Boring Portfolio

Boring Portfolio Report
Tuesday, February 27, 1996

by Greg Markus (MF Boring)

Today hurt. No sooner had I added Lam to my stable than it got slaughtered, right there in the middle of Wall Street in broad daylight.

The first warning came last night, when Micron Technology informed the world that it was halting further development of its new Lehi, Utah, fabrication plant, due to concerns about overcapacity among DRAM producers. Then this morning Microchip released news that it was experiencing some softening in orders for its specialty chips. As a result, the semiconductor equipment makers, Lam Research and Kulicke & Soffa among them, got clobbered today, the expectation being that Micron's order push-outs are just the beginning of a cascade of delays and cancellations from semiconductor makers all over the world.

KLIC lost $3/4 to close at a bid of $21 1/4, and LRCX was down nearly 10% today, selling off in the afternoon to close at $40 1/2. Lam has thus declined approximately 17% since we added it to the Borefolio just a few days ago. Should we bail out?

Possibly. Recall that Lam was lying in the low 30s just a few weeks ago. The stock had been trying to recover recently, and this latest blow could presage another visit to those depths. On the other hand, it's important to recall that much of the reason for Micron's present predicament is that it lagged behind its larger global competitors in upgrading capacity. Viewed from that angle, the moral of Micron's story is: invest in infrastructure or suffer at the hands of those who do. As for KLIC, relatively little of its business is with DRAM producers, and the comparatively modest decline in its price today suggests that pretty much anyone who was going to sell KLIC shares in quantity already has.

I tried, unsuccessfully, to reach David Ringler at Lam. (I suspect it was somewhat busy at Lam's Investor Relations office today.) But I'll try again tomorrow and report back (in the Lam folder) the second I hear anything.

As for our non-tech holdings, today was not a great day for them, either. Interest-sensitive Green Tree lost $5/8. Even Texas Industries, that leader of the Borefolio from day one, lost some ground: also $5/8 point, to be exact. Only Potash's "unch" reading on the bid side (at $75 5/8) kept it from being a complete wash-out.

To add insult to injury, the stock I mentioned last night as a possible Borefolio addition, United Waste Services, put the pedal to the metal and left without us today--up $2 1/4 on the heels of a fine earnings report released late yesterday. What has eight wheels and flies? UWST.

In hopes of reviving the our reeling Borefolio, I'm going to add another member to the team tomorrow. Nope, not UWST. I'm waiting for a bit more info on that one before making a decision. Instead, I'm going with 200 shares of a company that is almost literally in my own back yard, a true Peter Lynch choice: Borders Group (NYSE: BGP). My review of Borders and where I see the stock heading will be in a new folder in the Hall of Portfolios scroll sometime around 8pm tonight.

Today's Moves

GNT - 5/8
KLIC - 3/4
LRCX -4 1/4
POT ---
TXI - 5/8

                   Day   Month    Year  History
        BORING   -1.52%  -0.52%  -1.01%  -1.01%
        S&P 500  -0.50%   1.77%   4.12%   4.12%
        NASDAQ   -0.62%   4.37%   6.26%   6.26%

    Rec'd  #   Security     In At       Now    Change

  1/29/96 100 Texas Indus    54.52     60.88    11.65%
   2/2/96 200 Green Tree     30.39     31.38     3.25%
   2/9/96 100 Potash Corp    76.27     75.63    -0.85%
  1/29/96 200 Kulicke & S    23.89     21.25   -11.04%
  2/23/96 100 Lam Researc    48.02     40.50   -15.66%

    Rec'd  #   Security      Cost     Value    Change

  1/29/96 100 Texas Indus  5449.99   6087.50   $637.51
   2/2/96 200 Green Tree   6077.49   6275.00   $197.51
   2/9/96 100 Potash Corp  7627.49   7562.50   -$64.99
  1/29/96 200 Kulicke & S  4774.99   4250.00  -$524.99
  2/23/96 100 Lam Researc  4802.49   4050.00  -$752.49

                             CASH  $21267.55
                            TOTAL  $49492.55