Boring Portfolio

Boring Portfolio Report
Friday, August 29, 1997
by Greg Markus (TMFBoring)

ANN ARBOR, Mich. (August 29, 1997) -- The Nasdaq managed a 6-point gain in light, pre-holiday trading, but the Dow and S&P 500 broke tradition by closing lower on the Friday before the Labor Day weekend.

As for the Boring Portfolio, it posted a solid 1.18% advance, with only two of nine holdings down on the session. PRIME MEDICAL (Nasdaq: PMSI) ended a breathtaking week by surging $1 7/16 to a bid of $13 1/2 on huge volume of 789,000 shares. Altogether, PMSI gained 17.4% this week, as the premier stone-buster -- and soon-to-be prostate nuker -- appears to have been discovered by money managers.

For the week, the Borefolio appreciated all of $25, or 0.04%. Compared to weekly losses of 0.71% for the Nasdaq and 2.61% for the S&P 500, however, that pizza-and-a-movie money looks just fine, thanks. It also moves the Borefolio ahead of the S&P 500 in year-to-date returns, if only by the slimmest of margins: 21.61% to 21.43%.

Farewell to the month of August, which lowered the value of the Borefolio by 1.53%, the S&P 500 by 5.75%, and the Nasdaq by 0.41%. Hello to the month of September, statistically the cruelest month for stocks. Then comes October, and the 10th anniversary of the '87 meltdown. Expect to read no end of stories about that in coming weeks -- but not here, I promise.

What to do after one tough month and faced with possibly two tough months ahead? Well, I plan to do nothing special, as far as stocks go. We at the Boring Portfolio continue to plug away at our research, trying to invest the Borefolio's remaining cash balance in one or two terrific equities.

I know, I've been saying that for a few weeks now. My due diligence takes time, no doubt about it. Investing is something that I do in my off-hours, just as most folks do.

In Thursday's recap, Mark Weaver discussed some good places to get ideas for stocks to invest in. But once you've got those ideas, what next? Well, you research 'em. You do your homework.

At least, that's how I do it. Perhaps if I outline how I do my stock research, it might be of some use to you. Here goes.

I pull 10-Ks and 'Qs and proxies down from the Securities and Exchange Commission's Edgar site and read 'em over, making notes along the way. I grab a Marketguide profile of the company through YAHOO!'s (Nasdaq: YHOO) link and check out First Call's survey of analysts' estimates on AMERICA ONLINE (NYSE: AOL).

Then comes reading recent press releases and news stories about the company (Yahoo! and AOL are great resources for this, too), and clicking down into the company's Website, if it has one. Often, the Website will have a phone number or even a button to click to email the company and request an investor information packet.

Although you can usually get nearly everything that's in the packet directly from the Website (or from Edgar), sometimes the mailed packet will also include recent analysts' reviews, detailed information about the company's products, or other helpful stuff.

If you do request an investor packet, either by phone or by email, always ask for the whole shebang, including copies of analysts' reports. If it's against the company's policy to include stuff from analysts (some will, some won't), they'll say so. But you'll never know unless you ask.

Perhaps nine out of ten prospects I consider fail to make it past this point. Typically, I find a great company but the stock is too expensive for el cheapo port manager. Or else I hit upon a cheap stock only to discover that it's cheap for a good reason. I need a great company and a good price, and I'm happy to wait patiently until the combination turns up.

For the one-in-ten stock that makes it through the background check, I next phone the company and chat up the Investor Relations rep -- or even the CFO, if it's a smaller company -- to get answers to whatever questions I may have. This is a step that many individual investors balk at, but they shouldn't.

Folks in Investor Relations offices get paid to, well, relate to investors. I find that I learn a lot of stuff from speaking with a human being at the company. I also find that if you've done your homework in advance and try to ask questions accordingly, many managers are only too happy to talk about their companies. Heck, sometimes it's hard to get them to quit, once they start waxing eloquent about the new Mark 80 Widgetizer they unveiled at the last trade show in Atlanta.

Don't be shy. Call the company if you have questions or want clarification about something that you've read in a 10-K or press release.

When I call, I also ask if the company has a policy of opening up conference calls to individual investors or providing timely taped replays. Or do they seemingly prefer that the "little folks" simply leave them alone? If so, I'm always happy to oblige ... and let them know it.

Mark Weaver and I have arrived at a small but interesting list of stocks that have made it through the first cut, and many have even made it past the phone call trial. The list includes the usual Boring array: a steel service center, a discrete semiconductor maker, a multi-line insurance company, a contract electronics manufacturer, a trucker, and more. A couple of former Borefolio holdings are also on the list.

As always, if you've got any ideas, please pass 'em along. And have a wonderful Labor Day weekend.

Drip Portfolio -- A decision on Owens Corning.
Fool Message Boards -- Speak your mind!
Evening News -- All the news, early.
Daily Double
-- More room to run?
Daily Trouble -- Value in this butchered stock?
The Fool Portfolio -- Fool Port trying to catch the S&P.
Fool Four -- 23% annualized.

(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  ---      27.50
BGP   +  3/16  23.81
CSL   -  1/2   42.19
CSCO  +  3/16  75.31
GNT   -  1/16  43.94
ORCL  +1 3/4   38.06
OXHP  ---      73.06
PMSI  +1 7/16  13.50
TDW   ---      52.56
                  Day   Month    Year  History
        BORING   +1.18%  -1.53%  21.61%  39.94%
        S&P:     -0.46%  -5.75%  21.43%  44.70%
        NASDAQ:  +0.38%  -0.41%  22.95%  52.49%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     23.81   111.55%
  8/13/96  200 Carlisle C    26.32     42.19    60.26%
  5/24/96  100 Oxford Hea    48.02     73.06    52.13%
   2/2/96  200 Green Tree    30.39     43.94    44.59%
  6/26/96  100 Cisco Syst    53.90     75.31    39.73%
   3/8/96  400 Prime Medi    10.07     13.50    34.08%
   3/5/97  150 Atlas Air     23.06     27.50    19.26%
 11/21/96  150 Oracle Cor    32.43     38.06    17.36%
 12/23/96  100 Tidewater     46.52     52.56    12.98%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   9525.00  $5022.51
  8/13/96  200 Carlisle C  5264.99   8437.50  $3172.51
   2/2/96  200 Green Tree  6077.49   8787.50  $2710.01
  5/24/96  100 Oxford Hea  4802.49   7306.25  $2503.76
  6/26/96  100 Cisco Syst  5389.99   7531.25  $2141.26
   3/8/96  400 Prime Medi  4027.49   5400.00  $1372.51
 11/21/96  150 Oracle Cor  4864.99   5709.38   $844.39
   3/5/97  150 Atlas Air   3458.74   4125.00   $666.26
 12/23/96  100 Tidewater   4652.49   5256.25   $603.76

                             CASH   $7890.00
                            TOTAL  $69968.13