Boring Portfolio Report
Monday, January 27, 1997
by Greg Markus (MF Boring)
ANN ARBOR, Mich. (Jan. 27) -- Major market averages continued their descent from recent record highs, and the Boring Portfolio moved lower, as well. The Dow lost 36 points (0.54%), the S&P 500, 5.5 (0.71%), and the Nasdaq 14 (0.81%).
Damage to the Borefolio totaled 1.08%. Only Carlisle Companies (NYSE: CSL), unchanged on the session, and Solectron (NYSE: SLR), up an eighth, escaped injury.
Green Tree Financial (NYSE: GNT) reported its fourth quarter and 1996 results this morning. For the quarter the company racked up earnings per share of $0.58, three pennies ahead of the consensus of analysts as reported in First Call and at the top end of the range of projections. For the full year, EPS increased 22% to a record $2.20 from $1.81 in 1995. Net earnings were $308.7 million in 1996 compared to $254.0 million last year.
Total finance volume in the fourth quarter increased 58% to $2.942 billion. During the quarter, Green Tree completed five sales of asset-backed securities totaling $2.609 billion. I see that the company has just registered to offer another $2 billion in securities.
I participated in Green Trees post-report conference call this morning, a summary of which will be posted in The Motley Fool shortly. In a nutshell, the call indicated to me that the company continues to ramp up its new businesses rapidly, particularly in the area of home equity loans. CEO Larry Coss indicated that Green Tree aims to do $14 billion in loan volume this year -- which would be approximately a one-third increase over 1996. The company also expects to be approved soon to offer securitzed Visa and Mastercharge cards.
In its core business of serving the manufactured homes (MH) industry, Green Tree intends to expand its offerings in 1997 to include lending to developers of manufactured home parks. The company has also invested heavily in technology, adding more terminals in the offices of sellers of manufactured homes such that a decision on a loan can be received back in less than one hour. So even if the rate of growth in MH sales slows a bit in 1997, as some are forecasting, Green Tree can continue to increase its volume.
On top of all that good news, there was news this afternoon that gooroo Elaine Garzarelli had downgraded the financial services group that includes Green Tree. Since the Garz has served recently as a fairly reliable contra-indicator, Im not particularly concerned about her pronouncement.
The bottom line today for Green Tree was that the stock lost $7/8. Perhaps the Ms. Garzarellis edict had something to do with that, or perhaps it was the continued weakness in bonds, which has sent the yield on the long bond to just a shade under 7%. Looking ahead further than, say, 48 hours, Green Tree looks to me to be an excellent holding for the coming year.
Fine. But what about Oracle Corp (Nasdaq: ORCL)? The stock continued lower today, and on continued heavy trading volume. It certainly doesnt help the stock that a legal battle between it and Informix (Nasdaq: IFMX) has dominated the news. Nor did it help today that an analyst opined that the stock is dead money pending results of its next quarterly report in March.
Wow. Dead money all the way until March? Horrors!
Ill have more to say on this tomorrow. As for now, suffice it to say that at 30-times projected EPS for the fiscal year ending in May, Oracle is a world-leader trading at a forward multiple identical to its estimated five-year growth rate of 30% per year. As such, Oracle is one of the few technology leaders on the market trading at such a reasonable valuation.
Today's Numbers
Stock Change Bid -------------------- BGP - 3/4 36.63 CSL --- 31.13 CSCO - 3/8 68.25 GNT - 7/8 38.25 ORCL -1 1/2 38.13 OXHP - 1/4 51.63 PMSI - 1/4 11.50 SLR + 1/8 60.00 TDW - 1/8 48.13
Day Month Year History
BORING -1.08% 1.52% 1.52% 16.82%
S&P 500 -0.71% 3.28% 3.28% 23.07%
NASDAQ: -0.81% 4.79% 4.79% 29.96%
Rec'd # Security In At Now Change
2/28/96 200 Borders Gr 22.51 36.63 62.69%
6/26/96 100 Cisco Syst 53.90 68.25 26.62%
2/2/96 200 Green Tree 30.39 38.25 25.87%
8/13/96 200 Carlisle C 26.32 31.13 18.23%
3/8/96 400 Prime Medi 10.07 11.50 14.22%
10/15/96 100 Solectron 54.52 60.00 10.04%
5/24/96 100 Oxford Hea 48.02 51.63 7.50%
12/23/96 100 Tidewater 46.52 48.13 3.44%
11/21/96 100 Oracle Cor 48.65 38.13 -21.63%
Rec'd # Security In At Value Change
2/28/96 200 Borders Gr 4502.49 7325.00 $2822.51
2/2/96 200 Green Tree 6077.49 7650.00 $1572.51
6/26/96 100 Cisco Syst 5389.99 6825.00 $1435.01
8/13/96 200 Carlisle C 5264.99 6225.00 $960.01
3/8/96 400 Prime Medi 4027.49 4600.00 $572.51
10/15/96 100 Solectron 5452.49 6000.00 $547.51
5/24/96 100 Oxford Hea 4802.49 5162.50 $360.01
12/23/96 100 Tidewater 4652.49 4812.50 $160.01
11/21/96 100 Oracle Cor 4864.99 3812.50 -$1052.49
CASH $5999.08
TOTAL $58411.58
