Lots of folks say scrap the penny because it's a pain in the butt to count and it's really not worth much. That may be the case, but it certainly doesn't apply to all pennies, especially Penny Trenk, who recently gave an impressive demonstration of penny power through a significant stock market killing. What's more, she has several fresh stock ideas.
First, though, with the Dow Industrials having ballooned about 2,700 points since early March, investors could well be late to the party if they put fresh money to work in this schizophrenic market. Still, if you buy the growing belief that both the economy and the stock market have turned the corner, you might want to take a gander at a trio of stocks that entice Penny and which she's thinking of buying.
No, Penny, a New York City food connoisseur who dines out seven evenings a week, is not one of those hot money managers or some renowned stockpicker, but an investor in some New York restaurants (such as the Tribeca Grill and Lucky's Famous).
Why should you give a darn? Because she recently pulled off the kind of financial feat that one might associate with the likes of investment whiz Warren Buffet. And if you were lucky enough to have copied her and had the investment courage to do what she did, your net worth would be larger and you would probably view her as a Penny from heaven.
In sports, her feat would be equivalent to running a 4-minute mile or hitting 4 home runs in a single baseball game.
Here's the story. In mid-July, Penny bought 50 shares of Intuitive Surgical, a maker of robotic surgery systems, at $144 a share. What followed was what investment dreams are all about. I had dinner with her a few days ago and by then the stock had rocketed to $235. That's a breathtaking gain in just about 3 1/2 weeks of $91 a share or 63%, representing a blazing fast paper profit of $7,200. The stock is currently trading around $226.
Actually, it took a lot of guts for Penny to buy the stock since she did so after the company's shares had already shot up about 70% from their 52-week low of $84.86. Further, this is a highly volatile stock, which during the past year has traded as high as $314.63.
"I wish I had bought more," Penny says, "but I was scared because it was so high."
Playing the stock market is nothing new for Penny, who describes herself as fascinated with Wall Street and who began investing when she was a little girl, somewhere, she recalls, between the ages of 12 and 15. At that time, she sold one of her two typewriters and used the money to buy about 25 to 50 shares of AT&T. A firm believer in dividend reinvestment plans -- you use a company's dividends to buy more of its shares -- Penny presently holds an AT&T position that was worth about $250,000 before the market's big sell-off in recent years.
AT&T is just one of 79 stocks in Penny's portfolio that also includes IBM, British Petroleum, Exxon Mobil, Johnson & Johnson, Caterpillar, McDonald's, Teva Pharmaceutical, Berkshire Hathaway (Class B shares), JPMorgan Chase, Schlumberger, United Technologies, Wal-mart, Roche Holding, Waters Corp. and Flowserve Corp. She also owns EWZ, A Brazilian exchange-traded fund.
In many cases, Penny owns less than 100 shares of a company's stock. "I'd rather buy new ones than add to old positions," she says.
As a result of the vicious losses the past couple of years, many bloodied stock market players consider the buy-and-hold trend, or the idea of being a long-term investor, a strategy of the past. For many, the new trend is grab your profits while you can and run.
Not so Penny, who has owned some stocks more than 50 years. "I rarely sell," she says. "I guess it's foolish not to sell. I invest like I'm 30, but I'm way over 30. If you're smart, some friends tell me, you'll take a profit, and maybe some day I'll do that." Actually, she has recently begun to do some slight housekeeping, having dumped her entire stake in Eastman Kodak, which she notes "doesn't seem to go anywhere but down."
She doesn't profess to be any kind of investment whiz, but with the economy getting better and the market going up, she says, "I'm getting more confident." In contrast, about a month ago, she says she was kicking herself for not selling. After doing her homework, her increased confidence is prompting here to consider the purchase of 3 stocks:
- Joy Global, a world-wide mining and machinery services company.
A director of the American Food and Wine Institute, Penny is married to David Trenk, president of Joseph Trenk & Sons, one of the city's leading poultry distributors, whose clients include such well known dining delights as the Four Seasons, Nobu, Osteria del Circo and the Tribeca Grill.
Apparently, her husband, also a food aficionado, is not smitten with her investment prowess. He is not interested in the market and has never bought a stock, Penny says.
One of Penny's close friends tells me if you want to know where to eat in New York, ask Penny Trenk. "She has become what Zagat used to be," she says. Given her stockpicking prowess, Penny may have also become what the hot hedge fund manager of the high-flying Sixties used to be.