Boring Portfolio Report
Wednesday, June 19, 1996
ANN ARBOR, MI, June 19, 1996 -- Yesterday, the Foolfolio had its single worst day since inception. Today, it was the Borefolio's turn to take gas.
The net value of holdings in the Boring Portfolio slipped by more than 1.5% on Wednesday -- substantially greater than the NASDAQ's 0.32% decline, while the S&P 500 ended up essentially where it began the day. Borefolio losses were distributed across a range of stocks, as only Green Tree Financial and TXI advanced.
The big loser of the day was the stock that's been residing in at the bottom of the Borefolio daily list for a while now: LCS Industries. This company, you recall, is engaged in various aspects of the direct marketing biz: telemarketing, list services, and fulfillment operations. With today's 1 1/2 point decline, LCSI has now lost almost exactly 50% in value since I bought 200 shares less than three months ago.
Not to put too fine a point on it, with LCSI among its holdings the Borefolio now trails the S&P 500 index by over four percentage points in growth to date. Had I never bought the stock, the Borefolio would now be well in front of the S&P 500. Suffice it to say, this is not as I had envisioned it.
So why in the world did I ever buy LCSI? Well, my "buy" report is still right here in the Boring Portfolio section of The Motley Fool for all to see. That's the way we do things around here. In a nutshell, what I saw (and still see) in LCSI is a company that has a lot of promise and is still run by the two guys who founded it back in 1969: Arnold J. Scheine (President and CEO) and Marvin Cohen (Senior VP). After a thoroughly invisible span of years, LCSI began to attract attention last year when it acquired Catalog Resources, Inc. Between FY93 and FY95, the company grew sales by nearly 50% and net income over ten-fold. Fully diluted per share earnings went from $0.16 for FY93 to $0.32 a year later, to last year's $1.25.
Although no one was seriously expecting that kind of growth to continue this year, EPS estimates in the $1.75 range (and even higher) were tossed about by a few analysts and investor newsletters a few months ago. My current projections are more modest, but I still think that $1.50 is makeable: a 20% gain over 1995. At its current price of $13 1/4, the stock is trading at less than nine times my projected EPS for the FY ending in September.
Is it a good buy at that price? Should the Borefolio continue to hold the stock? I'm working on supplying a full answer to those questions to offer you tomorrow night. In the meantime, feel free to pop in to the LCS Industries folder and offer your own thoughts.
Tonight's Borefolio recap closes with a quick look at news on two of our other holdings: Borders Group and Green Tree Financial.
For all our Foolish friends in Silicon Valley, Borders announced today the grand opening of its new superstore in Palo Alto this week-end. According to the press release, several in-store grand opening events are planned, including a performance by Narada recording artist Kostia from his new release "10 Pebbles." But, hey, don't let that stop you from showing up. Buy lots of stuff! Do your bit to help out that top line for BGP!
Another Borefolio holding, Green Tree Financial, has been getting attention the past few days, as I've noted in this nightly column. This morning, the Wall Street Journal mentioned Green Tree in an item about insider selling -- or the lack thereof. The story mentioned that Green Tree "is another company whose chairman hasn't sold any shares in nearly a decade," other than disposing of a few shares occasionally as gifts. GNT gained $ 5/8 on Wednesday, to close at $31.50.
BGP - 3/8 ...GNT + 5/8 ...LCSI -1 1/2 ...OXHP -1 3/4 ... PMSI - 3/8 ...SHAW -1...TXI + 3/4 ...
*Scroll down or expand screen for full portfolio accounting
Day Month Year History
BORING -1.54% -4.26% 2.15% 2.15%
S&P 500 -0.00% -1.07% 6.49% 6.49%
NASDAQ -0.32% -5.17% 13.28% 13.28%
Rec'd # Security In At Now Change
3/8/96 400 Prime Medic 10.07 16.38 62.61%
2/28/96 200 Borders Gro 22.51 34.63 53.82%
1/29/96 100 Texas Indus 54.52 66.25 21.51%
2/2/96 200 Green Tree 30.39 31.50 3.66%
5/24/96 100 Oxford Heal 48.02 41.13 -14.36%
4/12/96 300 The Shaw Gr 18.84 15.38 -18.39%
3/25/96 200 LCS Industr 26.14 13.25 -49.31%
Rec'd # Security Cost Value Change
3/8/96 400 Prime Medic 4027.49 6550.00 $2522.51
2/28/96 200 Borders Gro 4502.49 6925.00 $2422.51
1/29/96 100 Texas Indus 5449.99 6625.00 $1175.01
2/2/96 200 Green Tree 6077.49 6300.00 $222.51
5/24/96 100 Oxford Heal 4802.49 4112.50 -$689.99
4/12/96 300 The Shaw Gr 5652.49 4612.50 -$1039.99
3/25/96 200 LCS Industr 5227.49 2650.00 -$2577.49