Boring Portfolio

Boring Portfolio Report
Thursday, May 1, 1997
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (May 1, 1997) -- Traders took profits after this week's strong runup in stocks and ahead of Friday's potentially influential payrolls and unemployment news. The Dow ended Thursday's session off 33 points. The S&P 500 fell 0.35%. Bargain-priced technology issues continued to attract attention, however, and the Nasdaq gained 10 points, or 0.77%. Nasdaq volume was a strong 622 million shares.

The Boring Portfolio began the month of May with a 0.78% gain in net asset value and a better than 0.90% gain on the portion of the portfolio invested in stocks. Six holdings rose, while three declined.

TIDEWATER (NYSE: TDW) posted strong results this morning for its fiscal fourth quarter. Operating earnings of $0.77 per share were well above the $0.69 consensus of 12 analysts surveyed by First Call. Quarterly revenues of $220.8 million were up 37% over the year-ago period.

Stocks of companies in the marine services group were clobbered earlier this week after some analysts expressed concern that orders for construction of new vessels could lead to overcapacity. Tidewater sharply disputed that claim in an impromptu conference call, and the stock recovered somewhat. Today, however, TDW lost a dollar amidst a generally weak oils group.

After the close of trading, Tidewater held its post-earnings conference call, a taped replay of which is available at 800-475-6701, access code 339160. The Motley Fool will provide a summary of the call tomorrow.

For now, I can report that Tidewater management said dayrates for its service vessels increased during the March quarter and that this trend should continue for at least the next two years. Chairman, CEO, and president Bill O'Malley insisted that the company is nowhere near its peak earnings.

Tidewater dominates the marine services industry with its fleet of 650 vessels, and the company has typically raised rates every two to three months over the past couple of years. O'Malley said he expects to consider another increase sometime around June 1 and that leasing rates outside of the U.S. domestic offshore areas will trend considerably higher than they are now.

Demand off the coast of West Africa was reported to be particularly strong. It was with an eye toward that market that Tidewater moved to acquire approximately 100 vessels of British-owned O.I.L. That acquisition should be completed soon.

One analyst on the conference call characterized the recent turbulence of marine services stocks as being a result of "more emotion than mathematics," and Tidewater management agreed. They pointed out that the 10 to 20 new vessels on order fairly closely parallels the number of new drilling rigs also on order.

GREEN TREE FINANCIAL (NYSE: GNT) grew another $3/4 following yesterday's $2 3/8 spurt. This comes after Morgan Stanley analyst Jennifer Oliver-Martin raised her rating on the stock to "strong buy" from "outperform." In her research note, Oliver-Martin said she changed her rating in light of the "completely unjustified" decline in Green Tree's share price. Even after a strong three-day run, GNT is trading at barely 10-times projected earnings for 1997 -- and the stock even pays a small dividend.

ORACLE (Nasdaq: ORCL) continues its own upward trek on the road to recovery. The stock gained $3/4 to move above the $40 mark. Rival (in someone's mind, anyhow) INFORMIX (Nasdaq: IFMX) today filed an even gloomier non-earnings report than had been anticipated. To add insult to injury, Informix said that its Chief Financial Officer, Alan Henricks has resigned. Henricks had just come to Informix from DOCUMENTUM (Nasdaq: DCTM) in January.

OXFORD HEALTH PLANS gave back 75 cents of the nearly $7 the stock had gained in the previous two days. The stock set a new high during Thursday's session before settling back. I'm speculating that the activity in Oxford's stock may be related to hourly news from Washington about a pending federal budget deal, and the likelihood that strong national economic growth may lessen pressure to put the screws on Medicare reimbursements to HMOs. Oxford reports its quarterly results on Tuesday.

Also reporting on Tuesday is CISCO SYSTEMS (Nasdaq: CSCO). CSCO continued its impressive run this week by adding $1 5/8 to close at a bid of $53 3/8. In Wednesday's recap I wondered aloud whether Cisco might make any surprise announcements during next week's Networld+Interop trade show in Las Vegas. According to an item published at the website of CNET Inc., Cisco will unveil a new line of access concentrators that can simultaneously handle voice, data, and multimedia traffic.

Industry reporter Ben Heskett writes that "the new Cisco 3800 Multi-Service Switching Access Concentrator line shores up another product segment and will appeal to telecommunications carriers and Internet service providers." Enterprises adding Internet access and video distribution capabilities to their corporate intranets would also be a market for the new boxes.

In a separate story, Donaldson Lufkin & Jenrette analyst Stephen Koffler was quoted as saying he expects the 3800 line, the first combined product coming out of Cisco's Stratacom acquisition, to have even more impact than Cisco's widely publicized BFR.

Heskett said that the 3800 line will be available in June, with prices starting at $3,395 for the 3810, $4,995 for the 3830, and $6,040 for the 3880.

Can you tell I'm excited?

(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  +  5/8   28.13
BGP   -  1/8   21.13
CSL   +  5/8   28.75
CSCO  +1 5/8   53.38
GNT   +  3/4   30.38
ORCL  +  3/4   40.50
OXHP  -  3/4   65.00
PMSI  +  1/8   9.38
TDW   -1       39.13
                   Day   Month    Year  History
        BORING   +0.78%   0.78%  -3.18%  11.41%
        S&P:     -0.35%  -0.35%   7.80%  28.46%
        NASDAQ:  +0.77%   0.77%  -1.59%  22.05%

     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     65.00    35.35%
   3/5/97  150 Atlas Air     23.06     28.13    21.97%
  8/13/96  200 Carlisle C    26.32     28.75     9.21%
   2/2/96  200 Green Tree    30.39     30.38    -0.04%
  6/26/96  100 Cisco Syst    53.90     53.38    -0.97%
   3/8/96  400 Prime Medi    10.07      9.38    -6.89%
 11/21/96  100 Oracle Cor    48.65     40.50   -16.75%
           100 Tidewater     46.52     39.13   -15.91%

     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   6500.00  $1697.51
   3/5/97  150 Atlas Air   3458.74   4218.75   $760.01
  8/13/96  200 Carlisle C  5264.99   5750.00   $485.01
   2/2/96  200 Green Tree  6077.49   6075.00    -$2.49
  6/26/96  100 Cisco Syst  5389.99   5337.50   -$52.49
   3/8/96  400 Prime Medi  4027.49   3750.00  -$277.49
 11/21/96  100 Oracle Cor  4864.99   4050.00  -$814.99
 12/23/96  100 Tidewater   4652.49   3912.50  -$739.99
CASH $7660.41 TOTAL $55704.16