QUALIPORT
Real Money No More

By Bruce Jackson (TMFGoogly)
May 3, 2001

Long-time followers of the Motley Fool will know that both the Qualiport and the Rule Shaker portfolios are real money portfolios. When we've announced a trade, we've actually gone out and bought the shares with our very own hard earned cash.

As you can see from my personal profile, I own shares in all the companies that the Qualiport currently holds (plus a few others). I've sunk my own personal dosh into the Qualiport companies.

For quite some time now, Maynard has been managing the Qualiport and making all the investment decisions. The same goes for James and the Rule Shaker portfolio.

Maynard has effectively been managing part of my own personal portfolio. I feel very comfortable with that, as our investment styles and beliefs are very similar. But it doesn't make rational sense for that situation to continue. Here's why...

• It doesn't make rational sense for me, Bruce Jackson.

When the Qualiport made its first investment, way back in December 1997, the money I invested into Rentokil Initial (LSE: RTO) was money I didn't need for a minimum of 5 years. The same goes for all the other investments made subsequent to that initial purchase.

Today, I still don't need that money. But sometime within the next 5 years, I may need the money, or some of it. It doesn't make sense for my own personal financial situation to be restricted by having my money tied up in the Motley Fool's Qualiport. It doesn't make sense for any individual who works for the company to be in a similar situation. We're going to change that.

• It doesn't make rational sense for the Motley Fool company.

What happens if I leave the company? (Not that I'm about to do so -- it's too much fun working here, as it has been since day 1, way back in September 1997.)

I will leave the Motley Fool at some stage in my life, even if it is in a coffin. No matter how much I love the Motley Fool, I'm not likely to want to bequeath the Qualiport money to the company. The Motley Fool company is not in the business of investing its cash in the stock market.

• It doesn't make any difference to the running of the Qualiport or the Rule Shaker.

The main purpose of the Motley Fool's real money portfolios has always been educational. Hopefully they served that purpose, even if they've only helped you avoid some of the many mistakes we've made.

The Fool portfolios, whether real money or not, will continue to be educational. We will continue to strive to beat the returns of the stock market. Pride is a huge motivating factor. For the current managers of the Qualiport and Rule Shaker, they don't need the portfolios to be real money in order for them to do their job properly. In the running of the portfolios, nothing will change.

Going Forward

For all intents and purposes, the running of the Qualiport and Rule Shaker portfolios will remain unchanged. They just won't be real money portfolios.

But we will still announce our purchases in advance of 'trading', and the managers of the portfolios will 'buy' or 'sell' the shares within 5 days of the announcement. We will include all charges when calculating our overall returns, including brokerage, stamp duty and bid/offer spreads. The portfolios will be as transparent and as real as ever.

Our commitment to education about money and the stock market has never wavered. It never will, real money or not.

The Unilever Challenge

Readers of the original best selling Motley Fool UK Investment Guide (this is a link to the recently updated version) may remember the great Unilever (LSE: ULVR) challenge. Author David Berger took readers down the supermarket shopping aisle with the challenge of filling their shopping baskets with as many Unilever products as possible. From soaps to detergents to tea to margarine, Unilever owns a vast array of consumer brands. In the book, David named Unilever an Obviously Great Investment.

Back in July 1998, the Qualiport bought shares in Unilever, paying 672p. The shares currently stand at 531p. Oops. Although I take full responsibility for paying a more than lofty price for Unilever, I must point out that David's bull article at the time influenced my decision. It said "Unilever is a buy. It's always a buy, whatever the markets or its price are doing. Isn't it?" Ever since, I've regretted paying so much for Unilever, great company though it is.

The Qualiport sold Unilever just under a year ago, receiving 441p per share. We cited its highly priced acquisition of Best Foods, and the £20 billion of debt it'd be taking on as the main reasons why we dumped it. Since then, I've forgotten all about it.

That was until last week. Following Unilever's excellent first quarter results and subsequent rise in the share price, suddenly David popped up from under the Unilever radar (where was he in early 2000 when the shares sank below 340p?).

He said: "In the 10 years following the Qualiport's initial purchase, I bet you a steak dinner that Unilever outperforms the market."

"You're on", I countered, feeling rather confident. So, let the race begin. It's already almost 3 years old, and here's how things currently stand.

            17/7/98     2/5/01    Change

Unilever     672p        531p      -20.9%
FTSE 100     6174        5904      - 4.4%

Good luck David. I like my steaks cooked medium-rare.