Boring Portfolio

Boring Portfolio Report
Wednesday, April 30, 1997
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (April 30, 1997) -- The U.S. gross domestic product grew at an annualized rate of 5.6% in the first quarter, well above expectations. Not only that, but the rise was fueled by a stunning 9.9% surge in personal consumption expenditures -- that is, by you and me buying stuff.

News of such strong growth and spending would normally send the stock and bond markets plunging on fears of rising interest rates. And the markets played according to script in the early going.

A look inside the GDP numbers, however, showed that a lot of the growth was channeled into restocking depleted business inventories, which might lead to an economic slowdown later as those inventories are worked down. On top of that, Republican leaders in Congress said they were close to reaching an agreement with the Clinton White House on the fiscal 1998 U.S. budget and that the budget would likely include cuts on both spending and taxes.

This news caused stocks and bonds to reverse course and resume yesterday's uphill run -- or at least that's the explanation most folks are offering. There might be some truth in that story. Or today's move might simply have been a case of spring fever, irrational exuberance, or even perhaps sensible investing in a humming economy.

At any rate, the Dow ended Wednesday up nearly 50 points (+0.67%), and above the 7000 mark once again. The S&P 500 gained nearly a full percentage point in value, while the Nasdaq tacked on 18 points, or 1.47%.

The Boring Portfolio added 2.24% onto yesterday's 2.15% gain, turning what was looking to be a losing month of April into a small positive gain. Seven of nine holdings rose, with TIDEWATER (NYSE: TDW) unchanged ahead of its quarterly earnings report tomorrow morning and BORDERS GROUP (NYSE: BGP) off $1/8.

GREEN TREE FINANCIAL (NYSE: GNT) spurted $2 3/8 thanks to a "strong buy" recommendation from the folks at Morgan Stanley. Trading volume of nearly 3 million shares was triple what GNT sees in an average day.

Even after that move Green Tree is trading at less than 10-times projected earnings of $3.01 a share for 1997. That compares with a multiple of 12-times projected 1997 earnings for shares of peer THE MONEY STORE (Nasdaq: MONE) and better than 14-times estimated 1997 earnings for the financial services industry overall.

ORACLE (Nasdaq: ORCL) founder and chairman Larry Ellison said Tuesday evening that he'd decided not to go forward on an attempt to take over APPLE COMPUTER (Nasdaq: AAPL) -- at least for the time being. Perhaps in reaction to that news, Oracle shares leaped $1 3/8 on trading volume of nearly 9 million shares. Meantime, the news from an international conference of Oracle users in Dallas was that Oracle8 was on track for its official unveiling on June 24.

CISCO SYSTEMS (Nasdaq: CSCO) tacked $1 7/8 onto yesterday's $3 1/2 advance ahead of that company's quarterly earnings report after the close of trading on May 6. On that same day, the Networld+Interop convention kicks off in Las Vegas. Someone knows whether Cisco has any announcements planned for that affair, but it ain't me. I guess we'll find out soon enough.

This morning, PRIME MEDICAL SERVICES (Nasdaq: PMSI) reported that it earned $0.15 per share on revenues of $20.9 million during the first quarter. That represented a 25% increase in EPS and a 189% (no, that's not a typo) increase in sales over the year-ago period. The EPS number beat analysts' consensus estimate by a penny and came in at the high end of the range.

The Motley Fool will provide a synopsis of the follow-up conference call as soon as I can whip it together (tomorrow morning, most likely), but the highlights are as follows:

* Prime expects to announce a new lithotripsy acquisition soon, in addition to a new mobile unit that should be in operation in Hawaii during the third quarter. Another three to five acquisitions are likely this year and perhaps five to ten more in 1998.

* The plan to develop and operate mobile Prostatron routes for treating benign prostate enlargement is proceeding well and is meeting an enthusiastic response particularly among urologists in the western U.S. Prime expects to have three Prostatron machines in operation by the end of the year.

* The income statement includes a one-time expense of $360,000 associated with the favorable restructuring of Prime's bank lending facility. With that expense backed out, earnings are even better than the listed $0.15.

Lastly tonight, don't think I haven't noticed that shares of OXFORD HEALTH PLANS have risen nearly $7 in two days. I have. Oxford reports its results next week.

(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  +  1/2   27.50
BGP   -  1/8   21.25
CSL   +  1/8   28.13
CSCO  +1 7/8   51.75
GNT   +2 3/8   29.63
ORCL  +1 3/8   39.75
OXHP  +3 1/8   65.75
PMSI  +  1/8   9.25
TDW   ---      40.13
                   Day   Month    Year  History
        BORING   +2.24%   0.75%  -3.93%  10.55%
        S&P:     +0.92%   5.84%   8.18%  28.91%
        NASDAQ:  +1.46%   3.20%  -2.34%  21.12%

     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     65.75    36.91%
   3/5/97  150 Atlas Air     23.06     27.50    19.26%
  8/13/96  200 Carlisle C    26.32     28.13     6.84%
   2/2/96  200 Green Tree    30.39     29.63    -2.51%
  6/26/96  100 Cisco Syst    53.90     51.75    -3.99%
   3/8/96  400 Prime Medi    10.07      9.25    -8.13%
 11/21/96  100 Oracle Cor    48.65     39.75   -18.29%
 12/23/96  100 Tidewater     46.52     40.13   -13.76%

     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   6575.00  $1772.51
   3/5/97  150 Atlas Air   3458.74   4125.00   $666.26
  8/13/96  200 Carlisle C  5264.99   5625.00   $360.01
   2/2/96  200 Green Tree  6077.49   5925.00  -$152.49
  6/26/96  100 Cisco Syst  5389.99   5175.00  -$214.99
   3/8/96  400 Prime Medi  4027.49   3700.00  -$327.49
 11/21/96  100 Oracle Cor  4864.99   3975.00  -$889.99
 12/23/96  100 Tidewater   4652.49   4012.50  -$639.99
CASH $7660.41 TOTAL $55272.91