Qualiport

[ December 3, 1999 ]

Blurring the Qualiport

By Stuart Watson (TMFTiger)

Potters Bar, Herts -- Bruce (TMFGoogly) is continuing his practice of attending as many Australian sporting events as possible. This weekend it is the Davis Cup. With a despairing lack of originality we find that, yet again, it is France and Australia battling it out for the world crown. Let's hope he doesn't accidentally jingle his jester's cap when Pat 'The Rat' Rafter is serving that crucial point.

Also in the spirit of continuation of recent Qualiport articles let's look at a book I've been reading recently. The title in question goes by the worryingly trendy name of Blur: The Speed of Change in the Connected Economy. It is not an investment book per se, but it still throws up many interesting issues worthy of discussion. However, it does fall down by never once mentioning the excellent Essex-based beat combo from which it takes its title. But never mind.

It was published in early 1998, so my first thought was that it would probably be out of date already. But had I read it at that time, before I had discovered the Fool and only just venturing onto the Internet, I probably would not have appreciated many of the arguments at all. As the title suggests, the crux of the book is that the distinction between everything in today's world is getting blurred. The speed which information can travel and how we are all interlinked is breaking down barriers left, right and center.

The authors suggest that every single market will eventually end up like a stock market, whether it is the labour market or the supermarket. The distinction between products and services will blur as will the relationships between buyers and sellers.

For example, in supermarkets these days manufacturers will pay for their newly launched goods to be given key positions, such as eye-level or on the left hand side, as apparently most people's natural tendency is to turn to the left upon entering. Here the supplier pays the buyer of the goods for prime position to maximise their sales over the long-term.

When consumers such as you and I buy these goods with our loyalty cards we are giving the supermarkets key information about our shopping habits. That information has value too. At the moment the supermarkets get it for free. It's suggested that in the future such a state of affairs is unlikely to continue. Consumers will be paid, in some form, for providing information about their buying habits.

So how do the Qualiport companies fare in such a brave new world? Top marks probably have to go to Dell (NASDAQ: DELL). For starters, it is the only company in the portfolio actually referred to in the book. As we know, Dell has been one of the key beneficiaries of the Internet. Michael Dell calls it "a dream come true". He also says that "the only thing better would be mental telepathy". Dell's latest trick is the Webpc, a stripped-down personal computer designed to make Internet access as easy as possible. It will retail from $999.

Not far behind I would probably place Independent Insurance (LSE: IIG) which is taking a radically different approach to the insurance industry. Independent actively works with its customers, making suggestions that help reduce their risks. This way they can both reduce the premiums, keeping the customer happy, but also reduce the probability they will have to pay out. The close involvement with the customer also helps them, increasing their knowledge and information.

Misys (LSE: MSY) is another company that appears to be at the cutting edge. It is leading the way in trying to establish the definitive internet portal for IFAs. Emap (LSE: EMA) scores highly as well. For example, the establishment of its FHM website, one of the most popular in the UK, enhances rather than detracts from the popularity of its leading publication.

PizzaExpress (LSE: PIZ) is another good, but less obvious example. Looking at its website I see that they show their standard menu, encourage feedback and even promote the PizzaExpress Club and jazz nights. Of all the companies in the Qualiport you would expect PizzaExpress has the least to fear from technological changes. But it seems to making the most of out it nonetheless.

After these five we have Lloyds TSB (LSE: LLOY), Unilever (LSE: ULVR) and Rentokil Initial (LSE: RTO). The approach from the three largest UK companies in the portfolio is less clear. As a customer of Lloyds I have a great admiration for their efficiency and smart, business-like approach. But I'm not sure I would put them at the head of the pack for breaking down the barriers of banking. I'm even less sure about Unilever and Rentokil. They both seem to be stuck in a rut. Perhaps that's part of the reason why they are the two worst performing shares in the Qualiport.

That's more than enough hazy management speak for one day. Back on Monday, Bruce lamented the fact that he wasn't participating in the 'tech stock boom' and felt a little envious as a result. His Misys shares must have been listening because they have done their best to jump on the tech bandwagon. In fact they've leapt some 25% in the value since Monday. The strong performance of the software giant has also help push the Qualiport back into the black.

As always, comments and questions on the Qualiport message board please.

Qualiport Numbers
3/12/1999 Close

Company  Change    Bid
DELL(US)+2.00    45.00
EMA     -0.11    10.92
IIG     -0.03     2.74
MSY     +0.89     8.72
PIZ     +0.03     7.62
RTO     -0.01     2.38
ULVR    -0.04     4.51
LLOY    +0.08     7.80


Qualiport Stocks

Last Rec'd  Total # Company    Buy  Current Change

 22/04/99   542     Misys      5.57  8.72    56.4%
 17/04/98   301     Emap      10.20 10.95     7.0%
 27/10/98  1133     Indep Ins  2.60  2.77     5.4%
 29/09/99   356     Lloyds TSB 7.56  7.80     3.2%
 27/01/99    74     Dell (US) 44.63 45.00     0.8%
 04/11/98   245     Pizza Exp  7.93  7.65    (3.8%)
 19/12/97   783     Rentokil   2.55  2.36    (6.7%)
 17/07/98   266     Unilever   7.53  4.60   (40.1%)

Last Rec'd  Total # Company     In At  Value   Change

 22/04/99   542     Misys      3065.85 4726.24 1660.40
 17/04/98   301     Emap       3139.85 3286.92  147.08
 27/10/98  1133     Indep Ins  2990.63 3104.42  113.87
 29/09/99   356     Lloyds TSB 2723.20 2776.80   53.60
 27/01/99    74     Dell (US)  2007.42 2018.18   10.76
 04/11/98   245     Pizza Exp  1966.34 1866.90  (99.43)
 19/12/97   783     Rentokil   2046.53 1863.54 (182.99)
 17/07/98   266     Unilever   2052.00 1199.66 (852.34)

Cash:                                          £ 28.46
Current Total :                             £20,871.12

Total Invested:                             £20,184.62
Profit/(Loss) :                                £686.50 

Value Per Share

                    Day      Month      Year      
Qualiport          2.29%    16.26%     -1.17%
FTSE 100           1.33%     7.78%     14.61%
FTSE All Share     1.33%     8.60%     17.96%