Boring Portfolio

Boring Portfolio Report
Thursday, April 17, 1997
by Greg Markus (MF Boring)

ANN ARBOR, Mich. (April 17, 1997) -- After ramping up at the rate of nearly 100 points per day this week, the Dow gave back 21 (-0.3%) on Thursday. The S&P 500 fell a bit, also. But the Nasdaq Composite reversed course and clocked a decent 0.6% gain. The Boring Portfolio split the difference, gaining a quarter percent.

Networking stocks recovered somewhat today, including CISCO SYSTEMS (Nasdaq: CSCO), which rose $1 5/8.

The Borefolio's other tech gorilla, ORACLE (Nasdaq: ORCL) slipped a half-buck despite boffo performances by founder and CEO Larry Ellison at Oracle's OpenWorld 1997 business fair in Tokyo.

Yesterday, Ellison demo'd a network of 500 so-called network computers running the NC Desktop operating system and hooked into 10 NC servers powered by Pentium Pro processors from (who else?) INTEL (Nasdaq: INTC). Oracle's wholly-owned subsidiary, NCI, simultaneously announced limited production of its network computer software and a series of partnerships with hardware and software companies world-wide to promote the thin-client strategy.

Today, Larry mused aloud that APPLE COMPUTER (Nasdaq: AAPL) would be a great supplier of the stripped down, el cheapo network computers.

Meantime, traders took the opportunity of an intraday high of $39 to unload some Oracle stock. Perhaps the cynics question what the point of this network toaster demo is, since the NC is unlikely to contribute a dime to Oracle revenues any time soon. Perhaps they're more concerned about such things as continuing strength in the dollar, sluggish economies in Japan and parts of Europe, products from MICROSOFT (Nasdaq: MSFT) cutting into sales on the low end, uncertain market interest in Oracle 8 and mundane stuff like that. Perhaps they're right.

Focus, Larry, focus.

ATLAS AIR (Nasdaq: ATLS) descended an eighth in relatively light trading. A wire service story yesterday reported that the latest issue of Flight International magazine contains an interview with Atlas founder and chairman Michael Chowdry. In the interview, Chowdry said his company is close to deciding whether to order a fleet of brand new BOEING (NYSE: BA) 747-400 freighters.

So far, Atlas has relied entirely upon a fleet of used and leased 747-200s. In the interview, Chowdry said that a move to the higher-payload, longer-range 747-400s may be "the next step" for the carrier.

"There are some routes, such as trans-Pacific, where the 747-400 freighter's economics make it compare favorably against the 747-200 freighter, and we have already begun talking with our established and potential customers about this," said Chowdry.

Atlas airs its quarterly results on April 24. We'll undoubtedly get an update on this development at that time.

GREEN TREE FINANCIAL (NYSE: GNT) reported its first quarter results this morning. Earnings per share of $0.65 represented a 35% gain over the year-ago quarter. That topped the analysts' consensus forecast as reported in First Call by two pennies and matched the top end of the range of estimates running from $0.59 to $0.65. The stock rose a dollar to close at $32 7/8.

The Motley Fool will provide our synopsis of the follow-up conference call soon. For now, I'll simply say that all branches of Green Tree's operations are growing nicely.

For example, despite some recent softness in the manufactured home (MH) industry, Green Tree experienced a 13% increase in its MH loan business for the quarter, to $1.01 billion.

Green Tree management said that the good gain did not result from the company moving down the creditworthiness ladder nor from increasing the proportion of somewhat riskier loans with 5% down payments. To the contrary, the percentage of Green Tree's MH loan volume coming from low down-payment loans actually declined by 8 points relative to a year ago.

Instead, Green Tree says it continues to gain overall market share as the company continues to strengthen its relationships with MH dealers, park developers, and manufacturers. In that regard, Green Tree yesterday won the MH Association's "Lender of the Year" award yet again.

The company's relatively new home improvement and home equity loan operations are blossoming, too -- up 290% from a year ago. Consumer product and credit card loans increased 131%. Equipment loan and lease volume increased 121%, and commercial loan volume increased 37%.

If that weren't enough, the company used some of its strong cash flow to repurchase 2.23 million shares of stock during the quarter.

All of which demonstrates why Green Tree is planted firmly in the Boring Portfolio.

CARLISLE COMPANIES (NYSE: CSL) reported it quarterly results today, as well. Earnings per share rose 23% to $0.43. That was two cents above the consensus of three analysts surveyed by First Call. Sales rose 28%, to $287.8 million. Sales and earnings in each of the companies three main segments were solid, as were order backlogs.

Since we're running long here tonight, I'll offer some additional comments on Carlisle tomorrow. In a nutshell, the company appears to me to be solidly on track to grow EPS at a rate in the upper teens for 1997, to around $2.10 for the year.

Finally, a correction. In last night's recap, I reported that a spokesperson at PRIME MEDICAL SERVICES (Nasdaq: PMSI) said the company is comfortable with the analysts' consensus earnings estimate -- and they are. That consensus estimate was mistakenly printed here as $0.25, however. The correct number is $0.15, which would indeed represent a 25% increase over the $0.12 earned a year ago, as stated here. Sorry 'bout that.

Prime expects to release its quarterly results on April 30, and The Motley Fool will cover the conference call that day.

(c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.

Stock  Change    Bid
ATLS  +  3/8   25.63
BGP   -  1/4   21.13
CSL   +  3/8   28.38
CSCO  -2 3/8   47.75
GNT   -  1/4   31.88
ORCL  +  1/4   37.50
OXHP  -1 5/8   61.63
PMSI  -  1/8   9.25
TDW   +  1/8   45.63
                   Day   Month    Year  History
        BORING   +0.26%   0.43%  -4.24%  10.20%
        S&P:     -0.23%   0.61%   2.84%  22.55%
        NASDAQ:  +0.56%  -0.38%  -5.73%  16.92%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     21.13    87.67%
  5/24/96  100 Oxford Hea    48.02     62.38    29.88%
   3/5/97  150 Atlas Air     23.06     25.50    10.59%
   2/2/96  200 Green Tree    30.39     32.88     8.19%
  8/13/96  200 Carlisle C    26.32     28.25     7.31%
  6/26/96  100 Cisco Syst    53.90     49.38    -8.40%
   3/8/96  400 Prime Medi    10.07      9.13    -9.37%
 11/21/96  100 Oracle Cor    48.65     37.00   -23.95%
 12/23/96  100 Tidewater     46.52     44.13    -5.16%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   8450.00  $3947.51
  5/24/96  100 Oxford Hea  4802.49   6237.50  $1435.01
   2/2/96  200 Green Tree  6077.49   6575.00   $497.51
  8/13/96  200 Carlisle C  5264.99   5650.00   $385.01
   3/5/97  150 Atlas Air   3458.74   3825.00   $366.26
   3/8/96  400 Prime Medi  4027.49   3650.00  -$377.49
  6/26/96  100 Cisco Syst  5389.99   4937.50  -$452.49
 11/21/96  100 Oracle Cor  4864.99   3700.00 -$1164.99
 12/23/96  100 Tidewater   4652.49   4412.50  -$239.99
CASH $7660.41 TOTAL $55097.91