Boring Portfolio

Boring Portfolio Report
Wednesday, October 8, 1997
by Greg Markus (TMFBoring@aol.com)


ANN ARBOR, Mich. (Oct. 8, 1997) -- Speaking before Congress today, Fed Chairman Alan Greenspan said that labor market trends suggest to him the economy is on an "unsustainable track."

Furthermore, he warned legislators, don't start spending any of that projected federal budget surplus, because the current windfall of capital gains tax revenues could diminish considerably. After all, sayeth the Greenspan, "It clearly would be unrealistic to look for a continuation of stock market gains of anything like the magnitude of those recorded in the past couple of years."

The inherently unpredictable stock and bond markets reacted to these utterances in an entirely predictable manner, sending the yield on the long bond up by nearly a tenth of a percentage point to 6.32% and dropping the S&P 500 stock index by nearly one percent. Strength in selected technology issues kept losses on the Nasdaq under control, however, and that benchmark actually finished the session higher by 0.26%... establishing yet another record.

The Boring Portfolio didn't manage to do as well as the Nasdaq, but its losses were limited to $100, or 0.14%. Losing holdings edged winners five to four.

Financial stocks were among those hardest hit today, and our GREEN TREE FINANCIAL (NYSE: GNT) got pruned along with the rest of the group. The Tree's loss -- of $7/8, to $48 3/4 -- may have been limited by a favorable report from Standard & Poor's.

S&P affirmed its investment-grade ratings on Green Tree's debt and commercial paper, citing the company's "excellent franchise name and market position in the manufactured housing sector, long track record at successfully implementing and managing a securitization strategy, growing diversity with regard to offered products," and "consistently strong profitability."

The report cautioned that, as with all companies that rely upon securitization, Green Tree's earnings are based upon certain loss and prepayment assumptions. Any resulting risk is mitigated in Green Tree's case, said the report, because "Green Tree's assumptions have proven to be conservative and the company has had more experience than most other securitizers for purposes of developing the assumptions."

All of which explains why Green Tree continues to have a place of prominence in the Boring garden of investments.

CISCO SYSTEMS (Nasdaq: CSCO) gave back $7/8 of Tuesday's $2 1/8 gain. Amidst a slew of press releases coming out of the industry trade show in Atlanta today was one announcing that Internet service provider UUNET Technologies has signed a $50 million contract to purchase and deploy Cisco's 12000 series Gigabit Switch Routers (GSRs) and Cisco 7500 series routers into UUNET's backbone.

Following on the heels of a recent announcement that SPRINT (NYSE: FON) had deployed GSRs in its Internet backbone, this is significant news in my opinion. UUNET is the world's largest Internet service provider, and as a subsidiary of telecommunication wunderkind WORLDCOM (Nasdaq: WCOM) it's likely to become even more central in establishing next-generation de facto standards for the 'net.

By the way, have you heard much lately from Ipsilon -- the upstart startup that proclaimed it was going to eat the Kid's lunch by making Cisco's products obsolete overnight?

Me neither.

On the upside, TIDEWATER (NYSE: TDW) continues to surf along, rising $11/16 today to close at $64 5/16, another record high.

OXFORD HEALTH PLANS (Nasdaq: OXHP) picked up $1 1/4 to $77 3/4. Appearing at an investor conference today, Jay Silverstein, chief marketing officer for Oxford, emphasized that problems now confronting several prominent HMOs are "not systemic" to the industry -- this according to a Reuters story.

Contrary to what some competitors have claimed, Silverstein said, "the enrollment climate is as good as its ever been." He added that the revenue shortfalls at some HMOs occurred because those companies failed to follow through with their previously stated plans to raise premiums, possibly as part of a misguided effort to build market share.

Silverstein also said that Oxford continues to reduce any remaining backlog of claims and is implementing a system whereby doctors may submit medical claims electronically and receive payment via electronic funds transfer in as little as 48 hours.

Finally, PRIME MEDICAL SERVICES (Nasdaq: PMSI) announced it has treated its first patient with the Prostatron device now operating along a mobile route in North Carolina. Prime owns a 23% interest in the NC Prostatron service, in partnership with approximately 53 urologists.

According to a press release, Prime is currently developing nine additional Prostatron routes in other states, which is consistent with the goal the company articulated earlier this year. Shares of Prime Medical closed up $1/16 to a bid of $13 15/16.

Drip Portfolio -- Healthcare decision finalized.
The Fool Portfolio -- Fool Port getting closer. Sort of.
Fool Message Boards -- Speak your mind!
Evening News -- All the news, early.
Daily Double
-- Doubled. Why? Learn.
Daily Trouble -- Slammed. A value?
Fool Four -- 23% annualized historically


TODAY'S NUMBERS
Stock  Change    Bid
ATLS  -  9/16  26.25
BGP   +  1/4   27.25
CSL   -  3/16  44.94
CSCO  -  7/8   80.75
GNT   -  7/8   48.75
ORCL  -  1/4   37.25
OXHP  +1 1/4   77.75
PMSI  +  1/16  13.94
TDW   +  11/16 64.31
                   Day   Month    Year  History
        BORING   -0.14%   2.65%  30.43%  50.09%
        S&P:     -0.94%   2.80%  31.47%  56.66%
        NASDAQ:  +0.26%   3.33%  34.91%  67.32%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     27.25   142.09%
  8/13/96  200 Carlisle C    26.32     44.94    70.70%
  5/24/96  100 Oxford Hea    48.02     77.75    61.90%
   2/2/96  200 Green Tree    30.39     48.75    60.43%
  6/26/96  100 Cisco Syst    53.90     80.75    49.81%
   3/8/96  400 Prime Medi    10.07     13.94    38.42%
 12/23/96  100 Tidewater     46.52     64.31    38.23%
 11/21/96  150 Oracle Cor    32.43     37.25    14.85%
   3/5/97  150 Atlas Air     23.06     26.25    13.84%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  10900.00  $6397.51
  8/13/96  200 Carlisle C  5264.99   8987.50  $3722.51
   2/2/96  200 Green Tree  6077.49   9750.00  $3672.51
  5/24/96  100 Oxford Hea  4802.49   7775.00  $2972.51
  6/26/96  100 Cisco Syst  5389.99   8075.00  $2685.01
 12/23/96  100 Tidewater   4652.49   6431.25  $1778.76
   3/8/96  400 Prime Medi  4027.49   5575.00  $1547.51
 11/21/96  150 Oracle Cor  4864.99   5587.50   $722.51
   3/5/97  150 Atlas Air   3458.74   3937.50   $478.76

                             CASH   $8028.59
                            TOTAL  $75047.34