Brinker and Stanford Telecom
I would like to remind everyone that I follow Brinker's philosophy that index funds are not only great performers, they are tax-efficient and cost-efficient as well. My sole contention is that Brinker is in denial when it comes to thinking that he can outperform the market with individual stock picks.
Brinker recommended Stanford Telecom for the first time on May 31, 1996 on the Nightly Business Report. (As everyone knows, this is also the same day he first recommended Ultratech Stepper at $25.) Here is the text to prove it.
KANGAS: Any individual stocks, new ones that you would buy at these levels?
BRINKER: There are great small cap ideas and in the technology area, particularly, Ultratek Stepper, which manufactures photolithography systems.
KANGAS: Symbol?
BRINKER: UTEK on the Nasdaq 25.
KANGAS: Okay.
BRINKER: And this company is making systems for the manufacturer of semiconductors and thin film that's also for disk drives. And outstanding outlook, rapid growth, and I think it's very attractive.
KANGAS: Okay. So that's your one basic selection away from your mutual funds?
BRINKER: In that area. In the telecom area and equipment area I like Stanford Telecom Nasdaq STII, small cap once again about 30 to 50 million market cap. They're into the broad band wireless cable and the cable modems and the wireless local loop, and personal satellite communications. Four very rapidly growing areas.
Stanford Telecom closed at a split-adjusted price of $27 5/8 on May 31, 1996. This is a stock that peaked on May 13, 1996, at $32 7/8, but Brinker liked it enough to recommend it at $27 5/8. Again, Brinker virtually picked the top. By the way, on May 31, 1996, the Russell 2000 closed at 361.85 and the S & P 500 closed at 669.12. Within 7 months Stanford Telecom hit a low of $11 1/4 on December 11, 1996. Not only did it become a "teenager" like Ultratech Stepper, it almost became a hat size. Stanford Telecom had fallen nearly 60% since Brinkers first recommendation. In the same time period the Russell 2000 had fallen a tiny 1% and the S & P 500 had risen over 10%, not including dividends, of course.
The next time Brinker appeared on NBR, it was January 24, 1997. Here is what he said at that appearance.
KANGAS: Quickly now. You also gave this as the only clinker you had in that entire interview, Stanford Telecom (STII). It was at 55. It's now all the way down to 32. Out of it?
BRINKER: I would say no. I would say the stock is attractive here. It's on sale here, a very technology rich company, broadband wireless, personal satellite communications, cable modems. I think the stock's a buy.
Stanford Telecom closed at $15 15/16 on January 24, 1997. Brinkers next visit was October 17, 1997. Here is the text. Pay special attention to Brinkers positive spin on STII.
KANGAS: And Stanford Telecom (STII) had a good move. You recommended...
BRINKER: Yes.
KANGAS: ... it at 15; and had a 2-for-1 split. Now, on that basis, it's 23. Take it away?
BRINKER: Well, we're up close to 50 percent since January in that one. I would hold the stock here, but if it gets back below 20, I'd be willing to add to it.
Stanford Telecom closed at $23 1/4 on October 17, 1997. Now amazingly, Brinker focuses in on the fact that STII is up 45% since his last visit, but makes no mention of the more important fact that he is still down over 15% since his original recommendation. This is SPIN at its best. Beyond that Brinker said he'd be willing to add to the position if got back below $20, well it did. As of the close of business on March 13, 1998, Stanford Telecom closed at $17. Brinker is down nearly 40% on this recommendation since May 31, 1996. In the same time period the Russell 2000 has risen almost 30% and the S & P 500 has risen just shy of 60%, not including dividends, of course.
Rillinois |
