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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: daffydog who wrote (12738)	12/13/1999 10:39:00 PM
From: Mike Buckley	Read Replies (4) \| Respond to of 54805

Mark, There is no time in the history of the greatest gorillas where anyone in his or her right mind said, "Gee, this is a really cheap stock." I'll take that as a compliment. When the PEG on Qualcomm was 1.0 at the time of the Ericsson capitulation, I called the stock undervalued. Hey, I don't have a lot of really great calls so I have to celebrate the few (the one?) that do come from my keyboard. --Mike Buckley

To: daffydog who wrote (12738)	12/14/1999 6:03:00 AM
From: Bruce Brown	Read Replies (2) \| Respond to of 54805

Agree on all points, except that if we search the bins at the front of the Home Depot where they keep the $1.29 pliers, looking for the next MSFT, we will not find it. We won't find it in the mid-priced tools either. And this is where we part paths with the traditional value investor. There is no time in the history of the greatest gorillas where anyone in his or her right mind said, "Gee, this is a really cheap stock." Or even, "This is a fairly-valued stock." The refrain has always been, "This valuation is WAY too much." And the critical error has been underestimating the GAP/CAP area under the curve that drives the valuation of the true gorilla. I'm not so sure that pliers is the tool of choice to use in speaking of gorillas, but I'll go with your term for sake of description. Our friend, the stock market, does indeed provide pairs of pliers for $1.29 at various times for those patient enough to wait. Not that these pliers will be the next Microsoft, but certainly many of them should be selling for $2.99, $4.49, $6.99, $12.49, $27.99 and have been placed in the sales bin at the front of the store for some reason or other. In many cases, the pliers placed in the bin may even be themselves Microsoft, Cisco, Intel, Qualcomm, Siebel, i2 or others. Who needs the 'next' Microsoft when you can buy the 'real' thing on sale? Obviously, these are all stocks that participate in a gorilla game. Various events require the market to place them in the 'value bin' from time to time and a smart shopper will be able to recognize the value and add them to their shopping cart to take home and place in the tool chest with the pliers they already own. Hey, we can never have too many pairs of pliers - right? i2 and Siebel were placed in the value bin earlier this year with fears of Y2K issues that hit the ERP market. A smart shopper wondered what a SCM and a CRM leader were doing in the value bin at $16 and $33. Now, these pliers sell for $140 and $176 ($88 split adjusted). Do we need to revisit the value bin last fall on Cisco, Microsoft, Intel and others that the market created? Suffice it to say, compared to the price of Cisco today, those pliers were really in the value bin in the fall of 1998. Even up and coming Gemstar was placed in what seems like the 'value bin at $68' (now that the price is hovering around $130) for making the announcement they would acquire TV Guide. Qualcomm has been relegated to the value bin not as dramatically, but smart shoppers will experience a day when some good shopping will occur. It's up to us to shop intelligently and choose the most promising items that show up in the 'value bin' the market creates at various times - and it will happen. Happy shopping to all and watch for the obvious 'blue light specials'. I know, that's K-Mart and not Home Depot, but it is one that serves my memory well from years ago (I used to stock shelves at K-Mart in high school). While you're there, you might even see a couple of decent hammers, drills and maybe even a jack-hammer. Now that's the tool of choice I would have used for a Gorilla. Either that, or a big buzz saw. BB