Boring Portfolio

Boring Portfolio Report
Tuesday, January 7, 1997
by Greg Markus (MF Boring)

ANN ARBOR, Mich. (Jan. 7) -- Another day, another set of records. After being down for most of the day, the Dow spurted higher late in the afternoon to gain 33 points and close a fraction above 6600. On the Nasdaq, strength in chip stocks contributed to an 11 point gain (0.86%) and another new high: 1328. The S&P 500 rose 6 (0.75%). Volume was very heavy on both the NYSE and the Nasdaq.

The Boring Portfolio rose 0.56% -- good, but hindered somewhat by a wilting GNT and an uncertain ORCL. In the short run, Green Tree's share price has suffered as interest rates have risen since late fall. Today, the yield on 30-year Treasuries rose another few notches, to 6.79%, in reaction to a report of a lower than expected decline in factory orders during November. As for Oracle, concern about soft sales in Europe persist.

Looking ahead into 1997 (and beyond), analysts who follow Green Tree and Oracle closely continue to forecast strong sales and earnings, so the near-term weakness in the stocks might constitute a good buying opportunity.

In the case of Green Tree, fresh information from First Call shows that analysts' consensus 1997 EPS projection has risen a penny, to $2.98. That would constitute an impressive 37% gain over an expected $2.18 for 1996, results for which will be reported late this month. Yet the stock is trading at barely 12-times that 1997 estimate, whereas the forward multiple on the S&P 500 (which is projected to grow earnings in the mid single digits, percentage-wise) is above 17.

There's not quite as gaping a mismatch of multiple to earnings growth for ORCL. Still, we've got one of the premier growth stocks on the planet trading at a multiple based on projected EPS for calendar 1997 that is just in line with projected growth of 30% or so over the next three to five years, and a bit below expected EPS growth of 32 to 34 percent in 1997. Compare that with the multiple on, say, Microsoft.

Turning to other Boring holdings, shares of Borders Group rallied, gaining a quarter-point on volume of 292,000 shares -- nearly triple the activity the stock sees on a typical trading day. On Thursday morning, Borders will report its holiday season sales results.

Prime Medical Services rose $3/8 on the bid side -- and on above average volume -- also. This morning, the company reported that it has increased its ownership interest in two partnerships in which it holds minority stakes, one operating in Utah and the other in Louisiana. PMSI acquired an additional 12% interest in the Utah operation, which it manages as the general partner, raising its stake to 36%. The company also acquired an additional 5% interest in Fayetteville Lithotripters, LP (Louisiana), bringing its total ownership in that partnership to 27%. Prime paid a total of $2.0 million for these acquisitions.

In the press release, Dr. Joseph Jenkins, PMSI president, stated, "These partnerships provide quality service to patients in 15 hospitals in Louisiana and Utah. These acquisitions are the fifth and sixth partnerships in which we have recently increased our ownership. We are working on acquisitions in four more partnerships which we expect to complete this month."

As Prime Medical bumps up its stake in these various operations, it of course correspondingly increases its claim on their earnings.

The Borefolio's other healthcare-related holding, Oxford Health Plans, rose $5/8. Tomorrow, Oxford joins the S&P Midcap 400 index and becomes a new holding for the various mutual funds that mirror that index. That presumably helps account for why 2.76 million OXHP shares traded today.

A press release announced that Oxford is making available to its 1.5 million member the digital version of IVI Publishing's "The Medical Advisor," a guidebook offering information on common medical ailments and treatment options, including so-called "alternative" therapies.

In the press release, Hassan Rifaat, MD, manager of alternative medicine at Oxford, is quoted: "We're committed to providing our members with the best information available so they can make educated decisions about their healthcare. Sometimes the choices are with traditional options and sometimes alternative therapies can be the solution. The Medical Advisor gives our members a comprehensive guideline to learn about both."

Finally tonight, shares of Tidewater added $7/8 to Monday's $2 advance as oil prices continued to heat up. Tidewater will be reporting quarterly earnings later this month, and The Motley Fool will be covering the news.

Today's Numbers

Stock  Change    Bid
BGP   -  1/8   34.63
CSL   +  7/8   60.88
CSCO  +1 7/8   67.38
GNT   -  3/4   36.75
ORCL  +  1/4   44.75
OXHP  +  1/4   59.25
PMSI  -  7/8   11.50
SLR   +1 5/8   54.25
TDW  +  2      46.38
                   Day   Month    Year  History
        BORING   +0.56%   1.65%   1.65%  16.97%
        S&P 500  +0.75%   1.69%   1.69%  21.17%
        NASDAQ   +0.86%   2.84%   2.84%  27.55%

    Rec'd   #  Security     In At       Now    Change

  2/28/96  200 Borders Gr    22.51     34.88    54.91%
  6/26/96  100 Cisco Syst    53.90     68.13    26.39%
  5/24/96  100 Oxford Hea    48.02     59.88    24.67%
   2/2/96  200 Green Tree    30.39     36.50    20.12%
   3/8/96  400 Prime Medi    10.07     11.88    17.94%
  8/13/96  100 Carlisle C    52.65     60.63    15.15%
 12/23/96  100 Tidewater     46.52     47.25     1.56%
 10/15/96  100 Solectron     54.52     54.13    -0.73%
 11/21/96  100 Oracle Cor    48.65     44.63    -8.27%

    Rec'd   #  Security     In At     Value    Change

  2/28/96  200 Borders Gr  4502.49   6975.00  $2472.51
  6/26/96  100 Cisco Syst  5389.99   6812.50  $1422.51
   2/2/96  200 Green Tree  6077.49   7300.00  $1222.51
  5/24/96  100 Oxford Hea  4802.49   5987.50  $1185.01
  8/13/96  100 Carlisle C  5264.99   6062.50   $797.51
   3/8/96  400 Prime Medi  4027.49   4750.00   $722.51
 12/23/96  100 Tidewater   4652.49   4725.00    $72.51
 10/15/96  100 Solectron   5452.49   5412.50   -$39.99
 11/21/96  100 Oracle Cor  4864.99   4462.50  -$402.49

                             CASH   $5999.08
                            TOTAL  $58486.58