Boring Portfolio

Boring Portfolio Report
Monday, June 9, 1997
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (June 9, 1997) -- I could get to like Mondays. A week ago, the Boring Portfolio soared 2.17%, with only one of nine holdings -- ATLAS AIR (Nasdaq: ATLS) posting a daily loss. Today, the Borefolio soared 2.27%; and again only one holding declined on the session.

That loser, however, wasn't Atlas Air. Au contraire. Atlas climbed $3 3/4 to an altitude of $32 3/8, on huge (for Atlas) volume of 609,000 shares. Atlas announced this morning that it had signed a definitive agreement with BOEING (NYSE: BA) to purchase 10 new 747-400 freighter aircraft, with an option to purchase 10 more.

Atlas watchers may recall that a few months ago company CEO, chair, and founder Michael Chowdry had mused aloud in an interview published in a trade magazine that Atlas might upgrade its existing fleet of used 747-200s. The 400 model offers greater range, cargo capacity, and fuel efficiency, and at that time Chowdry thought the additional cost of the new aircraft would be more than made up by the new markets and longer routes they would enable Atlas to service.

Scott & Stringfellow analyst Alex Brand upgraded Atlas Air to "strong buy" from "hold" on the news. A Reuters story quoted Brand as saying that, for him "this deal clears up a lot of business risk concerns. The long-term impact of this deal is just overwhelmingly positive and offsets any near-term risk."

Not everyone agrees. Moody's had been reviewing Atlas Air for a possible upgrade of its credit rating. That firm announced late today that they would retain Atlas at a B3a rating, however. Moody's is impressed by Atlas's "success in rapidly growing its cargo business," but is concerned that the shift from operating used 747-200 aircraft to new 747-400 freighters will change the company's cost structure and increase its debt leverage.

The Borefolio's sole loser on the day operates at far less lofty altitudes than Atlas Air does. Indeed it works at sea level. TIDEWATER (NYSE: TDW) slipped $7/8. Oil and gas stocks remain under pressure as crude prices continue to sag. That even today's lower prices are still more than sufficient to keep production at or near 100% and that little if any new marine services capacity will be coming on line anytime soon has apparently been lost on some traders.

But let's not be whiny on such a fine day.

GREEN TREE FINANCIAL (NYSE: GNT) gained $5/8 despite a comparatively weak bond market that sent some financial stocks lower. Green Tree may have benefited from news that the commercial credit unit of TRAVELERS GROUP (NYSE: TRV) will acquire Security Pacific Financial Services from BANKAMERICA (NYSE: BAC) for about $1.6 billion -- a premium of $300 million over net assets.

CISCO SYSTEMS (Nasdaq: CSCO) gained $1 9/16. After the close of trading, Cisco announced that it would acquire privately-held Skystone Systems Corp. of Ottawa, Ontario. According to the press release, Skystone ( specializes in high-speed Synchronous Optical Networking/Synchronous Digital Hierarchy (SONET/SDH) technology.

Cisco will pay for Skystone with one million shares of Cisco stock, worth approximately $66.5 million, and $22.6 million in cash. In connection with the deal, Cisco expects a one-time charge against after-tax earnings of between 8 and 11 cents per share in the fourth fiscal quarter of 1997, which ends next month.

The acquisition bolsters Cisco's ability to offer customers SONET/SDH capability, which is used for carrying information in very-high-capacity backbone networks, such as those operated by telecommunications carriers and large Internet Service Providers.

Also after the market closed today, the Dow wires had a story in which Cisco vice president of global alliances, Charlie Giancarlo, is quoted as saying that Cisco is close to announcing a partnership with a major telecommunications company "fairly soon." This would follow up on Cisco's recently announced partnership with GTE (NYSE: GTE).

Healthcare holdings, PRIME MEDICAL SERVICES (Nasdaq: PMSI) and OXFORD HEALTH PLANS (Nasdaq: OXHP) rose as well: +$1 15/16 for Oxford and +$1/16 for Prime. Trading volume for the latter exceed 200,000 shares -- more than double what PMSI sees on a typical day.

Trading in CARLISLE COMPANIES (NYSE: CSL) was also more than double its recent daily average topping 100,000 shares. Carlisle rose $7/8.

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(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  +3 3/4   32.38
BGP   +  5/8   23.63
CSL   +  7/8   31.38
CSCO  +1 9/16  66.44
GNT   +  5/8   36.63
ORCL  +  1/16  49.00
OXHP  +115/16  72.69
PMSI  +  1/16  11.69
TDW   -  7/8   41.63
                   Day   Month    Year  History
        BORING   +2.27%   3.82%  10.09%  26.69%
        S&P:     +0.57%   1.72%  16.49%  38.82%
        NASDAQ:  +0.51%   0.84%   9.37%  35.65%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     23.63   109.88%
  5/24/96  100 Oxford Hea    48.02     72.69    51.35%
   3/5/97  150 Atlas Air     23.06     32.38    40.41%
  6/26/96  100 Cisco Syst    53.90     66.44    23.26%
   2/2/96  200 Green Tree    30.39     36.63    20.53%
  8/13/96  200 Carlisle C    26.32     31.38    19.18%
   3/8/96  400 Prime Medi    10.07     11.69    16.08%
 11/21/96  100 Oracle Cor    48.65     49.00     0.72%
 12/23/96  100 Tidewater     46.52     41.63   -10.53%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   9450.00  $4947.51
  5/24/96  100 Oxford Hea  4802.49   7268.75  $2466.26
   3/5/97  150 Atlas Air   3458.74   4856.25  $1397.51
  6/26/96  100 Cisco Syst  5389.99   6643.75  $1253.76
   2/2/96  200 Green Tree  6077.49   7325.00  $1247.51
  8/13/96  200 Carlisle C  5264.99   6275.00  $1010.01
   3/8/96  400 Prime Medi  4027.49   4675.00   $647.51
 11/21/96  100 Oracle Cor  4864.99   4900.00    $35.01
 12/23/96  100 Tidewater   4652.49   4162.50  -$489.99

                             CASH   $7788.54
                            TOTAL  $63344.79