-Cisco Systems 27.5862 1000.00 70.6870 1949.99 3%
S CDG H-Cliffs Drilli 40.4040 1000.00 42.8120 1729.78 3%
S KO H-Coca Cola 19.4647 1000.00 80.4370 1565.68 2%
S DLX H-Deluxe Corp. 28.1690 1000.00 32.0000 901.41 1%
S EDUC H-Educational D 97.5610 1000.00 5.0000 487.80 1%
S ENCD H-Encad 30.3030 1000.00 12.6870 384.45 1%
S FSI H-FlightSaftey 18.5615 1000.00 47.8750 888.63 1%
S FEN H-Forcenergy 37.3832 1000.00 26.7500 1000.00 1%
S FPAM H-FPA Medical M 51.4469 1000.00 15.8750 816.72 1%
S FCX H-Freeport McMo 31.1284 1000.00 20.0620 624.50 1%
S GPS H-Gap Inc. 48.4262 1000.00 46.0000 2227.61 3%
S GART H-Gartner Group 28.9855 1000.00 34.8750 1010.87 2%
S G H-Gillette 15.2672 1000.00 124.0000 1893.13 3%
S GFI H-Graham-Field 142.8571 1000.00 6.9370 991.00 1%
S GASIA H-Greenwich Air 42.1053 1000.00 30.0000 1263.16 2%
S HWP H-Hewlett Packa 18.0995 1000.00 62.5620 1132.34 2%
S HM H-Homestake Min 51.6129 1000.00 11.6250 600.00 1%
S TZH H-Horsham 67.7966 1000.00 23.8120 1614.37 2%
S IFMX H-Informix 41.4508 1000.00 8.7180 361.37 1%
S IDTI H-Integrated De 72.7273 1000.00 14.0620 1022.69 2%
S INTS H-Integrated Sy 40.4040 1000.00 23.1250 934.34 1%
S JCP H-JC Penny 21.5054 1000.00 77.3120 1662.62 2%
S JH H-John Harland 38.6473 1000.00 15.6870 606.26 1%
S JNJ H-Johnson & Joh 20.0501 1000.00 77.0000 1543.86 2%
S LCI H-LCI Industrie 31.8725 1000.00 38.2500 1219.12 2%
S LSI H-LSI Logic 31.3725 1000.00 26.8120 841.16 1%
S MCD H-McDonalds 20.5128 1000.00 63.5000 1302.56 2%
S MHP H-McGraw-Hill 23.0880 1000.00 75.5620 1744.58 3%
S MRK H-Merck 10.9290 1000.00 131.4370 1436.47 2%
S MSFT H-Microsoft 32.0320 1000.00 93.0000 2978.98 4%
S MON H-Money Store 60.1504 1000.00 32.3120 1943.58 3%
S NEM H-Newmont Minin 18.3486 1000.00 32.8750 603.21 1%
S NKE H-Nike 17.6600 1000.00 45.0620 795.80 1%
S NOV H-Novacare 79.2079 1000.00 14.8120 1173.23 2%
S OXHP H-Oxford Health 21.6216 1000.00 17.2500 372.97 1%
S PSFT H-PeopleSoft 80.4021 1000.00 55.6250 4472.37 7%
S PDG H-Placer Dome 34.9345 1000.00 14.1870 495.62 1%
S QLGC H-Q Logic 47.9042 1000.00 38.5000 1844.31 3%
S RBD H-Rubbermaid 40.4040 1000.00 29.4370 1189.37 2%
S SDTI H-Security Dyna 24.0240 1000.00 28.0000 672.67 1%
S TNB H-Thomas & Bett 26.2296 1000.00 62.1250 1629.51 2%
S VFI H-Verifone 18.5615 1000.00 54.3750 1009.28 2%
S VSH H-Vishay Intert 36.6972 1000.00 22.0620 809.61 1%
S ZOLT H-Zolt 27.7778 1000.00 33.0620 918.39 1%
===========================================================================
PORTFOLIO C
STOCKS WITH LOW PE-RATIOS ON PURCHASE DATE
T Symbol Description Quantity $ Cost Mkt Price $ Value Val%
- --------- --------------- ---------- ----------- --------- ----------- ----
S ACCOB L-Adolph Coors 40.1003 1000.00 34.6250 1388.47 1%
S APD L-Air Products 13.8169 1000.00 82.8750 1145.08 1%
S ALRN L-Altron 52.6316 1000.00 14.3750 756.58 1%
S ABP L-American Busi 40.4040 1000.00 21.5620 871.19 1%
S AM L-American Gree 27.6817 1000.00 47.8120 1323.52 1%
S AMES L-Ames Departme 122.1374 1000.00 21.7500 2656.49 3%
S AXC L-Ampex Corp. 93.0233 1000.00 2.5620 238.33 0%
S AMAT L-Applied Mater 55.9440 1000.00 37.5000 2097.90 2%
S ADM L-Archer Daniel 55.2677 1000.00 22.3750 1236.61 1%
S ARV L-Arvin Industr 35.8744 1000.00 41.3750 1484.30 2%
S ATE L-Atlantic Ener 60.1504 1000.00 20.3750 1225.56 1%
S BDG L-Bandag 19.8511 1000.00 59.5000 1181.14 1%
S BAC L-BankAmerica 25.2366 1000.00 87.5620 2209.77 2%
S BIOA L-Bio-Rad Labor 37.7089 1000.00 27.0000 1018.14 1%
S BSH L-Bush Industri 57.5540 1000.00 29.6250 1705.04 2%
S ELY L-Callaway Golf 31.2500 1000.00 28.3750 886.72 1%
S CRP L-Carson Pirie 31.3725 1000.00 51.0000 1600.00 2%
S CTX L-Centex 49.5356 1000.00 38.8120 1922.58 2%
S CB L-Chubb 21.6508 1000.00 79.2500 1715.83 2%
S CNA L-CNA Financial 8.7336 1000.00 152.8750 1335.15 1%
S CNC L-Conseco 51.9480 1000.00 56.7500 2948.05 3%
S CUM L-Cummins Engin 15.4440 1000.00 56.6250 874.52 1%
S CY L-Cypress Semic 68.9655 1000.00 10.0000 689.66 1%
S DELL L-Dell Computer 271.1864 1000.00 67.3750 18271.18 20%
S DOW L-Dow Chemical 12.5786 1000.00 94.2500 1185.53 1%
S EGFC L-Eagle Food Ce 37.0370 1000.00 60.3750 2236.11 2%
S ECILF L-ECI Telecom 43.4783 1000.00 30.9370 1345.09 1%
S EBF L-Ennis Busines 90.9091 1000.00 12.4370 1130.64 1%
S ESL L-Esterline Tec 44.6927 1000.00 43.1250 1927.37 2%
S GGG L-Graco 60.8220 1000.00 30.2500 1839.87 2%
S HAN L-Hanson 68.3761 1000.00 29.1250 1991.45 2%
S H L-Harcourt Gene 20.9424 1000.00 55.3120 1158.37 1%
S HGIC L-Harleysville 52.4590 1000.00 26.7500 1403.28 2%
S HRS L-Harris Corp 22.5670 1000.00 51.8120 1169.24 1%
S HELX L-Helix Technol 63.2412 1000.00 19.6250 1241.11 1%
S JP L-Jefferson Pil 14.3885 1000.00 91.4370 1315.64 1%
S KMET L-Kemet Co. 45.4545 1000.00 19.5000 886.36 1%
S LAWS L-Lawson Produc 43.0108 1000.00 28.2500 1215.05 1%
S LEH L-Lehman Bros H 25.4777 1000.00 74.6250 1901.27 2%
S LGE L-LG&E Energy 47.4778 1000.00 25.9370 1231.43 1%
S LTD L-Limited 49.3827 1000.00 29.9370 1478.37 2%
S LUB L-Luby's Cafete 41.4508 1000.00 19.2500 797.93 1%
S MU L-Micron Techno 23.1214 1000.00 31.5000 728.32 1%
S MIND L-Mitcham Indus 173.9130 1000.00 11.3750 1978.26 2%
S NB L-Nationsbank 23.5640 1000.00 73.8750 1740.79 2%
S ONBK L-Onbancorp 21.2202 1000.00 69.3750 1472.15 2%
S MO L-Philip Morris 26.4900 1000.00 40.0000 1059.60 1%
S PZB L-Pittston Brin 31.4961 1000.00 39.7500 1251.97 1%
S RNB L-Republic NY C 10.0883 1000.00 136.9370 1381.46 1%
S RML L-Russell Corp. 39.0244 1000.00 26.9370 1051.20 1%
S LUV L-Southwest Air 54.2986 1000.00 29.8750 1622.17 2%
S SXI L-Standex 37.7358 1000.00 30.6870 1158.00 1%
S SFS L-Superfood Ser 79.2079 1000.00 15.3750 1217.82 1%
S SCOR L-Syncor Intern 91.9540 1000.00 15.8750 1459.77 2%
S TKR L-Timken 29.3040 1000.00 35.1250 1029.30 1%
===========================================================================
PORTFOLIO D
STOCKS WITH LOW PE-RATIOS AND HIGHER CAPITALIZATIONS ON PURCHASE DATE
T Symbol Description Quantity $ Cost Mkt Price $ Value Val%
- --------- --------------- ---------- ----------- --------- ----------- ----
S ACCOB L-Adolph Coors 40.1003 1000.00 34.6250 1388.47 2%
S APD L-Air Products 13.8169 1000.00 82.8750 1145.08 2%
S ALRN L-Altron 52.6316 1000.00 14.3750 756.58 1%
S ABP L-American Busi 40.4040 1000.00 21.5620 871.19 1%
S AM L-American Gree 27.6817 1000.00 47.8120 1323.52 2%
S AXC L-Ampex Corp. 93.0233 1000.00 2.5620 238.33 0%
S AMAT L-Applied Mater 55.9440 1000.00 37.5000 2097.90 3%
S ADM L-Archer Daniel 55.2677 1000.00 22.3750 1236.61 2%
S ARV L-Arvin Industr 35.8744 1000.00 41.3750 1484.30 2%
S ATE L-Atlantic Ener 60.1504 1000.00 20.3750 1225.56 2%
S BDG L-Bandag 19.8511 1000.00 59.5000 1181.14 2%
S BAC L-BankAmerica 25.2366 1000.00 87.5620 2209.77 3%
S ELY L-Callaway Golf 31.2500 1000.00 28.3750 886.72 1%
S CRP L-Carson Pirie 31.3725 1000.00 51.0000 1600.00 2%
S CTX L-Centex 49.5356 1000.00 38.8120 1922.58 3%
S CB L-Chubb 21.6508 1000.00 79.2500 1715.83 2%
S CNA L-CNA Financial 8.7336 1000.00 152.8750 1335.15 2%
S CNC L-Conseco 51.9480 1000.00 56.7500 2948.05 4%
S CUM L-Cummins Engin 15.4440 1000.00 56.6250 874.52 1%
S CY L-Cypress Semic 68.9655 1000.00 10.0000 689.66 1%
S DELL L-Dell Computer 271.1864 1000.00 67.3750 18271.18 26%
S DOW L-Dow Chemical 12.5786 1000.00 94.2500 1185.53 2%
S HAN L-Hanson 68.3761 1000.00 29.1250 1991.45 3%
S H L-Harcourt Gene 20.9424 1000.00 55.3120 1158.37 2%
S HGIC L-Harleysville 52.4590 1000.00 26.7500 1403.28 2%
S HRS L-Harris Corp 22.5670 1000.00 51.8120 1169.24 2%
S JP L-Jefferson Pil 14.3885 1000.00 91.4370 1315.64 2%
S KMET L-Kemet Co. 45.4545 1000.00 19.5000 886.36 1%
S LEH L-Lehman Bros H 25.4777 1000.00 74.6250 1901.27 3%
S LGE L-LG&E Energy 47.4778 1000.00 25.9370 1231.43 2%
S LTD L-Limited 49.3827 1000.00 29.9370 1478.37 2%
S LUB L-Luby's Cafete 41.4508 1000.00 19.2500 797.93 1%
S MU L-Micron Techno 23.1214 1000.00 31.5000 728.32 1%
S NB L-Nationsbank 23.5640 1000.00 73.8750 1740.79 2%
S MO L-Philip Morris 26.4900 1000.00 40.0000 1059.60 2%
S PZB L-Pittston Brin 31.4961 1000.00 39.7500 1251.97 2%
S RNB L-Republic NY C 10.0883 1000.00 136.9370 1381.46 2%
S RML L-Russell Corp. 39.0244 1000.00 26.9370 1051.20 2%
S LUV L-Southwest Air 54.2986 1000.00 29.8750 1622.17 2%
S TKR L-Timken 29.3040 1000.00 35.1250 1029.30 1%
===========================================================================
PORTFOLIO E
STOCKS WITH LOW PE-RATIOS, HIGHER CAPITALIZATIONS, &
S&P RATING OF (B or better) ON PURCHASE DATE
T Symbol Description Quantity $ Cost Mkt Price $ Value Val%
- --------- --------------- ---------- ----------- --------- ----------- ----
S APD L-Air Products 13.8169 1000.00 82.8750 1145.08 2%
S ABP L-American Busi 40.4040 1000.00 21.5620 871.19 1%
S AM L-American Gree 27.6817 1000.00 47.8120 1323.52 2%
S AMAT L-Applied Mater 55.9440 1000.00 37.5000 2097.90 4%
S ADM L-Archer Daniel 55.2677 1000.00 22.3750 1236.61 2%
S ARV L-Arvin Industr 35.8744 1000.00 41.3750 1484.30 3%
S ATE L-Atlantic Ener 60.1504 1000.00 20.3750 1225.56 2%
S BDG L-Bandag 19.8511 1000.00 59.5000 1181.14 2%
S BAC L-BankAmerica 25.2366 1000.00 87.5620 2209.77 4%
S ELY L-Callaway Golf 31.2500 1000.00 28.3750 886.72 2%
S CTX L-Centex 49.5356 1000.00 38.8120 1922.58 3%
S CB L-Chubb 21.6508 1000.00 79.2500 1715.83 3%
S CNC L-Conseco 51.9480 1000.00 56.7500 2948.05 5%
S CY L-Cypress Semic 68.9655 1000.00 10.0000 689.66 1%
S DELL L-Dell Computer 271.1864 1000.00 67.3750 18271.18 31%
S DOW L-Dow Chemical 12.5786 1000.00 94.2500 1185.53 2%
S H L-Harcourt Gene 20.9424 1000.00 55.3120 1158.37 2%
S HGIC L-Harleysville 52.4590 1000.00 26.7500 1403.28 2%
S HRS L-Harris Corp 22.5670 1000.00 51.8120 1169.24 2%
S JP L-Jefferson Pil 14.3885 1000.00 91.4370 1315.64 2%
S LGE L-LG&E Energy 47.4778 1000.00 25.9370 1231.43 2%
S LTD L-Limited 49.3827 1000.00 29.9370 1478.37 3%
S LUB L-Luby's Cafete 41.4508 1000.00 19.2500 797.93 1%
S MU L-Micron Techno 23.1214 1000.00 31.5000 728.32 1%
S NB L-Nationsbank 23.5640 1000.00 73.8750 1740.79 3%
S MO L-Philip Morris 26.4900 1000.00 40.0000 1059.60 2%
S PZB L-Pittston Brin 31.4961 1000.00 39.7500 1251.97 2%
S RNB L-Republic NY C 10.0883 1000.00 136.9370 1381.46 2%
S RML L-Russell Corp. 39.0244 1000.00 26.9370 1051.20 2%
S LUV L-Southwest Air 54.2986 1000.00 29.8750 1622.17 3%
S TKR L-Timken 29.3040 1000.00 35.1250 1029.30 2%
===========================================================================
PORTFOLIO F
VALUE STOCKS WITH SUPERIOR PRICE APPRECIATION POTENTIAL
????
===============================================================================
PORTFOLIO RETURNS
(12/18/95 - 04/03/98)
# of stocks % Return on Investment
Portfolio A: 110 70.94
Portfolio B: 55 27.06
Portfolio C: 55 129.12
Portfolio D: 40 142.41
Portfolio E: 31 187.82
Portfolio F: ?? ??.??
SP500:
12/18/95 606.81
04/03/98 1122.70 85.01
===============================================================================
PERFORMANCE STATISTICS (03/01/96 - 03/27/98)
P. SHARPE RATIO AVG.of WEEKLY YTD RETURNS as % STANDARD DEVIATION
-- ------------ ------------------------------ ------------------
E 1.471343398094177 76.33241271972656 47.92718124389648
D 1.234551668167114 54.86156845092773 39.72819519042969
C 1.168728590011597 49.94879531860352 37.76217651367188
X 1.161581516265869 26.05035591125488 17.42045783996582
A 1.04214346408844 25.41750526428223 18.80972480773926
B .3384206295013428 8.956538200378418 9.28273868560791
A = All Wall Street Irregular stock recommendations followed
B = High PE-Ratio Stocks
C = Low PE-Ratio Stocks
D = Low PE-Ratio/Higher Cap Stocks
E = Low PE-Ratio/Higher Cap Stocks/Rated (B) or better by Standard & Poors
X = SP500 Index
*note see appendix below for discussion of Sharpe Ratio.
===============================================================================
PORTFOLIO A
RECOMMENDATIONS FOLLOWED
Transactions
-------------
Date TAC Symbol Description Quantity $/U Com/Fees $ Amount
-------- --- --------- --------------- ---------- -------- -------- -----------
12/18/95 BUY KMET L-Kemet Co. 45.4545 22.00 -1000.00
12/18/95 BUY IFMX H-Informix 41.4508 24.12 -1000.00
12/18/95 BUY PSFT H-PeopleSoft 26.8007 37.31 -1000.00
12/18/95 BUY BROD H-Broderbund So 18.1818 55.00 -1000.00
12/18/95 BUY LSI H-LSI Logic 31.3725 31.88 -1000.00
12/18/95 BUY ANDW H-Andrew Corp 58.8235 17.00 -1000.00
12/18/95 BUY DELL L-Dell Computer 33.8983 29.50 -1000.00
12/18/95 BUY MU L-Micron Techno 23.1214 43.25 -1000.00
12/18/95 BUY ESL L-Esterline Tec 44.6927 22.37 -1000.00
12/18/95 BUY MON H-Money Store 60.1504 16.63 -1000.00
12/18/95 BUY CNA L-CNA Financial 8.7336 114.50 -1000.00
12/18/95 BUY GGG L-Graco 30.411 32.88 -1000.00
12/18/95 BUY COMS H-3-Com 26.936 37.13 -1000.00
12/18/95 BUY BIOA L-Bio-Rad Labor 25.4726 39.26 -1000.00
12/18/95 DPF CASH 14000.00
02/08/96 SP+ GGG L-Graco 15.2055 0.00
02/26/96 BUY ABX H-Barrick Gold 32 31.25 -1000.00
02/26/96 BUY PDG H-Placer Dome 34.9345 28.62 -1000.00
02/26/96 BUY HAN L-Hanson 68.3761 14.62 -1000.00
02/26/96 BUY TZH H-Horsham 67.7966 14.75 -1000.00
02/26/96 BUY FCX H-Freeport McMo 31.1284 32.13 -1000.00
02/26/96 BUY HM H-Homestake Min 51.6129 19.38 -1000.00
02/26/96 DPF CASH 6000.00
04/08/96 BUY AHP H-American Home 9.2272 108.37 -1000.00
04/08/96 BUY CB L-Chubb 10.8254 92.38 -1000.00
04/08/96 BUY CNC L-Conseco 25.974 38.50 -1000.00
04/08/96 BUY EDUC H-Educational D 48.7805 20.50 -1000.00
04/08/96 BUY GPS H-Gap Inc. 19.3705 51.62 -1000.00
04/08/96 BUY GART H-Gartner Group 28.9855 34.50 -1000.00
04/08/96 BUY INTS H-Integrated Sy 40.404 24.75 -1000.00
04/08/96 BUY LGE L-LG&E Energy 23.7389 42.13 -1000.00
04/08/96 BUY MHP H-McGraw-Hill 11.544 86.63 -1000.00
04/08/96 BUY OXHP H-Oxford Health 21.6216 46.25 -1000.00
04/08/96 BUY TNB H-Thomas & Bett 13.1148 76.25 -1000.00
04/08/96 DPF CASH 11000.00
04/10/96 SP+ TNB H-Thomas & Bett 13.1148 0.00
04/11/96 SP+ GPS H-Gap Inc. 19.3705 0.00
04/16/96 SP+ EDUC H-Educational D 48.7805 0.00
04/16/96 SP+ LGE L-LG&E Energy 23.7389 0.00
04/29/96 SP+ MHP H-McGraw-Hill 11.544 0.00
05/06/96 SP+ CB L-Chubb 10.8254 0.00
05/06/96 BUY ADM L-Archer Daniel 55.2677 18.09 -1000.00
05/06/96 BUY ATE L-Atlantic Ener 60.1504 16.63 -1000.00
05/06/96 BUY DLX H-Deluxe Corp. 28.169 35.50 -1000.00
05/06/96 BUY EBF L-Ennis Busines 90.9091 11.00 -1000.00
05/06/96 BUY FSI H-FlightSaftey 18.5615 53.87 -1000.00
05/06/96 BUY JH H-John Harland 38.6473 25.88 -1000.00
05/06/96 BUY LAWS L-Lawson Produc 43.0108 23.25 -1000.00
05/06/96 BUY LTD L-Limited 49.3827 20.25 -1000.00
05/06/96 BUY LUB L-Luby's Cafete 41.4508 24.12 -1000.00
05/06/96 BUY RML L-Russell Corp. 39.0244 25.62 -1000.00
05/06/96 BUY SFS L-Superfood Ser 79.2079 12.63 -1000.00
05/06/96 DPF CASH 11000.00
05/07/96 SP+ AHP H-American Home 9.2272 0.00
06/03/96 SP+ BIOA L-Bio-Rad Labor 12.2363 0.00
08/26/96 BUY NEM H-Newmont Minin 18.3486 54.50 -1000.00
08/26/96 DPF CASH 1000.00
09/09/96 BUY BAC L-BankAmerica 12.6183 79.25 -1000.00
09/09/96 BUY BMCS H-BMC Software 26.2295 38.13 -1000.00
09/09/96 BUY BA H-Boeing 11.0957 90.12 -1000.00
09/09/96 BUY CSCO H-Cisco Systems 18.3908 54.38 -1000.00
09/09/96 BUY KO H-Coca Cola 19.4647 51.38 -1000.00
09/09/96 BUY G H-Gillette 15.2672 65.50 -1000.00
09/09/96 BUY JNJ H-Johnson & Joh 20.0501 49.88 -1000.00
09/09/96 BUY MSFT H-Microsoft 16.016 62.44 -1000.00
09/09/96 BUY NB L-Nationsbank 11.782 84.88 -1000.00
09/09/96 BUY NKE H-Nike 8.83 113.25 -1000.00
09/09/96 DPF CASH 10000.00
10/21/96 BUY LCI H-LCI Industrie 31.8725 31.38 -1000.00
10/21/96 BUY MIND L-Mitcham Indus 173.913 5.75 -1000.00
10/21/96 BUY ATVI H-Activision 72.0721 13.88 -1000.00
10/21/96 BUY SCOR L-Syncor Intern 91.954 10.87 -1000.00
10/21/96 BUY EGFC L-Eagle Food Ce 37.037 27.00 -1000.00
10/21/96 BUY GFI H-Graham-Field 142.8571 7.00 -1000.00
10/21/96 DPF CASH 6000.00
10/24/96 SP+ NKE H-Nike 8.83 0.00
11/18/96 BUY BSH L-Bush Industri 57.554 17.37 -1000.00
11/18/96 BUY CSCC H-Cascade Commu 13.5593 73.75 -1000.00
11/18/96 BUY SDTI H-Security Dyna 24.024 41.62 -1000.00
11/18/96 DPF CASH 3000.00
12/02/96 SP+ PSFT H-PeopleSoft 26.8007 0.00
12/02/96 BUY ALRN L-Altron 52.6316 19.00 -1000.00
12/02/96 BUY FPAM H-FPA Medical M 51.4469 19.44 -1000.00
12/02/96 BUY GASIA H-Greenwich Air 42.1053 23.75 -1000.00
12/02/96 BUY HELX L-Helix Technol 31.6206 31.62 -1000.00
12/02/96 BUY ZOLT H-Zolt 27.7778 36.00 -1000.00
12/02/96 BUY AXC L-Ampex Corp. 93.0233 10.75 -1000.00
12/02/96 DPF CASH 6000.00
12/09/96 SP+ DELL L-Dell Computer 33.8983 0.00
12/30/96 BUY CHIR H-Chiron 53.3333 18.75 -1000.00
12/30/96 BUY AMAT L-Applied Mater 27.972 35.75 -1000.00
12/30/96 BUY CY L-Cypress Semic 68.9655 14.50 -1000.00
12/30/96 BUY IDTI H-Integrated De 72.7273 13.75 -1000.00
12/30/96 DPF CASH 4000.00
02/12/97 SP+ CNC L-Conseco 25.974 0.00
02/24/97 BUY CDG H-Cliffs Drilli 20.202 49.50 -1000.00
02/24/97 BUY ENCD H-Encad 30.303 33.00 -1000.00
02/24/97 BUY FEN H-Forcenergy 37.3832 26.75 -1000.00
02/24/97 BUY QLGC H-Q Logic 47.9042 20.88 -1000.00
02/24/97 DPF CASH 4000.00
02/28/97 SP+ NB L-Nationsbank 11.782 0.00
03/12/97 SP+ ANDW H-Andrew Corp 29.4117 0.00
04/07/97 BUY BDG L-Bandag 19.8511 50.37 -1000.00
04/07/97 BUY RBD H-Rubbermaid 40.404 24.75 -1000.00
04/07/97 BUY DOW L-Dow Chemical 12.5786 79.50 -1000.00
04/07/97 BUY JCP H-JC Penny 21.5054 46.50 -1000.00
04/07/97 BUY SXI L-Standex 37.7358 26.50 -1000.00
04/07/97 BUY MCD H-McDonalds 20.5128 48.75 -1000.00
04/07/97 BUY MO L-Philip Morris 8.83 113.25 -1000.00
04/07/97 DPF CASH 7000.00
04/11/97 SP+ MO L-Philip Morris 17.66 0.00
05/05/97 BUY ABT H-Abbot Labs 15.8103 63.25 -1000.00
05/05/97 BUY APD L-Air Products 13.8169 72.38 -1000.00
05/05/97 BUY ELY L-Callaway Golf 31.25 32.00 -1000.00
05/05/97 BUY ECILF L-ECI Telecom 43.4783 23.00 -1000.00
05/05/97 BUY H L-Harcourt Gene 20.9424 47.75 -1000.00
05/05/97 BUY HWP H-Hewlett Packa 18.0995 55.25 -1000.00
05/05/97 BUY MRK H-Merck 10.929 91.50 -1000.00
05/05/97 BUY PZB L-Pittston Brin 31.4961 31.75 -1000.00
05/05/97 BUY LUV L-Southwest Air 36.1991 27.63 -1000.00
05/05/97 BUY VFI H-Verifone 18.5615 53.87 -1000.00
05/05/97 BUY VSH H-Vishay Intert 36.6972 27.25 -1000.00
05/05/97 BUY ABP L-American Busi 40.404 24.75 -1000.00
05/05/97 DPF CASH 12000.00
06/02/97 BUY HRS L-Harris Corp 11.2835 88.63 -1000.00
06/02/97 BUY NOV H-Novacare 79.2079 12.63 -1000.00
06/02/97 BUY ONBK L-Onbancorp 21.2202 47.13 -1000.00
06/02/97 BUY CUM L-Cummins Engin 15.444 64.75 -1000.00
06/02/97 BUY TKR L-Timken 29.304 34.12 -1000.00
06/02/97 BUY LEH L-Lehman Bros H 25.4777 39.25 -1000.00
06/02/97 BUY RNB L-Republic NY C 10.0883 99.13 -1000.00
06/02/97 BUY CTX L-Centex 24.7678 40.37 -1000.00
06/02/97 BUY CRP L-Carson Pirie 31.3725 31.88 -1000.00
06/02/97 BUY ACCOB L-Adolph Coors 40.1003 24.94 -1000.00
06/02/97 BUY ARV L-Arvin Industr 35.8744 27.88 -1000.00
06/02/97 DPF CASH 11000.00
06/09/97 SP+ BA H-Boeing 11.9057 0.00
06/10/97 SP+ CDG H-Cliffs Drilli 20.202 0.00
06/19/97 SP+ BAC L-BankAmerica 12.6183 0.00
06/23/97 BUY AMES L-Ames Departme 122.1374 8.19 -1000.00
06/23/97 BUY AM L-American Gree 27.6817 36.12 -1000.00
06/23/97 BUY HGIC L-Harleysville 26.2295 38.13 -1000.00
06/23/97 BUY JP L-Jefferson Pil 14.3885 69.50 -1000.00
06/23/97 DPF CASH 4000.00
07/28/97 SP+ DELL L-Dell Computer 67.7966 0.00
09/29/97 SP+ HRS L-Harris Corp 11.2835 0.00
10/07/97 SP+ HGIC L-Harleysville 26.2295 0.00
10/14/97 SP+ AMAT L-Applied Mater 27.972 0.00
11/14/97 SP+ HELX L-Helix Technol 31.6206 0.00
11/28/97 SP+ LUV L-Southwest Air 18.0995 0.00
12/08/97 SP+ PSFT H-PeopleSoft 26.8007 0.00
12/17/97 SP+ CSCO H-Cisco Systems 9.1954 0.00
12/23/97 SP+ GPS H-Gap Inc. 9.68525 0.00
02/05/98 SP+ GGG L-Graco 15.2055 0.00
02/23/98 SP+ MSFT H-Microsoft 16.016 0.00
03/02/98 SP+ CTX L-Centex 24.7678 0.00
03/09/98 SP+ DELL L-Dell Computer 135.5932 0.00
===========================================================================
SYMBOL CHANGES
COMPANY OLD SYM. NEW SYM. CHG-DATE
---------------------------------- -------- ------- --------
H-Forcenergy FGAS FEN 6/18/97
H-Informix Corp. IFMX IFMXE 9/22/97
H-Informix Corp. IFMXE IFMX 11/20/97
H-Money Store MONE MON 12/10/97
L-American Greetings AGREA AM 02/11/98
===========================================================================
DELISTED STOCKS
SYMBOL COMPANY DATE
------ ---------------------------- -------
SFS L-Super Food Services 11/08/96
FSI H-Flight Saftey International 12/24/96
VFI H-Verifone 06/26/97
CSCC H-Cascade Communications 07/01/97
GASIA H-Greenwich Air Services 09/02/97
CRP L-Carson Pirie Scott & Co. 02/02/98
ATE L-Atlantic Energy Inc 03/02/98
ONBK L-OnBancorp Inc. 04/02/98
===========================================================================
WALL STREET IRREGULAR
RECOMMENDATIONS IGNORED
SYMBOL COMPANY FORBES ISSUE REASON
------ ---------------------------- ------------ ------
AEM Agnico-Eagle Mines Mar. 11, 1996 1
GLG Glamis Gold Mar. 11, 1996 1
XRX Xerox Apr. 22, 1996 2
??? Hoogovens Jul. 15, 1996 3
BST British Steel Jul. 15, 1996 1
HIT Hitachi LTD. Jul. 15, 1996 1
ASL Ashante Goldfields Sep. 9, 1996 1
ECO Echo Bay Mines Sep. 9, 1996 2
CA Computer Associates Sep. 23, 1996 2
NVAL National Vision Associates Nov. 11, 1996 2
SSET SSE Telecom Nov. 11, 1996 2
CLIX Compression Labs Nov. 11, 1996 2
PMOR Phar-Mor Nov. 11, 1996 1
TXF Texfi Industries Nov. 11, 1996 2
FLH Fila Holdings Dec. 2, 1996 1
GAL Galoob Toys Dec. 2, 1996 2
CGNE Calgene Dec. 16, 1996 2
ISIP Isis Pharmaceuticals Dec. 16, 1996 2
LGND Ligand Pharmaceuticals Dec. 16, 1996 1
MIKE Michaels Stores Dec. 16, 1996 2
SMTG Somatogen Jan. 13, 1997 1
SHMN Shaman Jan. 13, 1997 1
XOMA Xoma Jan. 13, 1997 2
YELL Yellow Corp. Jun. 16, 1997 2
MEDA Medaphis Jul. 7, 1997 2
NAVR Navarre Corp. Jul. 7, 1997 2
DJT Trump Hotels Jul. 7, 1997 1
CVN Computervision Jul. 7, 1997 2
Reason: 1 = Pe not listed in Barrons
2 = Pe < 0
3 = Quote not listed in Barrons
===========================================================================
SYMBOL KEY
DPF = CASH DEPOSIT OF FUNDS WDF = CASH WITHDRAWAL OF FUNDS
BUY = BUY SECURITY SLL = SELL SECURITY
SLS = SELL SECURITY SHORT BYC = BUY TO COVER SHORT POSITION
SP+ = SPLIT LONG SP- = SPLIT SHORT
T = TYPE OF INVESTMENT S = STOCK
$/U = PRICE PER SHARE M = MUTUAL FUND
TAC = TRANSACTION CODE $/COST = TOTAL INVESTMENT
DV+ = CASH DIVIDENDS PAID QUANTITY = # OF SHARES HELD
===========================================================================
NOTES ON PORTFOLIO RETURN COMPUTATION
The Return on Investment for Portfolios A-E and the SP500 Index is computed
by determining the Internal Rate of Return (IRR). All transactions are
converted to a series of cash flows (positive, negative, or null) and the
following equation is solved.
NPV = 0 = Sum((CF(i) / ((1+Rate)^(Date(i)-Date(0))))) - Internal Valuation
where:
NPV = Net Present Value
CF(i) = Cash Flow for transaction (i)
Rate = (Return on Investment)/100
Date(i) = Date of the (ith) transaction (years & fractions of years, 365.25
days per year assumed
Date(0) = Starting date of the portfolio valuation
^ = exponential notation (e.g. 3^2 = 9)
Sum = Signifies to sum for all transactions starting with the first
transaction following the start date specified, up to and
including all transactions on the close date.
**Note: In calculating the cost basis of each portfolio we assume 100%
margin requirements for each stock. If a portfolio consisted of 7
stocks (six long, one short) the cost basis would be $7,000.
OFF WALL STREET is produced weekly by RUSSELL EQUITY MANAGEMENT.
Periodically RUSSELL EQUITY MANAGEMENT may have positions in the stocks
profiled by OFF WALL STREET. RUSSELL EQUITY MANAGEMENT is not affiliated
with Forbes Magazine, Mark Hulbert nor David Dreman. The editor of OFF WALL
STREET is Russell Thomas.
RETURN TO ARCHIVES