Model Portfolio Update

What lies ahead

The performance of the portfolio, after 9% in costs, can be found at this marketplayer.com page. Last time I checked, I am up well over 30% before costs are accounted for, and almost 25% at $25 per trade.

Trades for 3/2/2000

• I am buying Microchip Tech. (Nasdaq: MCHP) This semiconductor company has had solid earnings increases and happens to be part of the sizzling Nasdaq 100. I could use more semiconductor winners in the portfolio, since I don't see an end to their outperformance in the near future.
• I am covering priceline. (Nasdaq: PCLN) I'm going to leave these guys alone for a while. The downtrend has pretty much abated and there could be good news coming. (Author's boast: The stock nearly doubled after I covered. Whew!)
• I am buying Knight/Trimark. (Nasdaq: NITE) This market-maker's profits have been soaring, but the stock hasn't really done much. I'm betting that might start to change soon.
• I am buying Telefonos de Mexico. (NYSE: TMX) The situation in Mexico is improving. Demand for tacos and burritos continues to rise, while guacamole and sour cream are holding steady. Thus, I think it's time to diversify south of the border slightly. (When I get time I'll write more about international investment strategies...)
• I am selling Atlantic Coast Airlines. (Nasdaq: ACAI) I still don't see any big lift for airline stocks coming. I am going to stay on the sidelines for a while with this one.

Trades for 2/22/2000

• I am buying Medimmune. (Nasdaq: MEDI) Here is a biotech with very solid earnings growth and a good drug pipeline. It's a good one to add to my biotech holdings.
• I am covering Drugstore.com. (Nasdaq: DSCM) This one was such a quick money-maker that I think I will take my gain and revisit shorting it in the future. I don't want to have too many positions, and tomorrow's market is not looking positive which should get me a good execution on this buy trade.
• I am covering OneMain.com. (Nasdaq: ONEM) I am happy with profits in this issue, but it's starting to reach a fair value for the ISP holdings. While that doesn't signal a bottom by any means, I think the risk/reward favors buying it back here rather than waiting for a possible drop to 75-80% of book value.

How I did [12/13/1999-2/12/2000]

My hypothetical marketplayer.com portfolio, with $900 in commissions paid to start up the $10,000 stock basket, has still grown to $11,337 without any trades since the beginning of the year. That's equivalent to a raw return of 22.7% in a period where the S&P has dropped 5% and the markets have been pretty violent.

Trades for 2/14/2000

• I am covering China.com. (Nasdaq: CHINA) Those bastards just keep overpromoting their stock. :) I don't want it to get out of hand... I'll revisit when the interest has died down a bit. (P&L: -25%)
• I am taking a loss in Metamor. (Nasdaq: MMWW) My entry point is awful and I should have taken the loss a long time ago. Patience is good, but a weak stock is no place for my money. (P&L: -38%)
• I am taking a loss in Continental. (NYSE: CAL) Again, I feel the funds can be put to better use elsewhere. (P&L: -24%)
• I am covering MP3.com. (Nasdaq: MPPP) This one has been really volatile, and I expect it's about time for some more stock-promoting news to come out from the company. I might short it again if it pops, but for now I want to book that gain. (P&L: +28%)
• I am taking partial profits in C-Cube. (Nasdaq: CUBE) I just have to sell some up here (probably half my original position). (P&L: +68%)
• I am buying E*Trade Group (Nasdaq: EGRP) While I've made good money shorting this stock in the past, I believe sentiment about this name could swing back up very soon. The growth in online trading has been massive, but the stock price has gone nowhere for some time. My downside stop is around 18 1/2. If you have options trading ability, I highly recommend buy/write trades for EGRP because the options sell at inflated prices. You might not want to cover the entire position you own, though, since it's a pain to watch it zoom past the strike. :)
• I am buying BMC Software (Nasdaq: BMCS) Buying beaten-down Nasdaq 100 companies appeals greatly to me at this point. This company has had some earnings trouble recently, but there is a high-growth core business here. Look for it to regain favor somewhat.
• I am shorting drugstore.com (Nasdaq: DSCM) Yeah, I know I'm late to the party. But there is simply no compelling reason to buy the stock at these levels. There is a tremendous supply of shares available, and these dog IPOs tend to get worse before they get better (should that ever happen).

Stay tuned! --jf