Kobrick Says Internet Stock 'Froth' Abated: Bloomberg Forum
Bloomberg News
June 7, 1999, 12:43 p.m. ET
Kobrick Says Internet Stock 'Froth' Abated: Bloomberg Forum
Boston, June 7 (Bloomberg) -- The shakeout in Internet
stocks has paved the way for new investment in ''backbone''
stocks like America Online Inc., Cisco Systems Inc. and CMGI
Inc., said Fred Kobrick, president of Kobrick Funds.
''There's a tremendous differentiation between backbone
providers and the 'Internet.com' companies themselves,'' he told
the Bloomberg Forum. AOL and Cisco have made profits from selling
Internet equipment and services, he said, compared with newer
companies, like Marketwatch.com Inc. or Priceline.com Inc. that
admit profits are far off.
The sharp decline in all those stocks in late April and May
made distinctions clear, he said. Shares of backbone companies
were hurt far less than more speculative Internet issues.
''What we don't want to see here is a frothy market that
makes no differentiation between the winners and the losers,''
said Kobrick, who manages Kobrick Capital Fund, Kobrick Growth
Fund and Kobrick Emerging Growth Fund in Boston.
All the funds have big technology holdings, which Kobrick
said he pruned in late April when he believed values were too
high.
Now he plans to buy favorites, including America Online, the
No. 1 consumer provider of online access, and MCI Worldcom Inc.,
No. 1 provider of business access as well as the No. 2 U.S. long-
distance telephone carrier.
''We have not ridden the Internet down,'' Kobrick, 55, said
in a telephone interview.
AOL, for example, was the biggest holding in Kobrick Growth
and Kobrick Capital on March 31, when the shares were at 147.
Today, they're around 117.
CMGI, an investor in Internet companies, was Kobrick
Capital's second-largest holding. CMGI shares now are around 101,
compared with 91 17/32 on March 31.
Kobrick didn't say what percentage of holdings he sold in
late April when he thought the market was overvalued. Nor would
he see how many shares he's bought back.
''Leadership companies'' that include Microsoft Corp., the
No. 1 software company, are poised to benefit from the stock
market's next rise, he said.
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