(click on pictures to enlarge)
Nardi pencils are neat examples of early multicolor pencils.
The red example is shown with the point engaged. To change color, you pushed the button on the clip and pulled the pencil apart. Then you could rotate the barrel and push the pencil back together to engage another color.
Of course, there's no way to tell what color you are going to get, so as Forrest Gump would say, "it's like a box of chocolates."
The pencil is the brainchild of a man named Romolo Nardi, who took out patents for this pencil on July 20, 1926 (number 1,593,347). View here.
This pencil is actually Nardi's third and final design. He applied for two earlier designs, first on June 6, 1923, which was granted July 29, 1924 as number 1,503,244, view here, and on December 9, 1924, which was granted patent number 1,576,988 on March 16, 1926. View here. I've never seen examples of either earlier design, so I cannot confirm they were ever produced.