Boring Portfolio

Boring Portfolio Report
Friday, June 20, 1997
by Greg Markus (TMF Boring)

CAMBRIDGE, Mass. (June 20, 1997) -- Major market averages closed mixed on Friday's "triple-witching" session, in which June stock options, index options, and index futures contracts all expired. The Dow extended into record territory by 19 points, to 7797. The S&P 500 strode past the 900 mark during the day but tiptoed back to close at 899, up fractionally (+0.08%). The Nasdaq slipped lower by the thinnest of fractions.

As for the Boring Portfolio, it added $25 to its net asset value (not counting a few bucks in accrued interest and dividends) to set a new high of $65,351. Boring winners and losers tied at four apiece, with one stock unchanged.

For the week, the Borefolio tacked on $1,750, or 2.75%. That compares with weekly gains of 0.61% and 1.69% for the S&P 500 and Nasdaq, respectively.

Lest someone I know strain a shoulder patting himself on the back for this fine recent performance, let’s not forget that it was three months ago this week that yours truly abruptly jettisoned 100 shares of SOLECTRON (NYSE: SLR) from the Borefolio.

Back in March, technology stocks were slumping. And my concern was that the Borefolio was overexposed to that sector, harboring as it was CISCO SYSTEMS (Nasdaq: CSCO) and ORACLE (Nasdaq: ORCL), as well as Solectron. Cisco and Solectron were both on the hardware side of the industry, while Oracle did software. So if one had to go, it would be either Cisco or Solectron. Since the only way anyone could get me to part with the Cisco shares was by prying them loose from my cold, dead fingers, the ax would have to fall on Solectron. At least that was my line of, uh, reasoning at the time.

And pretty good reasoning it turned out to be, for a while. I sold the Borefolio’s Solectron shares for $50 apiece on March 18. And as late as April 23 the stock could still be purchased at or below that price.

Then things changed. Tech stocks recovered. This past week, Solectron reported fiscal third quarter earnings of $0.71 per share -- a penny above the consensus forecast and up 34% over the year-ago quarter. The same Solectron stock I sold for 50 bucks in mid-March now goes for $70. It doesn’t take a mountain of Solectron-built computing gear to figure out that’s a 40% gain.

Moral: If you’ve identified a solid company that consistently makes its numbers, is in one of the fastest-growing businesses on earth, and also happens to be a Baldrige Prize winner, and if on top of that the stock of the company is not particularly overvalued, then maybe, just maybe, you should consider giving the stock a fair chance to show what it can do.

With that mea culpa out of the way, let’s proceed to bask in the reflected glow of some of this week’s top Borefolio performers.

The big winner of the day and week was quiet CARLISLE COMPANIES (NYSE: CSL). Headquartered in Syracuse, NY, Carlisle makes roofing materials, golfcart wheels, cheese-making equipment, truck trailers, brake parts, cafeteria trays, ... well, let’s just say its broadly, and exquisitely boringly, diversified. At any rate, the stock added $5/8 Friday to Thursday’s $2 3/4 gain to close at a record high of $37. Trading volume of 135,600 shares was more than double what CSL sees on an average day.

For the week, Carlisle rose 9.2%. For the life of me, I wish I could tell you why. I suppose that some money manager discovered what we’ve known for some time now: Carlisle’s a fine company, and the stock’s a good value.

Nearly matching Carlisle’s performance were shares of GREEN TREE FINANCIAL (NYSE: GNT). Green Tree grew $1/2 Friday and $2 7/8 (+8.2%) for the week to close at $38. As with Carlisle, there was no news I could find that specifically explained the move. Moderating interest rates -- down to 6.65% for the long bond on Friday -- presumably factor in there someplace.

Also of possible relevance is the flurry of recent news about continued consolidation across the spectrum of financial institutions -- banks, thrifts, brokerages, consumer lenders, insurers, and who knows what else all finding happiness, or at least its possibility, in various mix-and-match combinations. Legislation currently negotiating the hurdles in Congress could broaden the possibilities further yet.

Shares of BORDERS GROUP closed unchanged at $24 1/8. BGP gained $1 1/8 (+$4.9%) on the week. The company announced today the planned opening of four new superstores: in Hyannis, Mass., Danbury, Conn., Livingston, N.Y., and Fresno, Calif.

But there ain’t no Borders here in Cambridge. There is one on the other side of the Charles, but I didn’t feel like hiking over to Boston. Since the theme of tonight’s Borefolio recap appears to be “confessions,” I’ll ‘fess up: I spent a good chunk of the day in Wordsworth. And I enjoyed every minute of it, even bought a couple of books (Matt Ridley’s The Origins of Virtue and Alan Ehrenhalt’s The Lost City).

Heck, I might even do it again tomorrow.

Fool Message Boards -- what are Fools saying?
Evening News -- Big movers, up and down.
Daily Double
-- How can you find the next double?
Daily Trouble -- Is there value in this beaten down stock?
The Fool Portfolio -- AOL, Iomega, 3Com... and more.
Fool Four -- Trying to catch the market.

(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  +  1/8   32.63
BGP   ---      24.13
CSL   +  5/8   37.00
CSCO  +  3/8   69.31
GNT   +  1/2   38.00
ORCL  -1 3/16  48.38
OXHP  -  3/4   73.38
PMSI  -  1/16  11.44
TDW   -  3/8   43.38
                   Day   Month    Year  History
        BORING   +0.04%   7.11%  13.58%  30.70%
        S&P:     +0.08%   5.94%  21.32%  44.57%
        NASDAQ:  -0.00%   3.34%  12.09%  39.02%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     24.13   114.33%
  5/24/96  100 Oxford Hea    48.02     73.38    52.79%
   3/5/97  150 Atlas Air     23.06     32.63    41.49%
  8/13/96  200 Carlisle C    26.32     37.00    40.55%
  6/26/96  100 Cisco Syst    53.90     69.31    28.59%
   2/2/96  200 Green Tree    30.39     38.00    25.05%
   3/8/96  400 Prime Medi    10.07     11.44    13.59%
 11/21/96  100 Oracle Cor    48.65     48.38    -0.57%
 12/23/96  100 Tidewater     46.52     43.38    -6.77%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   9650.00  $5147.51
  5/24/96  100 Oxford Hea  4802.49   7337.50  $2535.01
  8/13/96  200 Carlisle C  5264.99   7400.00  $2135.01
  6/26/96  100 Cisco Syst  5389.99   6931.25  $1541.26
   2/2/96  200 Green Tree  6077.49   7600.00  $1522.51
   3/5/97  150 Atlas Air   3458.74   4893.75  $1435.01
   3/8/96  400 Prime Medi  4027.49   4575.00   $547.51
 11/21/96  100 Oracle Cor  4864.99   4837.50   -$27.49
 12/23/96  100 Tidewater   4652.49   4337.50  -$314.99

                             CASH   $7788.54
                            TOTAL  $65351.04