Blodget's Internet Picks Are Down: Laurel Kenner (Update1)
(Updates with today's closing prices.)
New York, Aug. 6, 1999 (Bloomberg) -- Nothing better illustrates
the trials of the U.S. stock market right now than the
performance of Internet stocks and their star analyst, Henry
Blodget.
Recruited from CIBC Oppenheimer & Co. by Merrill Lynch & Co.
in February, Blodget, 33, has ``near-term accumulate'' or ``near-
term buy'' ratings on 18 Internet stocks.
None of them are up since Blodget made his calls.
The biggest loser, Infoseek Corp., is down 47 percent since
Blodget rated it accumulate in May; the least unfortunate,
excluding recommendations made this week, is Excite At Home
Corp., with a 9 percent loss. Priceline.com Inc., which Blodget
called ``the next core holding'' in an April 27 research report,
has since declined 44 percent.
``Basically, we're just trying to call the trend for the
long-term winners,'' Blodget said. ``We're not going to get every
one of those right, but if we get a couple of long-term winners,
usually that takes care of the ones that fail.''
Blodget said last December that Amazon.com Inc. would reach
400, which it did. The bookseller went for 242 at the time of his
prediction. (The stock has since split.) Now, Amazon.com is down
57 percent from its April 23 high, and is 7 percent below the
level where Blodget made his now-famous call.
Blodget's picks did better than the Bloomberg U.S. Internet
Index this week -- an index of his choices fell 9.2 percent
through Thursday's close, to the Busnet's 12 percent; by
comparison, the Standard & Poor's 500 Index fell 2.1 percent.
Morgan Stanley's Star
Nor does Blodget differ much from the other star Internet
analyst, Mary Meeker, of Morgan Stanley Dean Witter & Co. Meeker
has ``outperform'' or ``strong buy'' ratings on the five Internet
stocks both she and Blodget have ratings on, including
Priceline.com. Her own recent recommendations have fared no
better, and VeriSign Inc., one of the four stocks she rates
``neutral,'' is up 33 percent since her recommendation.
Blodget said he couldn't comment on Priceline.com, which
sells airline tickets and hotel rooms, because Merrill is
involved in preparations for a sale of additional stock.
As for his other recommendations, ``It's not firm policy to
flip your rating whenever you think you're calling a relatively
short-term move,'' defined as three to six months, he said.
``We still think these stocks will have a very strong fourth
quarter, so we think the trend for the year will be up. We do
believe there is long-term upside for lots of companies -- like
AOL and Yahoo and Amazon,'' he said.
If You're Queasy ...
The wild swings of the last several months are likely to
continue, he said. ``If you're worried about the volatility, you
should probably just invest indirectly by companies like
Microsoft and AT&T Corp. and others that are around the sector.
Because clearly, it's not for everybody.''
Experts who called the Internet rally this year a bubble are
plentiful. Blodget is unusual in that he's still a bull, at least
on a few of his stocks. It will be interesting to see whether
he's forced to change some of his calls in coming months.
Comebacks are always possible. Still, most people who bought
Internet stocks while they were the market leaders earlier in the
year are in the red.
(Note: The following percentage declines were as of Aug. 6, 1999)
Blodget's Picks*
1) INIT US Interliant Inc. accumulate 8/ 4/99 - 2%
2) AOL US America Online Inc. buy 8/ 3/99 - 5%
3) ETYS US EToys Inc. accumulate 7/28/99 -14%
4) IIXL US iXL Enterprises Inc. buy 7/28/99 -28%
5) PSIX US Psinet Inc. accumulate 7/28/99 -15%
6) BNBN US barnesandnoble.com accumulate 7/23/99 -12%
7) AMZN US Amazon.com Inc. accumulate 7/22/99 -16%
8) DIR US DLJDirect accumulate 7/21/99 -32%
9) UBID US Ubid Inc. accumulate 7/21/99 -37%
10) ATHM US At Home Corp. accumulate 7/21/99 - 9%
11) SWCM US Software.com Inc. accumulate 7/20/99 -33%
12) YHOO US Yahoo! Inc. accumulate 7/ 8/99 -23%
13) INKT US Inktomi Corp. accumulate 7/ 6/99 -31%
14) LCOS US Lycos Inc. accumulate 6/22/99 -24%
15) TBFC US Telebanc Financial buy 6/ 1/99 -34%
16) PCLN US Priceline.com Inc. accumulate 5/14/99 -44%
17) TFSM US 24/7 Media Inc. accumulate 5/14/99 -38%
18) SEEK US Infoseek Corp. accumulate 4/14/99 -47%
Source: Bloomberg Analytics
*All ratings are ``near-term.'' Losses are as of Friday's close.
--Laurel Kenner in the New York newsroom (212) 318-2310./cws
Story illustration: To see a history of any analyst's stock
recommendations, type WHO followed by the name and choose
``Recommendations History.'' For other analyst ratings, type the
company ticker, <Equity> ANR.