Boring Portfolio

Boring Portfolio Report
Monday, March 4, 1996

by Greg Markus (MF Boring)

It was a great day for the month-old Borefolio, with three of its holdings hitting new highs and the port beating the NASDAQ and S&P 500.

There's still a substantial chunk of change left in the cookie jar, though, and I'd like to put more of it to work in the market this week. So if you have any stock suggestions, please post them--along with the reasoning behind your recommendations--in the "Boring Stocks" message folder, here in Fooldom. You can access that folder via the button in the lower half of the scroll in the Hall of Portfolios. Or you can click in through the "Investment Approaches" button on the main MF board.

Speaking of the Boring Stocks folder, one discussant wondered recently how our latest acquisition, Borders (BGP), stacked up against its competition--Barnes & Noble (BKS), Books-A-Million (BAMM), or Crown Books (CRWN), for example. Why did I pick Borders? In terms of the stocks, there's really no contest. BGP set yet another new high today ($23 1/2), while BKS, BAMM, and CRWN flounder in the bottom ends of their 52-week ranges. Fine, but *why*?

Bookstore aficionados are an opinionated lot. You'll hear folks say that Cody's in Berkeley is the best bookstore in America, or Denver's Tattered Cover, or Powell's in Portland (Oregon), or Seminary Books in Chicagoland, or the Harvard Coop, or whatever. They're all terrific stores, no doubt. In my experience, however, there are no multi-site bookstore operations--and few businesses of any kind, for that matter--that compare with Borders in terms of that amorphous concept called customer service.

First, and most important, there's the store personnel. I could bore you with dozens of stories about Borders service. Here's one.

A couple of weeks ago, I was looking for an obscure little book about swimming as a literary theme, entitled _Haunts of the Black Masseur_. (Don't ask why: that's for another day.) So I headed over to Borders here in Ann Arbor. There, as is often the case, was Joe Gable, manager of the flagship Borders store for more than 20 years and recent focus of a story in US News & World Report. He was straightening books on the shelves, tidying stacks on the tables, and generally overseeing his domain. I walked over and asked if he had the book.

"Yes, we carry it," he said. "It should be in the literature section--over there," and he pointed to a corner of the store a good 30 yards from where we stood. He dropped what he was doing, escorted me to the section, located the book, offered a few comments about the book, and handed it over for my examination.

"Thanks, very much," said I, much impressed.

"Not at all," said he.

Beyond the quality of the store personnel (and, yes, you have to pass a test to work at Borders), there's the computerized information system. Developed in-house, the system uses artificial intelligence to manage the vast inventory: which books (or kinds of books) are selling best, which ones to stock up on, which ones to get rid of.

Which is why my choice for the Borefolio--not only for bookstore stock, but for retail stock of any kind--is Borders.

Let's close with a quick update on our other holdings:

The sole downer today was Lam Research. For much of the day, it looked like our little Lam just might stem the run of losses it has accumulated virtually from the moment I bought the stock. Indeed, LRCX was up as high as 38 1/4 this morning. Alas, most chip-related stocks sold off yet again, and Lam ended the day minus 3/4, at 35 3/4.

Texas Industries more than made up for that bit of bad news, however. TXI leaped 2 3/8, on no news, to set yet another new high, 64 3/8. That makes for an 18% gain (including transaction costs and bid/ask spread) in one month for TXI. Green Tree Financial also set a new high today: up 1/2 to $33. Potash gained a full point to close at 76 1/2. And even Kulicke & Soffa managed to eke out a 1/4 point. I know: boring.

Today's Moves

BGP + 3/4
GNT + 1/2
KLIC + 1/4
LRCX - 3/4
POT +1
TXI +2 3/8

                   Day   Month    Year  History
                   Day   Month    Year  History
        BORING   +1.14%   1.99%  -0.04%  -0.04%
        S&P 500  +1.00%   1.62%   4.70%   4.70%
        NASDAQ   -0.11%  -1.38%   4.22%   4.22%

    Rec'd  #   Security     In At       Now    Change

  1/29/96 100 Texas Indus    54.52     64.38    18.07%
   2/2/96 200 Green Tree     30.39     33.00     8.60%
  2/28/96 200 Borders Gro    22.51     23.50     4.40%
   2/9/96 100 Potash Corp    76.27     76.50     0.30%
  1/29/96 200 Kulicke & S    23.89     21.25   -11.04%
  2/23/96 100 Lam Researc    48.02     35.75   -25.55%

    Rec'd  #   Security      Cost     Value    Change

  1/29/96 100 Texas Indus  5449.99   6437.50   $987.51
   2/2/96 200 Green Tree   6077.49   6600.00   $522.51
  2/28/96 200 Borders Gro  4502.49   4700.00   $197.51
   2/9/96 100 Potash Corp  7627.49   7650.00    $22.51
  1/29/96 200 Kulicke & S  4774.99   4250.00  -$524.99
  2/23/96 100 Lam Researc  4802.49   3575.00 -$1227.49

                             CASH  $16765.06
                            TOTAL  $49977.56