Boring Portfolio Report
Monday, April 28, 1997
by Greg Markus (TMF Boring)
ANN ARBOR, Mich. (April 28, 1997) -- The S&P 500 gained just under one percent Monday, while the Dow and Nasdaq each rose two-thirds of a percent. Trading was relatively light ahead of a string of economic reports that will be released in the week, beginning with Tuesday's readings on March durable goods orders and first-quarter employment costs. The Nasdaq's gain came despite losing stocks outnumbering winners on that market.
Winners, losers, and unchanged were all tied at three apiece in the Boring Portfolio. But the total score was -0.89%, as GREEN TREE FINANCIAL (NYSE: GNT) continued to wither and TIDEWATER (NYSE: TDW) submerged $4 1/8 to become the Borefolio's latest casualty du jour.
The situation with Green Tree is just plain frustrating, no doubt about it. There is no news out there, no downgrades, no cautious comments from analysts, no nothing. The company continues to insist that business is solid, and they are entirely comfortable with analysts' consensus estimate of $3.00 per share in earnings for the year. Yet even on a relatively good day for financial stocks, as today was, Green Tree sheds. The stock established a new 52-week low.
Should I sell the stock?
Perhaps so. After all, how long should one continue to fight the tape? On the other hand, the reasons why I originally bought Green Tree have not changed at all. If anything, the business has exceeded expectations and continues to show solid growth potential from here. Indeed, a good argument could be mustered for buying more -- if not right now, then once the stock finally settled down, so long as no contrary news surfaced. So I will continue to hold onto Green Tree. What other Green Tree shareholders do is, of course, their business.
Now for Tidewater. The stock lost $3 1/2 Friday on news (that I had not seen) that privately-owned Edison Chouest Offshore had commissioned LITTON INDUSTRIES (NYSE: LIT) to build 10 offshore supply vessels, with an option for seven more. Tidewater stock -- along with that of every other company in the offshore supply vessel biz -- sank Monday as analysts at Donaldson, Lufkin & Jenrette and Robinson-Humphrey downgraded the group. The analysts were concerned that the new boats could lead to overcapacity and, as a result, falling rental rates.
Tidewater executives cobbled together a lunch-time conference call to respond to those concerns. Tidewater Chairman, President and CEO Bill O'Malley laid out no fewer than 13 reasons why he thought the Street's reaction to the Edison Chouest announcement was unfounded. The most significant of those reasons was that Chouest's fleet -- including the vessels that would be built over the next two to three years -- service an entirely different market niche than Tidewater's. Chouest's fleet consists of large vessels that service needs of deep water rigs, whereas Tidewater's vessels are smaller and serve the middle and low-end of the market.
This assertion was confirmed on the conference call by none other than Laney Chouest, senior vice president at Edison Chouest. Chouest told listeners, "It is like saying that if the Chicago Bulls lost, then shares in the Atlanta Braves should be marked down."
O'Malley added that if U.S. dayrates for offshore service vessels did start to weaken, his company would delay bringing back capacity to the U.S. from overseas markets, which continue to be very strong in many regions of the world.
Tidewater will release its earnings report on Thursday after the market closes. O'Malley said, "I am sure you will not be disappointed."
Tidewater shares recovered a few points during and after the conference call.
As is our custom, The Motley Fool will cover Tidewaters post-earnings conference call and provide a synopsis. As for today's call, you can hear a taped replay at: 800-475-6701, confirmation # 340076.
But make a snack first. The call is over an hour in length.
On the brighter side, ATLAS AIR (Nasdaq: ATLS) ascended $3/4 following the company's quarterly earnings release last week. A synopsis of the follow-up conference call is provided in The Motley Fool's "Earnings Central" area.
(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 + 3/4 26.00 BGP + 1/4 21.25 CSL + 3/4 27.88 CSCO --- 46.38 GNT -1 7/8 26.88 ORCL --- 37.88 OXHP - 1/2 58.88 PMSI --- 9.00 TDW -4 1/8 40.00
Day Month Year History BORING -0.89% -3.53% -8.02% 5.85% S&P: +0.99% 2.09% 4.35% 24.35% NASDAQ: +0.64% -0.38% -5.73% 16.91% Rec'd # Security In At Now Change 2/28/96 400 Borders Gr 11.26 21.25 88.78% 5/24/96 100 Oxford Hea 48.02 58.88 22.59% 3/5/97 150 Atlas Air 23.06 26.00 12.76% 8/13/96 200 Carlisle C 26.32 27.88 5.89% 3/8/96 400 Prime Medi 10.07 9.00 -10.61% 2/2/96 200 Green Tree 30.39 26.88 -11.56% 6/26/96 100 Cisco Syst 53.90 46.38 -13.96% 11/21/96 100 Oracle Cor 48.65 37.88 -22.15% 12/23/96 100 Tidewater 46.52 40.00 -14.02% Rec'd # Security In At Value Change 2/28/96 400 Borders Gr 4502.49 8500.00 $3997.51 5/24/96 100 Oxford Hea 4802.49 5887.50 $1085.01 3/5/97 150 Atlas Air 3458.74 3900.00 $441.26 8/13/96 200 Carlisle C 5264.99 5575.00 $310.01 3/8/96 400 Prime Medi 4027.49 3600.00 -$427.49 2/2/96 200 Green Tree 6077.49 5375.00 -$702.49 6/26/96 100 Cisco Syst 5389.99 4637.50 -$752.49 11/21/96 100 Oracle Cor 4864.99 3787.50 -$1077.49 12/23/96 100 Tidewater 4652.49 4000.00 -$652.49
CASH $7660.41 TOTAL $52922.91