Boring Portfolio Report
Friday, April 26, 1996
(FOOL GLOBAL WIRE)
by Greg Markus (MF Boring)
PHILADELPHIA, PA, April 26, 1996 -- The NASDAQ extended its string to seven consecutive record-setting days on Friday. And the Boring Portfolio extended its string to 15 consecutive gains.
Friday was particularly kind to the Borefolio. It's value increased by 1.57%, easily outperforming the major market averages. Our big winners were Borders Group and Prime Medical Services, both of which hit new all-time highs.
Borders advanced $ 2 5/8, to $33 3/8. The only news on the wires referred to the grand opening of yet another Borders superstore, this time in Carmel Mountain, CA. Although that story probably does not account for the stock's sharp rise today (I suspect that some new earnings projections by a Smith Barney analyst helped in that regard), the press release does provide some insight into what sets Borders apart from its competitors. After noting the new store's opening, the press release continues:
"According to Shelley Porter, Borders' Carmel Mountain community
relations coordinator, ... 'We don't just sell books and music here, Borders is a community gathering place. People come to Borders to meet authors and learn new things, kids come to do art projects, music lovers come for free live performances, a lot of people come just to sit and talk with friends. And, of course, many spend hours just sitting and reading among the stacks of books.'"
That's not just press release puffery, folks. That's the real deal, from my experience. Border's approach to customer service may help to account for why BGP shares have advanced nearly 50% in less than two months.
The big news -- and it is indeed BIG news -- that propelled PMSI to a new high today was the stock-halting report this morning that Prime Medical would be acquiring privately held Lithotripters, Inc., of Fayetteville, N.C., as part of PMSI's strategy to develop a national lithotripsy network.
As I understand it, this merger (efffective May 1) will more than double PMSI in size and create the nation's largest lithotripsy company, with operations in 31 states. According to the press release, the purchase price is $88 million, comprised of $70 million in cash and 1,636,000 common shares of PMSI.
To finance the acquisition, Bank of Boston and NationsBank have increased Prime Medical's line of credit from $25 million to $90 million. PMSI will write-off merger costs related to the acquisition of approximately $3 million in 1996.
Lastly, I alert you to the fact that the Borefolio will be purchasing 200 shares of Zytec (NASDAQ: ZTEC) on Monday. Zytec designs and manufactures custom electronic-power supplies for original equipment manufacturers in the computer and other electronic industries, including IBM, Cisco Systems, Hewlett-Packard, Xerox, Digital Equipment, Cabletron, Sun Micro, and more.
My intention in purchasing ZTEC is to make a typically Boring play on the booming internetworking business -- buy stock in a company that makes one of the most boring parts of hardware innards: the power supply box.
As you may note from the dateline at the top of this Borefolio update, I'm out of town today, in Philadelphia. Consequently, I'm not able to provide the full review of Zytec now. It will be available in the Boring Portfolio section of The Motley Fool on Sunday evening, so that you may check it out before the market opens on Monday.
As for Philadelphia, other than the fact that an afternoon thunderstorm knocked out power for a couple of hours and put me out of action right as my filing deadline loomed, it's a surprisingly (for me) interesting place. Hmm-m-m. Maybe Philly could use some Zytec power supply stuff?
BGP +2 5/8 ...GNT --- ...LRCX --- ...LCSI - 1/4
...PMSI + 7/8 ...SHAW + 1/8 ...TXI - 1/2 ...
*Scroll down or expand screen for full portfolio accounting
Day Month Year History
BORING +1.57% 6.57% 4.93% 4.93%
S&P 500 +0.09% 1.23% 5.12% 5.12%
NASDAQ +0.22% 7.76% 14.01% 14.01%
Rec'd # Security In At Now Change
2/28/96 200 Borders Gro 22.51 33.38 48.27%
3/8/96 400 Prime Medic 10.07 14.63 45.23%
1/29/96 100 Texas Indus 54.52 63.88 17.15%
2/2/96 200 Green Tree 30.39 34.38 13.12%
4/12/96 300 The Shaw Gr 18.84 19.63 4.17%
3/25/96 200 LCS Industr 26.14 25.00 -4.36%
2/23/96 100 Lam Researc 48.02 43.25 -9.93%
Rec'd # Security Cost Value Change
2/28/96 200 Borders Gro 4502.49 6675.00 $2172.51
3/8/96 400 Prime Medic 4027.49 5850.00 $1822.51
2/2/96 200 Green Tree 6077.49 6875.00 $797.51
4/12/96 300 The Shaw Gr 5652.49 5887.50 $235.01
3/25/96 200 LCS Industr 5227.49 5000.00 -$227.49
2/23/96 100 Lam Researc 4802.49 4325.00 -$477.49
1/29/96 100 Texas Indus 5449.99 6387.50 $937.51