Boring Portfolio

Boring Portfolio Report
Wednesday, February 21, 1996

by Greg Markus (MF Boring)

This evening's report is about my conversation earlier today with Kulicke & Soffa's Investor Relations Officer, Jim Chiafery. After that, my colleague MF Czar will add a brief note summing up today's activity in the Borefolio stocks. I'm leaving that chore to Czar, because I have another obligation after the market closes. So if you've got any complaints about how our stocks closed tonight, please e-mail them to MF Czar!

Also, barring any unforeseen events, I plan to issue a buy report tomorrow evening, to be exercised on Friday. Stay tuned! Without any further ado, I'll begin tonight's report.

As followers of K&S know, the company had planned to host a presentation today to show off a new line of products and discuss business plans for coming year. Because of this other obligation I have today, I was unable to attend. So I called K&S's IR office to get an idea of what occurred at the conference. What I discovered is that it has been, uh, pushed back--probably until the middle of next month. The delay had been communicated some days ago, but since I wasn't on the list (yet), I didn't find out until today.

The main reason for the delay in the conference is that the K&S had hoped to announce a new joint venture with another company to pursue "flip-chip bonding technology development and subcontract services to semiconductor manufacturers." That language is from the recently filed 10-Q (available on EDGAR, for those who care to pull it down). The 10-Q continues: "This joint venture, if consummated on the terms currently being discussed, would require a minimum initial investment of approximately $11.0 million to fund the start up of operations. The Company maintains a $10.0 million unsecured revolving bank credit facility, subject to interest at 0.25% below the lender's prime rate. ... There have been no borrowings under this credit line during fiscal 1996."

As it happens, the details of the joint venture have not yet been completed; hence, no dog and pony show.

So what's this "flip-chip bonding" stuff all about? Basically, its a technique first developed by IBM some years ago but which has seen limited use (less than 2% of the total market) to date. Flip-chip bonding is an alternative to wire bonding. Tiny solder bumps on the chip are lined up with corresponding bumps on the circuit board, and the whole thing is then heated, melting the solder and bonding the chip in place. An advantage of this process is that it creates a low-profile package, perfect for cell phones, personal digital assistants, notebook computers, and so forth.

Although flip-chip bonding is small potatoes right now, overall use of the technology is expected to double or triple by the year 2000. The next-generation Intel chip (P-7) will be flip-bonded, for example. My impression is that the proposed joint venture is an important and desirable element of K&S's strategy.

In the balance of my conversation with Mr. Chiafery, I answered his questions about The Motley Fool and what we do here. He mentioned that folks have told him that K&S is the topic of a fair amount of discussion on our boards. He also invited me to participate in the conference next month, which I'll certainly try to attend. And if we have time, I'll try to show Mr. Chiafery how he can join us here in Fooldom and answer some of our questions directly.

So that's what I did with part of my day today. I now turn you over to MF Czar for tonight's Borefolio update. Take it away, Czar!

-- Greg Markus (MF Boring)

Thank you, Greg, for your diligent research on Kulicke & Soffa, that's the kind of thing we love to see. Okay, now that the handshaking is over, let's get down to business.

Friends, Dullards, Boringmen, lend me your screens! I've got a plum day to report on, starting with the aforementioned KLIC, which was up a rousing $1 on the bid side to $21, a cool 5% jump today. Not quite back to the Boring basis, but still showing signs of life. We have every confidence that Greg knows a Boring thing when he sees it, and thus have equally high hopes for KLIC.

Also up $1 today was Green Tree Financial (GNT), which closed at $30 1/4 on the bid side. This Fool has a sneaking suspicion that behind this move is the inclusion of GNT as one of 43 stocks in the Bear Stearns Vantage Point Portfolio. Call warrants on this portfolio (the warrants expire on August 20, 1997) are being traded on the AMEX. This is the first custom designed basket of stocks to have warrants listed, and I think that may have helped GNT's rise.

Finally, we have the two truly Boring stocks, Potash Corp. of Saskatchewan, makers of fertilizer, and Texas Industries, who are in the business of concrete and steel. The boys up in Saskatoon are doing something right, as POT closed up $3/4 to $78 5/8. The crew down in Texas has stalled a bit of late, and today was a continuation of that rut, as TXI closed unchanged on the bid side.

Have a dull night, and a Boring morning.

-- Keith Pelczarski (MF Czar)

Today's Moves

GNT +1
POT + 3/4
TXI ---

                   Day   Month    Year  History
        BORING   +0.95%   1.12%   0.62%   0.62%
        S&P 500  +1.17%   1.90%   4.26%   4.26%
        NASDAQ   +1.26%   3.50%   5.37%   5.37%

    Rec'd  #   Security     In At       Now    Change

  1/29/96 100 Texas Indus    54.52     61.25    12.34%
   2/9/96 100 Potash Corp    76.27     78.63     3.09%
   2/2/96 200 Green Tree     30.39     30.25    -0.45%
  1/29/96 200 Kulicke & S    23.89     21.00   -12.09%

    Rec'd  #   Security      Cost     Value    Change

  1/29/96 100 Texas Indus  5449.99   6125.00   $675.01
   2/9/96 100 Potash Corp  7627.49   7862.50   $235.01
   2/2/96 200 Green Tree   6077.49   6050.00   -$27.49
  1/29/96 200 Kulicke & S  4774.99   4200.00  -$574.99

                             CASH  $26070.04
                            TOTAL  $50307.54