Boring Portfolio

Boring Portfolio Report
Thursday, May 8, 1997
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (May 8, 1997) -- In the final hour of trading, market averages gave back about half of the day's gains but still managed to post good results. The Dow finished at 7137, up 51 points (0.7%). The S&P 500 and Nasdaq Composite each gained 0.6%.

The Boring Portfolio lagged behind, rising 0.2%. Losing stocks outnumbered winners in the Borefolio by 4 to 3. ATLAS AIR (Nasdaq: ATLAS) and PRIME MEDICAL (Nasdaq: PMSI) were unchanged.

CISCO SYSTEMS (Nasdaq: CSCO) continued to set the pace, tacking on $2 5/8 to push past the $60 mark and close at a bid of $61 3/8. Once again, volume was well in excess of 20 million shares.

Even with its strong runup, CSCO is trading at less than 27-times projected earnings of $2.32 for calendar 1997 (based on data in First Call). That's still cheaper than stocks of any number of Dow darlings that are growing earnings less than half as rapidly as Cisco is, and arguably no more reliably.

Today the Kid made good on the claim that he can ride alongside the biggest cowpokes in the West. Cisco announced a new partnership -- make that pohdahship -- with Billy Gates's outfit from up Redmond way. Cisco and MICROSOFT (Nasdaq: MSFT) will collaborate to link Microsoft's Active Directory software to Cisco's Internetworking Operating System (IOS), with the goal of scaling Active Directory so that it can be used across a Wide Area Network and on operating systems other than Microsoft NT.

As I understand it (and I'd be delighted if any of you technogeeks would help me out on this), Microsoft's Active Directory is, well, a directory. That is, it's software that tells you where stuff is when you're working in a distributed computing environment -- a place where things like applications, data, documents, and... stuff could be almost anywhere: on your desktop, on the machine in the next room, or on the other side of the planet.

Cisco's going to help Microsoft figure out how to make Active Directory work in real big distributed environments -- ones in which thousands of users will all be asking where stuff is, and all at the same time. Active Directory will be unbundled from NT 5.0 (which will supposedly ship early next year) so that it can be ported to machines running UNIX -- all the better to rack up more sales.

Speaking of Cisco (which I seem to be doing a lot of, lately), a summary of Cisco's conference call that took place Tuesday evening is now available in The Motley Fool.

We also offer you a synopsis of the OXFORD HEALTH PLANS (Nasdaq: OXHP) conference call. Oxford's stock slipped $1 3/8 on a bit of profit-taking today.

GREEN TREE FINANCIAL (NYSE: GNT) fell $3/8. Trading volume in GNT continues to be enormous -- around 3.5 million shares today. The stock is undergoing some big-time "distribution," as they say -- perhaps as Green Tree gets chopped down along with the underbrush of sub-prime lenders that inhabit the financial services sector.

What's baffling about this is that neither earnings estimates nor analysts' ratings have changed on Green Tree. If anything, analysts have been beating the bushes complaining about how senseless the selloff is. For example, one analyst reportedly entitled a Green Tree "buy" recommendation, "Enough is Enough!"

We've got a summary of Green Tree's most recent quarterly conference call over in the (where else?) "Conference Call" section of TMF, too.

On Wednesday, TIDEWATER (Nasdaq: TDW) was swept out to sea, losing $3 3/4 in a rush of heavy trading late in the afternoon. Before yesterday's deadline, I quickly cast about for a clue, but found nothing.

Later that evening I found the culprit: Tidewater CEO Bill O'Malley appeared yesterday at a trade gathering in Houston and let it be known that Tidewater would probably not be acquiring additional vessels until the company had paid down a good chunk of the loan it took out to acquire O.I.L. Ltd. O.I.L. owns 100 vessels, which when added to Tidewater's 650 make for one hefty armada.

O'Malley presumably thought he was demonstrating his company's fiscal prudence. After all, Tidewater is one of precious few firms in the oil services group that has zero long-term debt. Zero -- which was one of the attractive qualities that brought the stock into the arms of the Borefolio in the first place.

Whatever the message was that O'Malley meant to convey, some hotshots apparently took it as a sign to dump the stock, which they proceeded late yesterday to discharge like so much unwanted ballast.

After a night's reflection, it appears that some folks considered that action to have been a mistake, as TDW recovered two of the dollars it lost the day before -- and on heavy trading volume, once again.

Yup, a summary of Tidewater's May 1 conference call is also available here in TMF for you to peruse.

(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  ---      29.25
BGP   -  3/8   19.88
CSL   -  3/8   29.38
CSCO  +2 5/8   61.38
GNT   -  3/8   28.13
ORCL  +  3/4   43.75
OXHP  -1 3/8   65.75
PMSI  ---      10.13
TDW   +2       38.25
                   Day   Month    Year  History
        BORING   +0.18%   2.15%  -1.87%  12.92%
        S&P:     +0.57%   2.36%  10.74%  31.96%
        NASDAQ:  +0.60%   5.56%   3.08%  27.85%

     Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     19.88    76.57%
  5/24/96  100 Oxford Hea    48.02     65.75    36.91%
   3/5/97  150 Atlas Air     23.06     29.25    26.85%
  6/26/96  100 Cisco Syst    53.90     61.38    13.87%
  8/13/96  200 Carlisle C    26.32     29.38    11.59%
   3/8/96  400 Prime Medi    10.07     10.13     0.56%
   2/2/96  200 Green Tree    30.39     28.13    -7.45%
 11/21/96  100 Oracle Cor    48.65     43.75   -10.07%
           100 Tidewater     46.52     38.25   -17.79%

     Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   7950.00  $3447.51
  5/24/96  100 Oxford Hea  4802.49   6575.00  $1772.51
   3/5/97  150 Atlas Air   3458.74   4387.50   $928.76
  6/26/96  100 Cisco Syst  5389.99   6137.50   $747.51
  8/13/96  200 Carlisle C  5264.99   5875.00   $610.01
   3/8/96  400 Prime Medi  4027.49   4050.00    $22.51
   2/2/96  200 Green Tree  6077.49   5625.00  -$452.49
 11/21/96  100 Oracle Cor  4864.99   4375.00  -$489.99
 12/23/96  100 Tidewater   4652.49   3825.00  -$827.49
CASH $7660.41 TOTAL $56460.41