The Boring Portfolio

ANN ARBOR, MI, June 24, 1996 -- Stock activity was relatively light on this summer Monday. Market indices closed up for the session, with the NASDAQ gaining 0.65% and the S&P 500 up 0.30%. As for the Boring Portfolio, it continued the advance initiated on Friday, rising just under one percent in net value today.

Prime Medical Services was the big Borefolio winner, picking up $3/4 to close at a bid of $17 1/4. I infer that PMSI's road show in connection with the pending secondary offering is proceeding nicely. We should expect the sale to occur on approximately July 10, according to an analyst I spoke with late last week.

Oxford Health Plans continued to recover some lost ground as investors apparently recognize what a terrific bargain the stock is at its current price. OXHP gained $3/4 on Monday, to close at a bid of $41 5/8.

LCSI issued one of its characteristically terse press releases on Monday. The company announced a continuation of its 2.5 cent per share quarterly dividend, (payable on July 25 to shareholders of record on July 11). LCSI was unchanged on the day.

Shaw Group and Borders were each up a fraction, while Texas Industries and Green Tree Financial declined by roughly comparable amounts.

I confess to being quite baffled by the retracement in Green Tree. Yes, the market's atremble about creeping interest rates and consumer credit problems. Even so, the clipping that Green Tree has experienced is pretty dramatic. This once gloriously blooming investment is now looking a bit like a topiary gerbil.

Folks, the manufactured homes industry is selling its products as fast as it can turn them out. Check out the sales numbers from companies like Cavalier Homes, Redman Industries, Champion Enterprises, Palm Harbor, and American HomeStar, to name just a few. Green Tree is far and away the dominant lender to that industry, and the company has been adding new niches to that core biz, offering loans on everything from horse trailers to grand pianos.

Analysts continue to expect GNT to make something like $2.19 this year, which would constitute a 21% gain over 1995. Forecasts for 1997 are equally strong: $2.81, or a 28% gain over the 1996 estimate. With the stock currently trading at less than 14 times projected 1996 EPS, and a PEG ratio under .80, GNT is one terrific buy.

Speaking of terrific buys, I'll be making one for the Borefolio sometime in the coming week, as I add 100 shares of Cisco Systems to our current holdings. Cisco is, of course, the premiere name in internetworking products. Better yet, the stock is currently in one of those relatively rare periods in which it trades at a slight discount to its projected growth rate. My full "buy" report on Cisco is available elsewhere in the Boring Portfolio section of The Motley Fool.

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Transmitted: 6/24/96