Investment Clubs: Not so ‘Baroque’ anymore

Marketplace Staff May 18, 2007
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Investment Clubs: Not so ‘Baroque’ anymore

Marketplace Staff May 18, 2007
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TESS VIGELAND: This is Marketplace Money from American Public Media. I’m Tess Vigeland.

Back now to our investment club series.
We’re following three clubs — one in Seattle, another in San Jose and a third in Fairfax, Virginia — as they figure out what stocks to buy, sell and hold throughout the year.

We’re back with Formerly Baroque. They’re 12 women — of a certain age — who gather once a month for a coffee-clatsch where the talk is of stocks, bonds, limit orders and grandkids.

Our last visit was lovely but kinda . . . boring.
Not because of them — they’re great — but because all of their money was fully invested in the market. And they didn’t want to make any moves.

By our next visit in April, things had changed.

This time, instead of meeting at somebody’s house, the club met in a room on the second floor of an enormous grocery store called Wegman’s. They started with a prayer acknowledging a national tragedy in their state that week: the shootings at Virginia Tech.

Then Marjorie Weeda called the meeting to order.

MARJORIE WEEDA: Do we have a quorum? We have everyone here. OK, financial report. Pat?

PAT: We recovered nicely from the Shanghai dip. At the end of March, the whole portfolio dipped to $88,000. As of last night, it’s $96,000.

VIGELAND: And I think it was 96 last time I visited you in, what, early February?

PAT: Right. The dip affected us greatly. I said it was up 6 percent, it’s up 9 percent since that dip. And our stocks have recovered nicely – some of them we’ve sold.

VIGELAND: What did you sell?

PAT: We sold HomeEx and Heelie’s.

VIGELAND: You sold Heelie’s!

PAT: Sadly.

VIGELAND: So you’re back up at about $96,000 invested, so you haven’t hit the champagne mark yet.

MEMBER: It is on ice.

But a couple of weeks later — on May 11 — they finally did pop the corks (cork pop sound)as their investments soared over the $100,000 mark.
Well done, ladies!
But amid the good news, some club members were frustrated that some of the stocks they’d sold – The Mexican builder HomeEx and the wheeled kids shoes called Heelies – went up after the club dumped the stock.

MEMBER: What that suggests is that we need to keep, all of us, is to look at these stocks that we’ve sold – not just HomeEx, but other ones – and let’s just look at what’s happening and to rebuy.

They all agreed to that.
And from there, it was time to check in on their portfolio.

MEMBER: We’ll begin reviewing our stocks now. And our Irish bank, Allied Irish Bank, thankfully came back up. And it just came back up even in the last week. I have mixed feelings about this when I look at the other ones and what some of the other ones have done. I still like the idea of this diversity and investing in foreign bank, so I’m going to courageously suggest that we sell if we need the money.

MEMBER: Pat?

PAT: This is . . . Franklin Resources has done very well. I’m gonna ping the analyst again – Citigroup downgraded it yesterday, a day before yesterday, and it went up $1.32 yesterday. So the stock itself is up 11 percent since February, it was 1.17.29 at that meeting, it closed yesterday at 1.30.29. I recommend a hold, possibly a buy.

And those rubber shoes they love so much, the Crocs? Still turning a profit, according to club member Fran Betzner. But others had some concerns.

MEMBER: Crocs is holding its own. It closed yesterday at 53.68, and has been pretty much climbing a little and dropping back and climbing a little bit. But I think we should just hold.

MEMBER: If I can make a comment on Crocs: Two weeks ago, my Land’s End catalog came in, and I go, “Oooh, look! Crocs on the back.” It’s not Crocs. It’s Trello. So you’re having a lot of knock-offs. And the way I feel about it, if people buy the knock-offs, if they’re not as comfortable, they’ll just say, well that’s it – they’re not gonna buy Crocs, ’cause they’re gonna think it’s the same.

VIGELAND: So if you have concerns about knock-offs, why hold on to the stocks?

MEMBER: ‘Cause it’s still going up.

MEMBER: Well, and one other caution also, in our portfolio it’s our major investment: $21,000. ‘Cause we have 400 shares of that.

In the end, they voted to hold onto all those shares.
But they did sell a wee bit o’ Allied Irish Bank. And with that money and some other cash in their account, they brought onboard a couple of new stocks.
One is Sun Hydraulics, which makes . . . hydraulics. The other: a company called Case New Holland, which makes big tractors and other equipment.
Maureen Anderson pitched that stock to the group.

MAUREEN ANDERSON: OK, this one is CNH. I’ll read the summary first: The corn industry is reaching historic levels. CNH sees a bigger piece of its business from the ethanol-corn goldrush. Earnings weren’t too good before 2003 – 2003, they started coming back up, advancing through the last two quarters to 129 percent growth. It is $40.29 per share. This a good . . . think a good time to buy.

In all, they OK’d the purchase of 550 more shares of six different companies…
No doubt, some of those decisions launched them over the $100,000 mark.

MEMBER: All right. Any other old business? New business.

MEMBER: OK, that’s a wrap!

And that’s a wrap for the latest round of visits with our three investment clubs.
If you want more information on how to start your own club, we’ve got a link to the organization “Better Investing” at our website, marketplace.org. You can find the entire series there as well, plus photos of the clubs and all the fun they’re having.

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