The bull and bear fund. 01/16/95(evaluations of stocks and price
predictions)
(Streetwalker) (Column)
John H. Christy Shlomo Z. Reifman
Forbes
Page 122
COPYRIGHT Forbes Inc. 1995
WE DO IT every year: Ask a bunch of analysts to pick just one stock for
the new year. Last year's contestants (FORBES, Jan. 3, 1994) fared
moderately well in a sideways market. Our 12 bulls, asked to pick one
stock to own in 1994, lost an average 0.2%, edging out the
market's--1.9% return.
The starting line
Name/affiliation Stock Ticker Recent
symbol price
The bulls say buy these stocks...
Alison Bisno/Stephens Citation Corp CAST 12 3/4
Van Brady /Presidio
Management Cambridge Tech Partners CATP 20 1/2
Leopldo Guzman/Guzman &
Co Grupo Televisa(*) TV 32 7/8
Kurt Kammerer/Advest Professional Sports
Care Mgmt PSCM 12 1/4
Michael Kassen/Neuberger
& Berman Progressive Corp PGR 35 7/8
Madelynn Matlock/Bartlett
& Co Istituto Mobiliare(*) IMI 18 1/8
Theodore Rosenberg/Burney
Co MicroAge MICA 11 3/8
David Saks/Gruntal & Co Ivax IVX 17 3/4
Brett Sneed/Bull & Bear
Group System Software
Associates SSAX 14 5/8
Lesa Sroufe/Ragen
MacKenzie Washington Energy WEG 13 1/2
Paul Stephens/Robertson
Stephens Contrarian Fund McMoRan Oil & Gas MOXY 2 3/4
Gregory Weiss/Investment
Quality Trends Chemed CHE 33 3/4
...the bears say short these stocks
William Lambos/BIG
newsletter Epitope EPT 24 7/8
Robert Lang/Lang Asset
Management Hilton Hotels HLT 67 3/4
William Lyons/Short On
Value Nextel Communications CALL 15 3/8
Evan Sturza/Sturza's
Medical Investment Letter Glaxo(*) GLX 20 5/8
Ranjan Tandon/Libra
Advisors IP Timberlands, LP IPT 23 1/2
Closing prices as of Dec. 23, 1994.
(*)ADR.
But it was a year for bears, not for bulls. Our five bears shone. Their
chosen short-sale candidates were down an average 31%.
The shorts were helped by one bull's-eye. Embrace Systems, a
molded-plastics firm panned by Stephen Carlson of Aspen Capital Group,
went bankrupt.
Unfortunately for the bulls, they, too, had a stock that became worthless:
Elizabeth Tran of Prudential Asia Fund Management picked KYC
Machine Industry. The Japanese manufacturer of construction equipment
didn't go up. It went broke. In a reminder of how the stock market
humbles all of us, analyst Tran was our first-place winner the year before.
Last year's best buy came from Kurt Kammerer of Advest, who
recommended physical therapy provider Advantage Health. It gained
135%.
For a summary of 1994's 12 bulls and 5 bears, see the table on page 123.
The finish line
Name/affiliation Stock %
change
The bulls lost...
Kurt Kammerer/Advest Advantage Health 135%
Alison Bisno/Stephens Blount 84
Lesa Sroufe/Ragen MacKenzie Alberto-Culver 21
Van Brady /Presidio Management Systems & Computer
Technology 23
Theodore Rosenberg/Burney Co Boeing 20
Jerry Herman/Kemper Securities Lesco -1
Carlene Murphy/Strong Common Stock
Fund Dovatron International -2
Christine Munn/Munn, Bernhard &
Associates AmeriCredit -18
Mark Keller/AG Edwards Esco Electronics -42
Justin Mazzon/American Blue Chip
Investment Management Woolworth -40
Wayne Burgan/Analytic Capital
Management Castle Capital -83
Elizabeth Tran/Prudential Asia Fund
Management KYC Machine Industry -100
...the bears won
Stephen Carlson/Aspen Capital Group Embrace Systems -100
Evan Sturza/Sturza's Medical
Investment Letter Aphton -45
Robert Lang/Lang Asset Management Deere & Co -9
David Hines/Hines Management Columbia Gas System -1
Robert Stovall/Stovall/Twenty-First
Advisers Charles Schwab 0.4
Performance from Dec. 10, 1993 through Dec. 15, 1994.
And now for 1995. Kammerer and other winners were invited back to try
their luck again.
Kammerer is sticking with the rehabilitation theme. He picks Professional
Sports Care Management, a company founded by the current team
physician of the New York Giants.
Alison Bisno of Stephens Inc. finished a strong second by picking Blount
last year. Her new choice: Citation Corp., which owns metal foundries and
sells at less than 12 times her 1995 earnings projection of $1.15 a share.
Now in his seventh consecutive appearance is Van Brady of Presidio
Management. His 1994 pick, Systems & Computer Technology, gained
23%. This year Brady's going with Cambridge Technology Partners, a
computer consulting firm.
Another returning bull, Theodore Rosenberg of Burney Co., is also betting
on computers. His choice is MicroAge, a Tempe, Ariz.-based franchisor
of computer stores.
Lesa Sroufe of Seattle's Ragen MacKenzie is back with Washington
Energy, a regulated natural gas utility. Doesn't sound like a swinger, but it
should hold up if interest rates decline. The company was awarded a
4.9% rate boost last May, and its customer base is growing 5% annually,
twice the national average.
A bullish newcomer is David Saks, Gruntal & Co.'s pharmaceuticals
analyst. His favorite for 1995 is Ivax, a Miami-based pharmaceutical firm.
Its trailing earnings of $1.06 aren't bad, but Saks rhapsodizes about the
company's founder and chairman, Phillip Frost: "Qualitative faith in people
sometimes transcends quantitative analysis."
Newcomer Paul Stephens, portfolio manager of the Robertson Stephens
Contrarian Fund, is betting on petroleum. His favorite: McMoRan Oil &
Gas, a spinoff of Freeport-McMoRan. "The company has a lot of hidden
assets, including the largest 3-D seismic library on the Gulf of Mexico."
Brett Sneed, senior vice president of Bull & Bear Group, a mutual fund
vendor, picks System Software Associates, which sells applications for
midrange computers.
Gregory Weiss of Investment Quality Trends chooses Chemed, the
nation's largest supplier of janitorial services and 60% owner of
Roto-Rooter. A year ago Chemed purchased Patient Care, a large New
York-area provider of home health care. Another plus, says Weiss, is
Chemed's 6.4% yield.
Michael Kassen of Neuberger & Berman puts his chips on Progressive
Corp., which insures high-risk drivers. Kassen says Progressive was rare
among insurers last year in turning a profit on underwriting. Most
property/casualty insurers are in the black only by dint of investment
income.
We asked two analysts to offer international buy recommendations.
Leopoldo Guzman, president of Miami-based Guzman & Co., likes
Mexico's Grupo Televisa, which owns television stations and programming
operations throughout Latin America. It's also the dominant
Spanish-language TV programming group in the U.S. The peso
devaluation just made the stock a lot cheaper.
Madelynn Matlock, director of international investment at Cincinnati's
Bartlett & Co., offers Italian bank Istituto Mobiliare, off 30% (in dollar
terms) from its peak in April 1994.
If you think the bear side is the place to be in 1995, as in 1994, have we
got some picks for you!
We couldn't reach 1994 genius Stephen Carlson. We replaced him with
William Lyons, publisher of the Atlanta-based Short on Value newsletter.
Lyons shorts Nextel Communications. (For a contrary view on Nextel,
see p. 47.)
Robert Lang, who manages money from Atlanta, says he'd short Hilton
Hotels, overpriced at 25 times 1995 estimated earnings.
Evan Sturza of Sturza's Medical Investment Letter last year told us to
short Aphton, which fell nearly 45%. Now he's bearish on Glaxo, the
British drug giant. He says the sales of new drugs in Glaxo's pipeline won't
offset the loss from the patent expiration on its popular ulcer medication,
Zantac, which rang up sales of $3.7 billion for the year ended June 1994.
Newcomer William Lambos also tracks biotechnology stocks as editor of
the BIG newsletter in New York. He's short Epitope, a biotech company
that makes OraSure, an oral test for HIV. OraSure just got federal
approval, but only as a doctor-supervised test. Disillusioned investors who
hoped for a home-detection item will soon dump the stock, says Lambos.
Ranjan Tandon, president of Libra Advisors, a New York hedge fund, is
sour on IP Timberlands, L.P., a wasting asset controlled by International
Paper. "Even if timber prices stay stable, I think the stock is overpriced,"
says Tandon. "And I expect timber prices to fall." It had better fall briskly:
As a short-seller, you would have to cover the company's $2.88 annual
dividend.
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