Boring Portfolio

Boring Portfolio Report
Thursday, June 5, 1997
by Greg Markus (TMF Boring)

BOSTON, Mass. (June 5, 1997) -- The Boring Portfolio ended a two-day losing streak with a small gain on Thursday. Only two of nine holdings declined, but profit-taking in shares of OXFORD HEALTH PLANS (Nasdaq: OXHP) to the tune of -$2 1/8 weighed on the Borefolio.

BORDERS GROUP (NYSEE: BGP) was the other losing issue, slipping $1/8. Brown Brothers Harriman initiated coverage of Borders today with "short-term hold" and "long-term outperform" ratings.

The firm expects Borders to earn $0.92 per share this fiscal year, which ends Jan. 31, and $1.15 the following year (not $1.50, as reported by Dow Jones).

Those projections are consistent with those of other analysts who follow the Ann Arbor-based book retailer. They imply 31% EPS growth this year and 25% growth subsequently.

At its current price of $23 1/8, BGP is trading at 25-times estimated EPS for the current year. That suggests the stock is fairly valued, which may be the rationale for the "short-term hold" recommendation. And "holding" is exactly what I intend to do -- because I expect BGP to "outperform" over the "long term."

More specifically, if earnings stay on track to meet analysts -- and the company's -- expectations, $28 or so would not be an unreasonable target for this time next year. And if Borders should exceed expectations, which it has managed to do with regularity, that target could well move up.

GREEN TREE FINANCIAL (NYSE: GNT) grew $1/4. A press release from American Image Motor Co. stated that the Santa Cruz, Calif. (Go Slugs!) maker of high-performance motorcycles "is pleased to announce" it can now offer financing for its retail customers through Green Tree.

CISCO SYSTEMS (Nasdaq: CSCO) recovered yesterday's $5/8 loss plus a bit more, to close at a bid of $64 3/4. I've not had a chance yet to see it myself, but I'm told that this week's issue of Time magazine features an upbeat article on Cisco and CEO John Chambers.

ORACLE CORP. (Nasdaq: ORCL) rose $13/16. In an interview late yesterday at the Spring Comdex show in Atlanta, Oracle CEO Larry Ellison told a Reuters reporter that Oracle will introduce some time around September a set-top box that will allow consumers to receive a ticker of personalized news, sports scores, and stock quotes along the bottom of their TV screens while they watch their regular programs. The device, called NCTV, will retail for "a couple hundred" dollars, said Ellison.

I have to say that I hope folks didn't run out and buy shares of ORCL based on that revelation alone.

Moving on, ATLAS AIR (Nasdaq: ATLS) and PRIME MEDICAL SERVICES (Nasdaq: PMSI) were unchanged in light trading.

Indeed, trading activity was generally on the light side ahead of tomorrow morning's release of Labor Department statistics on May employment and payrolls. Economists are anticipating the report will show that nonfarm payrolls rose 225,000 last month, helped by improving weather and settlements of auto-worker strikes.

Even so, the overall unemployment rate is expected to edge up to 5.0% from April's historically low reading of 4.9%. Expectations are for average hourly earnings in May to have increased by a nickel, to $12.19.

Should the report, to be released at 8:30AM EDT, depart noticeably from these forecasts, we could be in for an interesting session, one way or the other.

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Stock  Change    Bid
ATLS  ---      28.13
BGP   -  1/8   23.13
CSL   +  1/8   30.63
CSCO  + 11/16  64.75
GNT   +  1/4   35.63
ORCL  + 13/16  47.50
OXHP  -2 1/8   71.88
PMSI  ---      11.63
TDW   +  1/2   43.75
                   Day   Month    Year  History
        BORING   +0.02%   1.53%   7.66%  23.89%
        S&P:     +0.38%  -0.58%  13.85%  35.66%
        NASDAQ:  +0.75%  -0.73%   7.67%  33.54%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     23.13   105.44%
  5/24/96  100 Oxford Hea    48.02     71.88    49.66%
   3/5/97  150 Atlas Air     23.06     28.13    21.97%
  6/26/96  100 Cisco Syst    53.90     64.75    20.13%
   2/2/96  200 Green Tree    30.39     35.63    17.24%
  8/13/96  200 Carlisle C    26.32     30.63    16.33%
   3/8/96  400 Prime Medi    10.07     11.63    15.46%
 11/21/96  100 Oracle Cor    48.65     47.50    -2.36%
 12/23/96  100 Tidewater     46.52     43.75    -5.96%

    Rec'd   #  Security     In At     Value    Change

  2/28/96  400 Borders Gr  4502.49   9250.00  $4747.51
  5/24/96  100 Oxford Hea  4802.49   7187.50  $2385.01
  6/26/96  100 Cisco Syst  5389.99   6475.00  $1085.01
   2/2/96  200 Green Tree  6077.49   7125.00  $1047.51
  8/13/96  200 Carlisle C  5264.99   6125.00   $860.01
   3/5/97  150 Atlas Air   3458.74   4218.75   $760.01
   3/8/96  400 Prime Medi  4027.49   4650.00   $622.51
 11/21/96  100 Oracle Cor  4864.99   4750.00  -$114.99
 12/23/96  100 Tidewater   4652.49   4375.00  -$277.49

                             CASH   $7788.54
                            TOTAL  $61944.79