Boring Portfolio

Boring Portfolio Report
Monday, February 3, 1997
by Greg Markus (MF Boring)

ANN ARBOR, MICH. (Feb. 3, 1997) -- The Dow Jones Industrial Average lost 7 points in trading that was positively sedate as compared with January's volatility. The S&P 500 gained a fraction of a point (+0.07%), while the Nasdaq fell 4 (-0.28%).

The Boring Portfolio added more than half a percentage point in net asset value to extend its push into record territory. Five holdings rose and three declined, while last week's big winner, Borders Group (NYSE: BGP) held steady at $44 5/8 as over 600,000 shares changed hands.

Green Tree Financial (NYSE: GNT) hit the $40 mark. Since its recent quarterly earnings report, a number of analysts have reiterated their "buy" recommendations on Green Tree, and offered near-term price targets in the $50 range. The company recently filed shelf registrations with the Securities and Exchange Commission to offer up to a total of $2.2 billion in securities backed by home equity and home improvement loans and up to $3 billion in securitized manufactured home mortgages. The interest rate environment continues to cooperate, with the yield on the long bond dipping a bit to 6.73% today.

Oracle Corp. (Nasdaq: ORCL) added a half-point to the $1 3/8 it gained on Friday, and on continued good volume. In the conference call following Oracle's report of quarterly earnings late last year, company spokesmen noted that Oracle would be offering software specially tailored to manage all aspects of businesses in a particular industry, from procurement of basic materials to tracking consumer demand. Last month, Oracle introduced a "vertical market" software suite targeted specifically at businesses in the pharmaceutical industry. Today, the company released a suite aimed at the consumer packaged goods (CPG) industry.

Oracle CPG is a client-server suite that cover scanner-based sales and marketing management, manufacturing and plant maintenance, order management and logistics, supply chain planning and management, data warehousing, and financial management. Three software vendors, Manugistics, Industri-Matematik International, and TSW International, supply applications that are integrated into the package. The European unit of snack-food giant Frito Lay, was an early adopter of the suite.

Shares of Carlisle Companies (NYSE: CSL), Solectron (NYSE: SLR), and Prime Medical Services (Nasdaq: PMSI) all rose today, as well. I could find no specific news on any of those issues, so I will decline to call attention to the fact that PMSI closed at $12 today.

On the losing side, Cisco Systems (Nasdaq: CSCO) ended the session lower by $1 3/8 after moving above the $70 mark earlier in the day. Traders exited CSCO and stocks of many other networking companies in advance of Cisco's quarterly earnings report, scheduled for tomorrow after the market closes. Presumably, sellers were concerned that networking stocks could slide as they did recently following reports from Cascade Communications (Nasdaq:CSCC) and 3Com (Nasdaq: COMS).

Hey, it's happened before, and it could happen again.

As for myself, there is not a single stock I would rather own for the long haul than Cisco. Not one. A fine feature article by Rajiv Chandrasekaran that appeared in the business section of Sunday's Washington Post makes the case nicely, and I recommend it to you.

Deep in the Post article is a comment that bears repeating. The Post reporter wrote, "Although the company's products all come in neat boxes, one of the secrets to its success is something intangible: the software that runs the network. Cisco's network operating system... is to routers what Microsoft's Windows is to personal computers -- the basic instructions that make the hardware work."

What the Post article doesn't say, but what some industry observers are saying, is that the parallel between Cisco and Microsoft is more than an just an analogy. As the network has become the computer and as network-based services and applications, such as desktop videoconferencing, "push" broadcasting, and multicast streaming of audio and video over the Internet to the desktop become more commonplace, it will be increasingly important for routers to be able to communicate directly with the desktop client, whether that be PC or "thin client."

As Cisco's Chief Technology Officer put it recently, "Clients need to find services in the network; the client asks and the network finds them. That includes everything from infrastructure, directory services, bandwidth, data, pointers and service components."

Not to put too fine a point on it, what I understand this all to mean is that Cisco software will be on your desktop in the near future -- and on mine, too. When that occurs, Cisco will not merely be "like" the Microsoft of the networking world, it will be a competitor of Microsoft in the networked world.

I don't know about you, but I find that absolutely fascinating.

Today's Numbers

Stock  Change    Bid
BGP   ---      44.63
CSL   +  3/8   29.75
CSCO  -1 3/8   68.25
GNT   +1 1/8     40.00
ORCL  +  1/2   39.25
OXHP  -  5/8   53.75
PMSI  +  1/2   12.00
SLR   +  1/2   60.75
TDW   -  5/8   46.38
                    Day   Month    Year  History
        BORING   +0.56%   5.17%   5.17%  21.01%
        S&P:     +0.07%   6.21%   6.21%  26.56%
        NASDAQ:  -0.28%   6.59%   6.59%  32.19%

    Rec'd   #  Security     In At       Now    Change

  2/28/96  200 Borders Gr    22.51     44.63    98.22%
   2/2/96  200 Green Tree    30.39     40.00    31.63%
  6/26/96  100 Cisco Syst    53.90     68.25    26.62%
   3/8/96  400 Prime Medi    10.07     12.00    19.18%
  8/13/96  200 Carlisle C    26.32     29.75    13.01%
  5/24/96  100 Oxford Hea    48.02     53.75    11.92%
 10/15/96  100 Solectron     54.52     60.75    11.42%
 12/23/96  100 Tidewater     46.52     46.38    -0.32%
 11/21/96  100 Oracle Cor    48.65     39.25   -19.32%

    Rec'd   #  Security     In At     Value    Change

  2/28/96  200 Borders Gr  4502.49   8925.00  $4422.51
   2/2/96  200 Green Tree  6077.49   8000.00  $1922.51
  6/26/96  100 Cisco Syst  5389.99   6825.00  $1435.01
   3/8/96  400 Prime Medi  4027.49   4800.00   $772.51
  8/13/96  200 Carlisle C  5264.99   5950.00   $685.01
 10/15/96  100 Solectron   5452.49   6075.00   $622.51
  5/24/96  100 Oxford Hea  4802.49   5375.00   $572.51
 12/23/96  100 Tidewater   4652.49   4637.50   -$14.99
 11/21/96  100 Oracle Cor  4864.99   3925.00  -$939.99

                             CASH   $5999.08
                            TOTAL  $60486.58

Transmitted: 2/03/97