Computer Capabilities Connecting With Investor Needs
"It's great that we'll soon be connected." - Tim Rice, "The Lion King"
In this age so dominated by Microsoft, surely some computer buff knows the significance of ENIAC.
And if there is a soul who can reply, then how about what ENIAC stands for?
On the off chance a reader doesn't know those answers, we will spill them, along with some fascinating information on how easy it is becoming to gather corporate data. The word "Internet" should come into play.
We'll even spend a moment consoling five professional stock selectors who this year made the grievous mistake of agreeing to pick a five-stock portfolio they are not allowed to touch. A review is necessary, after all: The first half of the year has expired.
But first, ENIAC.
A quick peek into Britannica (our Encarta is otherwise engaged) tells us that ENIAC is the "first, all-purpose, all-electronic digital computer." It was birthed in 1946 by two University of Pennsylvania investors, J. Presper Eckert and John Mauchly.
ENIAC stands for Electronic Numerical Integrator and Calculator.
This subject may seem a bit esoteric. We can get away with it, of course, because it's the Fourth of July weekend. While the roustabouts are out playing, these are the sorts of things the true sophisticate yearns to ponder. Stay with us, because this gets interesting before long.
A second generation of ENIAC was under development in the 1950s. One site of research was the University of Illinois.
On the team to conjure the first transistorized computer was a bright young fellow named John Penhollow. He was a postgraduate student. Not in computer science. It would be decades before someone thought that up. It was in electrical engineering.
Now at age 59, Penhollow doesn't look like a nerd. He doesn't even use a pocket protector.
But you get the impression he knows his computer stuff. For most of his 24 years at Exxon, Penhollow designed and worked with computer systems that made it easier for one of the world's largest companies to discover oil.
Then, things began to change. The federal Securities and Exchange Commission had for five years tried to find a way to get corporate information - annual reports, quarterly statements, key announcements - computerized. The SEC received authorization as early as 1983 to commence that effort.
In 1988, Penhollow was snatched from Exxon. For 5 1/2 years, he labored so that corporations could file their data electronically, and so citizens - investors - could access the data instantly via computer.
Penhollow made EDGAR work. The Electronic Data Gathering, Analysis and Retrieval system is under way. Some 2,500 entities already are on-line. Companies are being added every few months. By May 1996, more than 15,000 public companies, investment companies and investment trusts will report electronically.
EDGAR's architect left the SEC early last year to become director of EDGAR Services for Bowne & Co., the world's largest printer. Bowne brought Penhollow to Seattle last week to talk to clients and potential clients about filing with EDGAR.
In the "old" days, a company could file and know it might be days or more before a sensitive disclosure might work its way out to the public.
"Now, it's five minutes from the time of filing to when the public can see it," Penhollow said.
The ramifications are serious. Penhollow said not only will the public have access to financial information almost instantly, but commercial providers will come along with some fairly whiz-bang enhancers.
For example, a time will come when a person on a personal computer will make a few entries and get back a list of all of the female chief executives, aged 40 to 45, who make more than $150,000 a year and run a specialty retailing company with more than 3,000 employees.
"You'll be able to get that directly or through your broker," Penhollow said. "If I were Charles Schwab, I'd allow both brokers and clients to use computers to search out characteristics."
Internet is an alternative to commercial services such as Prodigy and CompuServe. Although cumbersome, the Internet offered up EDGAR data this year.
Internet is receiving data on a two-year National Science Foundation grant. What happens when that is extinguished is unclear.
Nonetheless, Penhollow said commercial services may offer enough enhancements at prices low enough to provide a reasonable alternative to Internet.
What's available and the channels for distribution will continue to widen. Just as few imagined in 1987 the possibilities of Internet, Penhollow said, who can guess what will be here five, seven, 10 years down the road.
One guy who might have an idea is Penhollow. Imagine what a person with his knowledge could do, given some cash and a separate corporation, and told to develop commercially successful EDGAR-based data projects.
Until that happens, the small investor will have to be content to sign on to the Internet and call up annual and quarterly reports, prospectuses and mutual-fund data until his eyes fall out or his fingers fall off.
Midterm grades
Five Wall Street professionals, whose picks on a combined basis were even at the end of the first quarter, are now down a composite 6.5 percent for the year.
Bill Whitlow and his analysts at Pacific Crest Securities lead the pack, with their five choices up a composite 6.4 percent. The picks are: Nike 28.8 percent, Flir Systems 32.1, Expeditors International 15.0, Interlinq -20.0, Advanced Technology Labs -23.9.
Les Childress of Childress Investment Management on Bainbridge Island is second at an average of 1.8 percent. His picks: Hollywood Entertainment 83.3, Starbucks 13.5, Price/Costco -22.4, Schnitzer Steel -30.1, TJ International -35.5.
Mike Kunath of Kunath Karren Rinne & Atkin saw his list fall to minus 9.1 percent. His five: Flir Systems 32.1, U.S. Bancorp 3.5, Interpoint -15.4, Flow International -21.7, Vectra Technologies -44.1.
Terry Douglas of Piper Jaffray saw her portfolio slip to minus 11.9 percent. Her choices: Boeing 6.9, U.S. Bancorp 3.5, ProCyte -19.6, Interlinq -20.0, Electro Scientific Industries -30.1.
Donna Jaegers of Seattle Capital Management was off 20.6 percent. Her picks: Alaska Air 5.3, Egghead -19.4, Icos -22.2, Price/Costco -22.4, Vectra Technologies -44.1.
All Northwest stocks ended the quarter down 4.4 percent. The Murphey Favre Northwest 50 index was off 2.3 percent.
Three other portfolios - all under water - are worth noting. The 10 selections readers chose last December were down 6 percent at the end of the first quarter. But they rallied to cut their midyear loss to 0.7 percent, meaning $1,000 invested at the start of the year was worth $993.
The 10 stocks randomly selected by Seattle Times reporter Helen Jung, up 2.6 percent at the quarter, were down 7.7 percent ($923) at the six-month post. (Usually reliable sources say the downturn is not believed to be related to Jung's decision to leave The Times for a newspaper 1,400 miles away.)
The final portfolio is Nobody's List, the brainchild of Bill Swailes of Bellevue. It consists of the 12 stocks no reader listed last December. At the first-quarter mark, that group was up a robust 11 percent. But the damage done to smaller stocks in the second quarter did in the dirty dozen. They flip-flopped dramatically, off 21.3 percent at midyear. That meant $1,000 shriveled to $787. Five of the 12 stocks were off more than 30 percent, "led" by TriQuint Semiconductor's negative 56 percent.
Stocks and bonds
The Dow Jones industrial average of 30 blue-chip stocks last week rose 9.71 points to 3,646.65.
The Murphey Favre Northwest 50, 50 stocks weighted by their regional economic impact, rose 18.62 points to end at 2,421.74.
The U.S. Treasury's 30-year bellwether bond fell $9 per $1,000 of face value to $841. That was priced to yield 7.61 percent, said Pamela Warren, Seattle-Northwest Securities vice president.
Many are keeping their powder dry, waiting to see what the Federal Reserve's policy-making body and the G-7 meeting of seven major industrial nations decide to do about the falling dollar.
Municipal bonds lost as much as $15 per $1,000, reported Judith Cochrane, Seafirst Bank municipal trader. The fear of higher interest rates continues to plague the market.
The impending holiday weekend held volume down, Cochrane said. This week, affected by summer vacations and a light new-issue calendar, also should be slow.
----------------- READERS PORTFOLIO ----------------- 10 NW stocks preferred by readers
Boeing + 7.2. Carver - 2.1. Flow International -22.5. Immunex -21.5. Microsoft +24.7. Nike +31.0. Plum Creek Timber +21.5. QFC - 8.1. Starbucks +12.4. Wash. Mutual S.B. -13.5.
AVERAGE: +2.9% What $1,000 invested in those stocks would be today: $1,029.
---------------------- READERS' NON-PORTFOLIO ---------------------- 10 NW Stocks picked randomly, excluding readers' top 10.
Arrow Transportation - 3.4. Data I/O +20.5. Fred Meyer + 1.4. Icos -22.2. Interlinq -21.8. Itron +11.1. Louisiana-Pacific -25.2. Paccar -12.9. Sequent Computer -15.2. Wash. Water Power -22.0.
AVERAGE: -9.0% What $1,000 invested in those stocks would be today: $910.