Boring Portfolio

Boring Portfolio Report
Tuesday, May 13, 1997
by Greg Markus (TMF Boring)


ANN ARBOR, Mich. (May 13, 1997) -- Benchmark indices fell Tuesday, as traders took profits ahead of the potentially market-moving Producer Price and Consumer Price data that will be released on Wednesday and Thursday, respectively. The S&P 500 fell 0.5%, while the Nasdaq dropped 0.8%.

Despite those unfavorable headwinds, the Boring Portfolio tacked ahead $188 dollars -- a 0.3% increase in the total value of the portfolio and a 0.4% gain on the portion invested in stocks. That gain put the Borefolio into the black -- albeit just barely -- for the year-to-date. Considering that the Russell 2000 index of smaller capitalization stocks (which tend to figure heavily in the Borefolio) is itself up less than a percentage-point in 1997 -- and considering also that the Borefolio has had nearly $8000 sitting in cash for a while now -- that's not so bad.

On the other hand, you may be wondering why in the world the Borefolio's been sitting on all that cash as the Dow and S&P 500 are setting all-time highs.

A fair question.

The answer is pretty straightforward, and has nothing to do with market-timing or any other tactical considerations.

For the past few weeks, Tom Gardner and I have tossed around some ideas about ways to restructure the Borefolio that might entice Tom to come over and pitch in with its management. "Management" means more than just figuring out what stocks to buy or sell. It also means doing the background research, talking with the management at the companies, writing up the "buy" and "sell" reports, covering the quarterly conference calls, writing the nightly recaps, and so forth.

Until we get our plans settled, I'm holding off on buying any new stocks.

One reason for restructuring is to bring some of Tom's (and my) favorite "Cash King" stocks into the mix -- names like MICROSOFT (Nasdaq: MSFT), INTEL (Nasdaq: INTC), COCA COLA (NYSE: KO), and DISNEY (NYSE: DIS). Of course, the Borefolio already contains some big-cap Cash King exemplars in CISCO SYSTEMS (Nasdaq: CSCO) and ORACLE (Nasdaq: ORCL).

The new stocks we would buy -- or, for that matter, the holdovers from the current portfolio -- wouldn't all have to be mega-caps, however. GREEN TREE FINANCIAL (NYSE: GNT), for example, is unmistakably the leader in its niche, and its been quite a Money Tree in terms of generating consistent profits. OXFORD HEALTH (Nasdaq: OXHP), to take another example, is small compared to many competitors; but it's been growing at triple or quadruple the rate of some of them. And in the eyes of many industry experts, Oxford leads in defining the future direction of healthcare. Not incidentally, Oxford generates a fair profit for its shareholders.

For that matter, all the Borefolio occupants manifest at least some key characteristics of a present or future "Cash King." Any eventual reconstitution of the Borefolio as a "Kingfolio" (or whatever it would be called) would thus be evolutionary rather than a radical departure from what we've been doing in this little port since January 1996.

Which reminds me: one thing that might change is that this little port might become a bit littler. Tom and I have been discussing ways to make our proposed new enterprise resemble even more closely how an individual would grow a portfolio. So we're thinking about trimming the initial investment back to a somewhat more accessible amount -- say, $20,000 to $25,000 -- and adding a bit more each month ($250?) just as an individual would, or should.

Another reason for trying to entice Tom into the portfolio's co-management is that it would provide a venue for him to spell out in more detail his "Simpleton" approach to long-term investing -- and also to provide your Borefolio manager with a bit of needed relief. After all, just as it is for most of you, managing a portfolio is very much a sideline for me -- as it is for Tom, too.

We're still working out the details of the transition. And we're very much interested in reading any suggestions or recommendations you might care to make. In that regard, a few folks have been kicking these ideas around with me in the "Boring Stocks" folder at The Motley Fool's site on AOL. If you have access to AOL, we'd be delighted to have you join in the conversation. Or feel free to drop a note to Tom (tomgardner@aol.com) or me (tmf_boring@AOL.com).

I'll update you from time to time as the final plan emerges. Right now, we're looking to get the transition rolling in early June.

As for the current crop of Boring holdings, there's not a whole lot to report today.

Oracle gained $1 1/8 on double its average trading volume. Analysts at Paine Webber and Merrill Lynch reiterated their "buy" ratings on the stock. According to fresh numbers in First Call, analysts' consensus estimates are for earnings of $1.26 per share for fiscal 1997 (which ends this month) and $1.67 for FY98.

BORDERS GROUP (NYSE: BGP) picked up a dollar ahead of its quarterly earnings report tomorrow morning. The Motley Fool will cover the follow-up conference call.

And Green Tree Financial continued its recovery, rising $3/8.


(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.


TODAY'S NUMBERS
Stock  Change    Bid
ATLS  -  3/4   28.50
BGP   +1       20.75
CSL   -  1/4   29.50
CSCO  -  1/2   62.38
GNT   +  3/8   31.00
ORCL  +1 1/8   44.75
OXHP  -  3/4   65.00
PMSI  -  1/8   10.25
TDW   -  5/8   39.50
                   Day   Month    Year  History
        BORING   +0.33%   4.21%   0.11%  15.20%
        S&P:     -0.54%   3.97%  12.47%  34.03%
        NASDAQ:  -0.79%   5.78%   3.30%  28.11%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     20.75    84.34%
  5/24/96  100 Oxford Hea    48.02     65.00    35.35%
   3/5/97  150 Atlas Air     23.06     28.50    23.60%
  6/26/96  100 Cisco Syst    53.90     62.38    15.72%
  8/13/96  200 Carlisle C    26.32     29.50    12.06%
   2/2/96  200 Green Tree    30.39     31.00     2.02%
   3/8/96  400 Prime Medi    10.07     10.25     1.80%
 11/21/96  100 Oracle Cor    48.65     44.75    -8.02%
 12/23/96  100 Tidewater     46.52     39.50   -15.10%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   8300.00  $3797.51
  5/24/96  100 Oxford Hea  4802.49   6500.00  $1697.51
  6/26/96  100 Cisco Syst  5389.99   6237.50   $847.51
   3/5/97  150 Atlas Air   3458.74   4275.00   $816.26
  8/13/96  200 Carlisle C  5264.99   5900.00   $635.01
   2/2/96  200 Green Tree  6077.49   6200.00   $122.51
   3/8/96  400 Prime Medi  4027.49   4100.00    $72.51
 11/21/96  100 Oracle Cor  4864.99   4475.00  -$389.99
 12/23/96  100 Tidewater   4652.49   3950.00  -$702.49

                             CASH   $7660.41
                            TOTAL  $57597.91