Boring Portfolio

Boring Portfolio Report
Thursday, September 25, 1997
by Mark Weaver, MD (MWEAV@aol.com)


ST. LOUIS, MO (Sept. 25, 1997) -- The market charted a downhill course from opening to close today. The first ill wind blew in on the stronger than expected durable goods report -- the theory here is that an overheated economy will draw the attention of the Fed and interest rates will rise. The second piece of "bad" news was the rise in existing home sales which was unexpected -- the theory here is ... well, the same.

This mix of economic reports weighed heavily on the bond market which retreated over a point and interest rates "rose" to 6.40% (still a pretty good number). The bond market set the tone for the stock market and down she went.

The Borefolio moved up 0.22% today while the S&P fell 0.70% and the Nasdaq dropped 0.50%. The Borefolio had 5 winners and 4 losers on the day.

The only news of significance surrounded OXFORD HEALTH PLANS (Nasdaq: OXHP). Oxford has pretty much tread water since its last earnings report and today was no exception. There is a lot of anxiety surrounding healthcare providers generally as the government works through the process of Medicare reform. There has been little Oxford specific news to account for the weakness in the stock.

Yesterday, three major not-for-profit managed care companies made an agreement with consumer groups to make a bill of rights for managed-care patients legally binding. An executive from HIP (Health Insurance Plans) went as far to say he favored the enactment of laws to ensure that result.

In the meantime AAHP suggested that the government shouldn't micromanage but should simply provide a framework. There is a difference of opinion within the HMO community.

Then, Senate Republicans released a study by the GAO which showed that they could find no evidence that HMO's had explicit gag orders in physician contracts which would inhibit patient's knowledge of or access to inovative health care therapies. These guys favor minimizing government regulation.

Ron Pollack of Families USA was quoted as saying "What we have today is a crazy quilt pattern of regulations." Amen to that.

So, what does this mismash of point-counterpoint have to do with Oxford? The managed care industry is under scrutiny from all sides and one of the big scrutinizers is the US government. There is a justifiable fear that where the government treads, profits are threatened. This could be either through budget cuts or costly regulation. The entire HMO industry continues to trade at prices below their expected earnings potential. Fear is winning the battle over greed.

Today Oxford announced that in a survey conducted by CareData Reports comparing HMO and POS plans in New Jersey that it was ranked numero uno in 10 out of 11 categories. That is simply phenomenal.

Oxford outranked the plans offered by Aetna-US Healthcare, CIGNA HealthCare, Blue Cross/Blue Shield of New Jersey, HIP Health Plan of New Jersey and Prudential HealthCare.

Here are the categories where Oxford ranked number 1:

-overall satisfaction with the health plan
-satisfaction with the quality of medical care
-overall satisfaction with the primary physician
-overall satisfaction with specialists
-satisfaction with the quality and reputation of the plan's hospitals
-overall satisfaction with customer service and plan administration
-satisfaction with the health plan's concern for the member's well being
-likelihood to recommend the current plan to a friend
-likelihood to re-enroll in the current plan
-HMO member satisfaction with the prescription drug plan
-POS plan improving member health and well-being

If the customer is always right, Oxford has little to fear from moves to improve quality of care for HMO members. In fact, it could be the model for any such initiative.

Oxford closed down $1 1/4 today.

There was also news affecting ATLAS AIR (Nasdaq: ATLS) which continued to gain altitude, up $1/8. There was a report on airfreight volumes at the Miami airport which showed that Atlas is number one in that airport. Significantly, Fine Air ceased operations at that airport following it's crash last month. I would expect that Atlas can pick up some of that lost business and that can't be bad news.

PRIME MEDICAL SERVICES (Nasdaq: PMSI) continued it's rally up $1/2. There was no news to account for the move. Other winners moving without a speck of news included BORDERS GROUP (NYSE: BGP) up $7/8, and TIDEWATER (NYSE: TDW) which followed the oil services group's bounce back from it's recent selloff.

As for the rest of the losers, there was no news on any of them so, let's just forget it and enjoy the remainder of this beautiful early fall day.

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TODAY'S NUMBERS
Stock  Change    Bid
ATLS  +  1/8   27.75
BGP   +  7/8   29.00
CSL   -  13/16 44.88
CSCO  -1 3/4   72.81
GNT   -  3/16  46.56
ORCL  +  5/16  38.19
OXHP  -1 1/4   74.88
PMSI  +  1/2   14.25
TDW   +  7/16  59.00
                   Day   Month    Year  History
        BORING   +0.22%   5.82%  28.68%  48.07%
        S&P:     -0.70%   4.27%  26.62%  50.88%
        NASDAQ:  -0.50%   5.77%  30.04%  61.28%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     29.00   157.64%
  8/13/96  200 Carlisle C    26.32     44.88    70.47%
  5/24/96  100 Oxford Hea    48.02     74.88    55.91%
   2/2/96  200 Green Tree    30.39     46.56    53.23%
   3/8/96  400 Prime Medi    10.07     14.25    41.53%
  6/26/96  100 Cisco Syst    53.90     72.81    35.09%
 12/23/96  100 Tidewater     46.52     59.00    26.81%
   3/5/97  150 Atlas Air     23.06     27.75    20.35%
 11/21/96  150 Oracle Cor    32.43     38.19    17.74%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  11600.00  $7097.51
  8/13/96  200 Carlisle C  5264.99   8975.00  $3710.01
   2/2/96  200 Green Tree  6077.49   9312.50  $3235.01
  5/24/96  100 Oxford Hea  4802.49   7487.50  $2685.01
  6/26/96  100 Cisco Syst  5389.99   7281.25  $1891.26
   3/8/96  400 Prime Medi  4027.49   5700.00  $1672.51
 12/23/96  100 Tidewater   4652.49   5900.00  $1247.51
 11/21/96  150 Oracle Cor  4864.99   5728.13   $863.14
   3/5/97  150 Atlas Air   3458.74   4162.50   $703.76

                             CASH   $7890.00
                            TOTAL  $74036.88