Boring Portfolio

Boring Portfolio Report
Friday, March 7, 1997
by Greg Markus (MF Boring)

ANN ARBOR, Mich. (March 7, 1997) -- Same old, same old. The Dow enjoyed a 56-point ascent on Friday to end the week just above the 7,000 mark. The S&P 500 rose an equivalent amount -- about 0.80%. But the Nasdaq fell, and the Boring portfolio treaded water as its non-"tech" holdings did their best to counterbalance losses in the likes of CISCO SYSTEMS (Nasdaq: CSCO), ORACLE (Nasdaq: ORCL), and SOLECTRON (NYSE: SLR).

Three short weeks ago, the Borefolio was humming along. It reached a new high on Valentine's Day, surely a good omen.

Well not so far.

In the intervening few weeks, traders would have us believe that the Internet was just a passing fad -- a pet rock or hoola hoop to mark the close of the second millennium. And businesses will never again need to buy Oracle's software to manage their information. Heck, who needs software when the computers and related electronic gear that Solectron fabricates will end up being sold as boat anchors at some flea market alongside the Pacific Coast Highway?

Technology is trash. Sell it. And fast.

I hear it. And I can't say the thought doesn't cross my mind to follow the crowd to the great egress to offer up my tattered Cisco shares -- now worth less than when I bought them in June of 1996 -- or my dog-eared Oracle.


Despite the various analyst "downgrades" and earnings trimmings -- such as today's demotion of Cisco by a guy at Furman Seitz -- the arithmetic fact of the matter is that the consensus earnings forecasts of analysts have not changed on Cisco or Oracle or Solectron. Not in months, in some cases.

Even the pessimists -- such as the Furman Seitz analyst today, for example -- still expect Cisco to grow earnings at 30% or so. Indeed, using his own numbers -- of $2.04 for FY97 and $2.84 for FY98 -- projected growth would approach 40% in the coming year. Forty percent!

Meantime, Oracle (which actually received an upgrade to "buy" from an analyst today) was tossed into the "hold" bin yesterday by an analyst because he couldn't abide Oracle's "lackluster" earnings growth of merely 32%.

Oh, look. Cisco news. Chief Technology Officer Edward Kozel said late Friday that Cisco expects to release their high-performance "Big Fast Router" later this year. Kozel said the product will have better performance than Cisco's current crop of routers and should support "tag switching," a technology Cisco is promoting for more efficiently directing traffic in a computer network.

If you're looking for a lesson tonight -- and I surely am -- then look no further than OXFORD HEALTH PLANS (Nasdaq: OXHP). Last summer, the Ox was slaughtered -- cut literally in two, despite the fact that business remained solid and hugely profitable.

"Sell!" the traders screeched. HMOs are losers! Sell!

Today, Oxford gained $2 3/8 on above-average volume to close at a bid of $61 3/4 -- just a fraction shy of its all-time high. The stock's been just terrific -- albeit very, very volatile.

When the traders were selling, that was the time to buy.

BORDERS GROUP (NYSE: BGP) booked a $7/8 gain today, putting that stock within range of its own record. Borders announced yesterday that they'll be opening a second superstore in Manhattan later this year. Last year, Borders debuted in the World Trade Center. The new one will be in midtown, at 57th and Park. Forty-two thousand square feet of books, music, software and espresso for your enjoyment in the Ritz Tower.

Very nice.

Borders reports its 1996 results on Tuesday morning. As usual, The Motley Fool will be covering the follow-up conference call.

Speaking of Borders, if you're near one of their stores this week-end, consider popping in and buying a copy of the March issue of Wired magazine. It's the one that has a feature story on Cisco that begins "Those shiny, happy people at Cisco Systems have created the third most valuable company on the Nasdaq...."

I guess I have Cisco on my mind, huh?

(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.

Today's Numbers

Stock  Change    Bid
ATLS  +  1/8   20.38
BGP   +  7/8   44.75
CSL   +  1/8   32.00
CSCO  -3 3/8   51.13
GNT   +  7/8   38.88
ORCL  -  3/4   35.75
OXHP  +2 3/8   61.75
PMSI  -  3/8   11.13
SLR   -  5/8   48.50
TDW   -  1/4
                   Day   Month    Year  History
        BORING   -0.03%  -0.16%  -0.18%  14.86%
        S&P:     +0.80%   1.79%   8.67%  29.50%
        NASDAQ:  -0.27%   0.21%   1.61%  26.02%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  200 Borders Gr    22.51     44.75    98.78%
  5/24/96  100 Oxford Hea    48.02     61.75    28.58%
   2/2/96  200 Green Tree    30.39     38.88    27.93%
  8/13/96  200 Carlisle C    26.32     32.00    21.56%
   3/8/96  400 Prime Medi    10.07     11.13    10.49%
  6/26/96  100 Cisco Syst    53.90     51.13    -5.15%
 10/15/96  100 Solectron     54.52     48.50   -11.05%
   3/5/97  150 Atlas Air     23.06     20.38   -11.64%
 11/21/96  100 Oracle Cor    48.65     35.75   -26.52%
 12/23/96  100 Tidewater     46.52     44.25    -4.89%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  200 Borders Gr  4502.49   8950.00  $4447.51
   2/2/96  200 Green Tree  6077.49   7775.00  $1697.51
  5/24/96  100 Oxford Hea  4802.49   6175.00  $1372.51
  8/13/96  200 Carlisle C  5264.99   6400.00  $1135.01
   3/8/96  400 Prime Medi  4027.49   4450.00   $422.51
  6/26/96  100 Cisco Syst  5389.99   5112.50  -$277.49
   3/5/97  150 Atlas Air   3458.74   3056.25  -$402.49
 11/21/96  100 Oracle Cor  4864.99   3575.00 -$1289.99

 10/15/96  100 Solectron   5452.49   4850.00  -$602.49
 12/23/96  100 Tidewater   4652.49   4425.00  -$227.49

                             CASH   $2662.96
                            TOTAL  $57431.71