Investors looking for the summer weather to heat up the performance of the 100 stocks listed in the DM News Portfolio last month were disappointed.
Stock prices for 82 of those companies lost value or were unchanged for July. Among those suffering the biggest drops between June 29 and July 27:
· Coldwater Creek, down 34 percent from $27.18 to $17.90.
· Talbots Inc., down 21 percent from $38.95 to $30.58.
· Fair Isaac & Co., down 19 percent from $33.14 to $26.75.
· J. Jill Group, down 18 percent from $23.67 to $19.30.
· E.piphany Inc., down 16 percent from $4.56 to $3.82.
· Collegiate Pacific, down 15 percent from $11.30 to $9.58.
· Brookstone, down 13 percent from $20.70 to $17.99.
Taking a particularly severe hit was DoubleClick, plummeting 36 percent from $8 to $5.10. The company said last month that revenue came in below its previously issued outlook, mainly because of year-over-year declines from its Abacus and Ad Management divisions. The declines resulted mainly from lower-than-anticipated mailings by customers in the U.S. retail business-to-consumer Abacus Alliance and “continued softness” in the publisher portion of DoubleClick's Ad Management business.
“DoubleClick … just had a disappointing quarter and lower guidance for the future, and it was fairly significant in terms of the guidance that was lowered,” said Scott Smallman, a senior vice president at Piper Jaffray, Seattle. “The issue there was pricing pressure on all of their businesses, which include advertising. [It was] across-the-board pricing pressure.”
Amazon.com's stock also was battered last month, falling 27 percent from $53.71 to $39.11.
“With Amazon, you had a stock that was richly valued where you needed to have something beyond any reasonable assumption in order to keep the momentum going,” Smallman said.
Amazon posted quarterly earnings of 18 cents a share last month, missing Wall Street estimates by a penny.
“Among investors a buzz will develop, and in the case of Amazon — since they've so aggressively beaten Street expectations over the years that they've been public — that buzz gets pretty loud,” he said. “Expectations were much greater than what analysts had in print, and they didn't come through with enough of a positive surprise to make the stock go higher.”
The recent poor performance in the DM sector occurred as the broader market also turned in a lackluster showing. The Dow Jones Industrial Average closed below the psychologically significant 10,000 mark July 23 and July 26.
Smallman was not surprised by the recent overall market performance. He drew a connection between Wall Street and politics, referring to last week's Democratic National Convention.
“Typically, in presidential election years, markets have trouble around the time that the out-of-power party has its convention,” he said. “What does that party do? It says, 'Life is tough. We can do better.' And you get a negative buzz. But after that you usually get signs of improvement, and I think the investment community is waiting for that.”
In other news, Deluxe Corp. acquired business-to-business cataloger New England Business Service Inc. Deluxe (DLX) replaces NEBS in the Portfolio.
Portfolio value: If $1,000 had been invested in each of the 100 firms in the DM News Portfolio at the start of 2004, or when the stock first closed for newly public firms, the value would be $127,498, up 27.5 percent.