Monkey fails to shine in muddled 2nd quarter

July 3, 2005

BY DAVID ROEDER SUN-TIMES COLUMNIST

The second quarter is history, so the time came to call Mr. Adam Monk, the cebus monkey who is the favorite investment counsel of the Sun-Times, and ask him about his stocks.

Bad move.

"Stocks -- you call those cadavers stocks? I haven't seen even a spasm out of them in months," he said. "The whole Wall Street might as well be in Rockford for all the good it's doing. My brokerage statement looks like the returns from a Kevin Costner movie.

"If the market tanked, that would be better than what's happening now, which is nothing. This tight trading range kills me, like that collar I have to wear when I go on TV with you guys. Who would ever think stocks could get so dull. They're worse than the Sunday Tribune!"

Through Friday's business, Mr. Monk's five stocks, selected last January from the Sun-Times' now-defunct stock tables, are down 4 percent. This puts our redoubtable primate squarely in line with the market, with the Dow Jones industrial average down 4.5 percent, and the Nasdaq composite index losing 5.5 percent. The Standard & Poor's 500 index is off only 1.5 percent.

The overall inert market, meanwhile, has hurt the performance of most readers who entered our Monkey Business contest this year. The prize goes for the stock that will appreciate the most in 2005. So far, the clear leaders are Tim Vileta and Dennis Rybarczyk, who picked Sonesta International Hotels (SNSTA), and Jennifer Kiscellus and Judy Sedivy, who picked Forward Industries (FORD). Both are up more than 300 percent.

They've left everybody else in their dust. A list of the leaders runs with this story, and it shows a substantial dropoff. But there's half a year left, and Mr. Monk's stellar performance from 2004 came almost entirely in the fourth quarter.

For that reason, I told Mr. Monk I was surprised by his impatience.

"I prefer to think of it as redeploying capital," he replied. "As we're speaking, I'm sitting on top of a tradesman's van, making sure my hired hands don't nick up the cabinetry. I've joined the crowd and I'm building condos in Bucktown."

Mr. Monk, somehow that seems beneath you.

"Listen, doofus, you told me to invest in that American Girl franchise in Pilsen, and I'm still recovering. No, I'm riding this housing trend until the bubble machine breaks down. The crews I hire build as fast as people can buy."

And not a union card in the bunch, I'll bet.

"Nor a building permit, but the city stays off my case because I've promised to do a few affordable units. It's really easy to do with just a few changes by my architectural firm, Cinder, Block and Leaks. You won't miss a supporting wall or two. And the alderman pre-screens the buyers!"

While Mr. Monk follows his dubious course, devoted readers should stick with long-term investments in stocks and continue checking the Sun-Times for updates on this year's Monkey Business contest, which drew more than 400 entries. The winner, the one whose stock shows the biggest percentage gain in 2005, will win a prize donated by coin dealer Harlan J. Berk Ltd., 31 N. Clark. It's a 1905 U.S. gold coin featuring Lady Liberty.

From the look of things, we might have to revert to our tie-breaker to settle this year's winner. We asked everybody to pick the year's close for the Dow Jones industrial average. On that basis, Rybarczyk, who always makes a strong showing in this derby, has the edge, with a guess of 10,666.

Mr. Monk praised the wisdom of our contest leaders, but said he's intent on his condo strategy. "Here's the last favor I'll do for you," he said. "You know that if trends continue, all of downtown will be a bedroom community, and the only people with jobs will be doormen. So take down this scoop: I'm buying Tribune Tower and turning it condo. I figure old man McCormick's space will go for $15 million at least."

What's happening to the newsroom?

"Going next to a warehouse in Itasca. Except for the editors, who will move to Paris."

Why Paris?

"It's the only place that would take 'em."

TIMING IS ALL: In last Sunday's Curious Investor report on Carl Birkelbach, who runs a La Salle Street money management firm, he mentioned MBNA (KRB) as a favorite stock. If you bought any right away, remember the Sun-Times at subscription renewal time. MBNA shares gained 25 percent Thursday because of Bank of America's (BAC) $35 billion takeover, and the stock held its ground Friday. "Sometimes the magic works," Birkelbach said. Beats clipping the grocery coupons.

STOCK ALERTS: Before the news of the KRB deal, BAC fell off Zacks.com's "brokerage buy list," which reflects the core buy recommendations of at least three of the 12 top investment banks. Another stock to fall from the list is Devon Energy (DVN).

Meanwhile, look for some of the income-oriented funds to scoop up shares of 3M (MMM), at least if the managers think like Josh Peters, equities strategist for Morningstar DividendInvestor. Peters last week recommended adding MMM shares because of the stock's selloff on the announcement that its CEO, W. James McNerney Jr., was bound for Boeing (BA). He credited McNerney with shaking up MMM but said the changes he instituted are now entrenched. "Because of that, we believe his replacement won't have very much cleanup work to do," Peters said.

GARDEN WATCH: Crop futures moved higher Friday at the Chicago Board of Trade after a week of declines that made me wonder if traders were discounting the drought. Even the trees in my neighborhood are suffering, and that means things are bad. But Greg Grow, director of agri-business, ADM Archer Financial Services Inc., said the market has sold off on rains in the Midwest outside Illinois. He said a dry holiday weekend should bring stronger prices next week.

CLOSING QUOTE: "The fact is that barring an interruption to the supply line, oil supplies and oil stocks are sufficient to meet demand through fall. Unless something happens to interrupt oil production and refining, energy prices should fall significantly from their current levels." -- Jim Collins, editor of OTC Insight, at Zacks.com