Boring Portfolio Report
Wednesday, March 26, 1997
by Jeff Fischer (MF BudFox)
ALEXANDRIA, VA., (March 26, 1997) -- ......Annnnnnd in this corner, weighing in at a market cap of $35 billion, trading at 8 times sales and 24 times estimates for the year ending in July, sporting net profit margins of above 20% for the last five years, wearing the gray and white boxers, and known round the globe as the undisputed heavyweight champion of the world!!... CCCCCCIIIIIIIIISCO SYSSSSTEMMMS!!!!!!!!! (Nasdaq: CSCO).
Today the stock of the leading networker rose $4 1/2 to $52 1/2. Yesterday after the market closed, as MF Osprey reported, Montgomery Securities mentioned the stock as "undervalued," along with MICROSOFT (Nasdaq: MSFT) and ORACLE (Nasdaq: ORCL). Oracle is another Boring Portfolio stock.
Many may question how Cisco and Oracle are "boring" stocks. They aren't. They're no more boring than Coca-Cola, Intel, or Gillette, in that these companies operate successful business models which have built equity for shareholders consistently while leading their industries, in both innovation and marketing.
Cisco and Oracle are far from boring, and the Boring Portfolio and MF Boring (Greg Markus) are no slouches, either. The "Boring" name doesn't fit very well, and there's a reason.
Before Greg became MF Boring, he was frequenting the Fool's chat rooms and writing of a few stocks he followed. Somebody asked him what kind of industries he watched and he replied somewhere along the lines of, "Paper, healthcare, financial -- you know, some of the more boring ones." A Fool replied, "You should be MF Boring, then. You're MF Boring."
Greg follows and invests in much more than "boring industries," but the Boring name stuck as he became a volunteer MF, and the name carried with him so far as to lead to "The Boring Portfolio," run by MF Boring. So, Greg didn't entirely name himself or his portfolio, but today he and his work are known as "Boring." That doesn't mean they'll always be named "Boring," though. Maybe Greg will change the names at some point.
This column over the past six months has done more to teach individual investors, on a daily basis, than the Fool Portfolio has, in my opinion. Greg does less entertaining and more stock and business analysis. He keeps at it daily and he does it well. The past few months he's focused on Cisco and Oracle more than others, but he's also paid much attention to two other leaders, OXFORD HEALTH PLANS (Nasdaq: OXHP) and GREEN TREE FINANCIAL (NYSE: GNT).
This portfolio is an interesting mix, with:
CISCO (Nasdaq: CSCO): the leading networker
ORACLE (Nasdaq: ORCL): the leading database software company
ATLAS AIR (Nasdaq: ATLS): an air cargo carrier
BORDERS BOOKS (NYSE: BGP): leading book seller
OXFORD (Nasdaq: OXHP): a leader in health-benefit plans
GREENTREE (NYSE: GNT): the leading financier in manuf. homes
TIDEWATER (NYSE: TDW): an energy company focused on marine services (offshore petroleum)
CARLISLE (NYSE: CSL): manufacturer of plastic, rubber, and metal products for everything from roofing components to small tires for golf carts, to food-service products.
PRIME (Nasdaq: PMSI): a medical services company
The Borefolio gained 0.77% today, while the S&P gained 0.18% and the Nasdaq soared 1.68%. To date, the portfolio is underperforming the market, though it's only been in operation for little over one year, and it has taken months for Greg to build a portfolio of stocks with which he's comfortable. I'm not making excuses, but... a year is not a long time. Meanwhile, I care more about Greg's daily recaps for the insight and interpretations offered, rather than how the portfolio performs. Of course, we all want to see the port outperform the S&P in the long-term.
The list of companies above offered no news today, aside from CISCO SYSTEMS (Nasdaq: CSCO), which had plenty of press releases.
Cisco expects to buy or acquire over twenty companies this year, and today it acquired a Silicon Valley start-up called Telesend Inc, using stock to make the purchase. Telesend's technology will be incorporated into Cisco's Wide Area Network product.
Telesend developed a new telecommunications technology known as ISDN DSL, or IDSL for short (standing for Integrated Services Digital Network Digital Subscriber Line). Okay. Sounds fancy. What DSL offers is high-speed Internet access which also helps to relieve congestion on telephone lines. The congestion has been caused by the increased popularity of the Internet.
IDSL allows phone companies to offer Internet access at speeds four times quicker than standard phone lines, or 128,000 bits per second.
One beauty of Cisco's plan is that it utilizes installed equipment -- Cisco is the only company to offer this -- while combating a similar technology recently offered by ASCEND COMMUNICATIONS (Nasdaq: ASND). The IDSL technology will be integrated into Cisco's 90i wide area network access product.
In other news, Teleport, a provider of fiber optic networks whose market will represent nearly 70% of the nation's by the end of the year, has agreed to use Cisco's ATM switching equipment in its services network.
Cisco also announced the release of Cisco Enterprise Accounting, which is the first Cisco software program used to monitor and control network usage costs -- an important need that comes with a company's owning and operating of a network. The product is the first in a coming family of Cisco software products.
Finally, MCI COMMUNICATIONS (Nasdaq: MCIC) announced a large contract of at least $100 million, and up to $3 billion, to provide the U.S. Postal Service with telecommunication equipment. Cisco is the major networking company involved on the contract.
To close with a tip:
Here we have the Boring Portfolio, about a portfolio of stocks that are anything but boring. But, if you're interested in keeping only to "boring stocks" which you know well -- or only to leading stocks -- you probably want to keep cold-callers (like Bust the Tipsters' "Cold Call Pete") from ringing up your home with "hot stock" tips. To get and keep your name off cold callers' (and mailers') lists, contact the following:
Telephone Preference Service
Direct Marketing Assn.
PO Box 9014
Farmingdale, NY 11735-9014.
The equivalent service for unwanted mail is:
Mail Preference Service
Direct Marketing Assn.
PO Box 9008
Farmingdale, NY 11735-9008.
It will take about two months for the calls and mail to decrease. Thank you to MF DrRap for following up on our initial information to get the final contacts listed above.
MF Boring will return next week, while Thursday MF Osprey will write this recap.
Fool on! Or, Bore on!
(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 - 1/8 25.38 BGP +1 1/4 40.13 CSL - 1/4 30.75 CSCO +4 1/2 52.25 GNT - 7/8 36.75 ORCL +1 1/2 40.50 OXHP - 1/2 62.75 PMSI - 1/4 10.63 TDW - 1/8 49.38
Day Month Year History BORING +0.77% 0.36% 0.33% 15.46% S&P: +0.18% -0.04% 6.72% 27.17% NASDAQ: +1.68% -3.05% -1.70% 21.91% Rec'd # Security In At Now Change 2/28/96 200 Borders Gr 22.51 40.13 78.23% 5/24/96 100 Oxford Hea 48.02 62.75 30.66% 2/2/96 200 Green Tree 30.39 36.75 20.94% 8/13/96 200 Carlisle C 26.32 30.75 16.81% 3/5/97 150 Atlas Air 23.06 25.38 10.05% 3/8/96 400 Prime Medi 10.07 10.63 5.52% 6/26/96 100 Cisco Syst 53.90 52.25 -3.06% 11/21/96 100 Oracle Cor 48.65 40.50 -16.75% 12/23/96 100 Tidewater 46.52 49.38 6.13% Rec'd # Security In At Value Change 2/28/96 200 Borders Gr 4502.49 8025.00 $3522.51 5/24/96 100 Oxford Hea 4802.49 6275.00 $1472.51 2/2/96 200 Green Tree 6077.49 7350.00 $1272.51 8/13/96 200 Carlisle C 5264.99 6150.00 $885.01 3/5/97 150 Atlas Air 3458.74 3806.25 $347.51 3/8/96 400 Prime Medi 4027.49 4250.00 $222.51 6/26/96 100 Cisco Syst 5389.99 5225.00 -$164.99 11/21/96 100 Oracle Cor 4864.99 4050.00 -$814.99 12/23/96 100 Tidewater 4652.49 4937.50 $285.01 CASH $7660.41 TOTAL $57729.16