The Boring Portfolio

Boring Portfolio Report
Wednesday, November 13, 1996

by Greg Markus (MF Boring)

ANN ARBOR, Mich., November 13, 1996 -- Most market averages were down for much of Wednesday but managed to close higher with the help of afternoon mini-rallies. Such volatility is not entirely unexpected as the market moves toward options expirations on Friday. For the seventh straight session, the Dow advanced, this time by 8 points to (yawn) another record high. The S&P rose 0.22%, while the Nasdaq gained 0.33%.

The Boring Portfolio gained 0.13% in net value, helped by strength in Cisco and Solectron (which set another new high today) but hampered by continued weakness in Prime Medical.

PMSI fell another two-bits today on unprecedented volume of nearly 800,000 shares. That would have constituted two week's worth of trading not too long ago. For a few minutes today, the stock slipped below the $10 mark.

As I noted last night, every shred of evidence I've unearthed indicates that absolutely nothing has changed in the business. I called another of the six analysts who follow PMSI (and he had spoken with the company earlier in the day), and he concurred.

No analysts have revised their ratings on PMSI recently. DLJ, Principle, Southcoast, Southeast, and Bradford are all in the range of $0.63 to $0.68 in terms of projected EPS for 1996. Prudential is listed in some ratings summaries with a $0.43 estimate, but according to Pru that number assumes fully taxed earnings, whereas the other analysts are incorporating PMSI's tax-loss carryforwards into their estimates. Pru's comparable (i.e., partly taxed) number is $0.67 -- right in the middle of the pack. Next year's estimates are also unchanged, as far as I can tell.

As I said yesterday, I have no idea when the PMSI sell-off will finally exhaust itself. At some point, though, the entity (or entities) who are pretty obviously engaged in unwinding their positions will abate. Meantime, there's nothing I can do about the sell-off, and I certainly have no intention of cashing in at this ridiculous price. So I just sit and watch, slightly amused by the whole situation, to tell you the truth. (And in case you were wondering, I am personally in the red with the stock, as well.)

Moving from the ridiculous to the sublime, Borders Group pre-released its quarterly earnings this morning. Total sales for the company's fiscal third quarter ending Oct. 27 rose to $413.5 million -- up 14.2% over last year. Consolidated net loss for the quarter was $2.7 million, or $0.06 per share. That was not only a substantial improvement over last year's 15 cent loss, it was also 3 pennies better than analysts were expecting.

Not surprisingly, BGP rose on roughly double its average trading volume today. Many folks (including me) await a full breakdown of the numbers along with the company's comments, and that will occur tomorrow morning. The Motley Fool will provide full details, as is our policy.

There's one other thing in today's abbreviated earnings report worth noting now. Borders superstore sales were up 42.3%, to $212.0 million. Same store sales increased 8.6%. At Waldenbooks, sales of $197.9 million were off 3.8% from a year ago, while same store sales were basically flat (-0.2%). I interpret both the Borders and Waldens numbers as good news -- the former for obvious reasons and the latter because they indicate that the company is succeeding in its strategy of trimming back the least profitable Waldenbooks stores and retaining the ones that can hold their own, at a minimum.

Lastly, the day would not be complete without a bit of techno-news from Cisco. The company announced that Telecom Finland, which operates the world's largest network based on ATM (Asynchronous Transfer Mode) technology, has deployed Cisco's LightStream ATM switches as both a backbone and access network solution for its expanding ATM-network.

According to the press release, "the Finnish deployment is one more example of Cisco's growing presence as a strategic supplier to telecommunications carriers and other service providers worldwide." Also, according to Dataquest, Cisco is the tenth largest vendor of telecom equipment in the world, based on total sales.

As Johnny Carson might say, "I did not know that."

Stock  Change    Bid
--------------------
BGP   +  3/8   36.13
CSL   ---      54.75
CSCO  +1 1/8   66.00
GNT   ---      39.75
OXHP  -  7/8   53.13
PMSI  -  1/4   10.00
SLR   +  3/4   58.88

                   Day   Month    Year  History
        BORING   +0.13%   3.11%  15.77%  15.77%
        S&P 500  +0.22%   3.67%  17.62%  17.62%
        NASDAQ   +0.33%   3.21%  21.11%  21.11%

    Rec'd   #  Security     In At       Now    Change

  2/28/96  200 Borders Gr    22.51     36.13    60.47%
   2/2/96  200 Green Tree    30.39     39.75    30.81%
  6/26/96  100 Cisco Syst    53.90     66.00    22.45%
  5/24/96  100 Oxford Hea    48.02     53.13    10.62%
 10/15/96  100 Solectron     54.52     58.88     7.98%
  8/13/96  100 Carlisle C    52.65     54.75     3.99%
   3/8/96  400 Prime Medi    10.07     10.00    -0.68%



    Rec'd   #  Security     In At     Value    Change

  2/28/96  200 Borders Gr  4502.49   7225.00  $2722.51
   2/2/96  200 Green Tree  6077.49   7950.00  $1872.51
  6/26/96  100 Cisco Syst  5389.99   6600.00  $1210.01
  5/24/96  100 Oxford Hea  4802.49   5312.50   $510.01
 10/15/96  100 Solectron   5452.49   5887.50   $435.01
  8/13/96  100 Carlisle C  5264.99   5475.00   $210.01
   3/8/96  400 Prime Medi  4027.49   4000.00   -$27.49


                             CASH  $15435.93
                            TOTAL  $57885.93



Transmitted: 11/13/96