Boring Portfolio Report
Monday, July 7, 1997
by Greg Markus (TMF Boring)
ANN ARBOR, Mich. (July 7, 1997) -- Major market averages closed mixed on Monday. The Dow and S&P 500 each lost half a percentage point in value, but the Nasdaq managed to post a 3-point gain (+0.21%).
The Boring Portfolio garnered a 0.67% advance to establish a new high-water mark in net asset value: $65,639.
The new record was attained despite a $2 3/8 loss in shares of ATLAS AIR (Nasdaq: ATLS).
After everyone had gone home for the holiday week-end last Thursday afternoon, Atlas issued a press release announcing that the company's results for the June quarter would be "below current analyst expectations." Those expectations were for earnings in the neighborhood of $0.50 per share, according to First Call.
One-time charges associated with Atlas's decision to return five leased aircraft to FEDERAL EXPRESS (NYSE: FDX), as well as the continuing operational limitations of those planes, are the culprits.
Atlas has decided to write off the money it has sunk into improvements on the five FedEx 747-200s, which have required above-average maintenance and repair costs to keep them flying. Also included in charge are reserves for costs associated with returning the aircraft when the leases expire in early 1998, and costs of establishing reserves for future periods -- all to the tune of approximately $17 million, after tax.
That one-time charge will be substantially offset by an extraordinary gain of around $16.6 million (after-tax), related to refinancing $235 million in debt during the quarter.
Beyond these accounting matters lies the continuing impact of the FedEx planes on earnings through the balance of 1997. Company management told me late today that they are still working through the numbers and don't have precise figures yet. But it's evident that analysts' consensus estimates for the balance of the year will require some downward tweaking.
The silver lining inside this gray cloud that's settled over Atlas Air is that by taking the full hit in the June quarter, the company has minimized the impact of the Five Freighters from Hell on its books for the balance of the year. Also, Atlas is slated to put three other 747-200s into service soon, which should help. And looking past the near-term turbulence and into 1998, Atlas will begin receiving delivery of brand new 747-400s from BOEING (NYSE: BA) next May.
Atlas will report results for the June quarter in two to three weeks.
Moving to some of today's Borefolio winners, CISCO SYSTEMS (Nasdaq: CSCO) gained $2 3/8 as Cowen & Co. analyst Maria Lewis Kussmaul reiterated her "strong buy" rating on the Kid and raised her near-term price target to $90 a share from $75 a share.
TIDEWATER (NYSE: TDW) rose $11/16 as oil services stocks continue to strengthen.
And, lo!, GREEN TREE FINANCIAL (NYSE: GNT) shot up $1 1/16 in heavy trading as interest rates continue to edge lower.
Also numbered among Monday's winners was Tour de France veteran and sometime fashion model Mario Cipollini. "Super Mario" outsprinted three other riders to win Stage 2 of the Tour after winning Stage 1 the day before. You can check out all the details by clicking over to the official Website of Le Tour de France.
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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 -2 3/8 30.63 BGP + 15/16 25.25 CSL - 1/16 35.00 CSCO +2 3/8 73.88 GNT +1 1/16 36.81 ORCL - 1/4 49.31 OXHP - 5/8 76.13 PMSI --- 10.63 TDW + 11/16 46.13
Day Month Year History BORING +0.67% 2.02% 14.08% 31.28% S&P: -0.51% 3.06% 23.15% 46.75% NASDAQ: +0.21% 1.99% 13.92% 41.29% Rec'd # Security In At Now Change 2/28/96 400 Borders Gr 11.26 25.25 124.32% 5/24/96 100 Oxford Hea 48.02 76.13 58.51% 6/26/96 100 Cisco Syst 53.90 73.88 37.06% 8/13/96 200 Carlisle C 26.32 35.00 32.95% 3/5/97 150 Atlas Air 23.06 30.63 32.82% 2/2/96 200 Green Tree 30.39 36.81 21.14% 3/8/96 400 Prime Medi 10.07 10.63 5.52% 11/21/96 100 Oracle Cor 48.65 49.31 1.36% 12/23/96 100 Tidewater 46.52 46.13 -0.86% Rec'd # Security In At Value Change 2/28/96 400 Borders Gr 4502.49 10100.00 $5597.51 5/24/96 100 Oxford Hea 4802.49 7612.50 $2810.01 6/26/96 100 Cisco Syst 5389.99 7387.50 $1997.51 8/13/96 200 Carlisle C 5264.99 7000.00 $1735.01 2/2/96 200 Green Tree 6077.49 7362.50 $1285.01 3/5/97 150 Atlas Air 3458.74 4593.75 $1135.01 3/8/96 400 Prime Medi 4027.49 4250.00 $222.51 11/21/96 100 Oracle Cor 4864.99 4931.25 $66.26 12/23/96 100 Tidewater 4652.49 4612.50 -$39.99 CASH $7788.54 TOTAL $65638.54