Boring Portfolio Report
Thursday, October 9, 1997
by Mark Weaver, MD
([email protected])
St. Louis, MO (Oct. 9, 1997) -- Greg has been having all of the fun in getting to announce new Borefolio highs, well, now it's my turn! The Borefolio bolted ahead 0.66% today to set a new high of $75,541 and change! Even more encouraging for those of us who believe that markets are not totally efficient, the Borefolio moved ahead of the S&P 500's year to date returns by a small fraction. The S&P 500 fell 0.33% today while the Nasdaq continued to move higher, up 0.23%.
Borefolio winners outpaced losers 5 to 3 while ATLAS AIR (Nasdaq: ATLS) maintained its altitude of $26 1/4, unchanged.
Winners included TIDEWATER (NYSE: TDW) which continued to rally along with the white hot oil services and oil drilling sectors. These industry groups are ranked #1 and #2 for relative strength according to Investor's Business Daily. Today's rally may have been prompted by the news that TRANSOCEAN OFFSHORE (NYSE: RIG) inked a deal for one of its harsh environment jack up rigs for day rates of $150,000. That is $40,000 more than any prior contract for this type of rig. Virtually all of that goes straight to the bottom line folks!
As for Tidewater, Greg related to me that he still sees compelling value in Tidewater shares. The stock trades at a PE of only 18 times fiscal 1998 estimates which is well shy of anticipated earnings growth (the fiscal year ends in March). Earnings growth will be aided even further once the underperforming compression division is jettisoned. Tidewater rose $1 5/8.
PRIME MEDICAL SERVICES (Nasdaq: PMSI) is creeping close to its 52 week high. I am used to relative silence from Prime Medical but yesterday's Prostatron announcement was followed by today's announcement of the acquisition of a 75% stake in AK Associates. AK Associates provides installation, upgrade, manufacturing, refurbishment and repair services for major medical equipment manufacturers and mobile medical service providers. Prime has used AK Associates in the past and AK Associates has an agreement with Prostatron maker EDAP Technomed to manufacture prostatherapy trailers.
Needless to say, this sounds like a good fit. The market responded by moving Prime Medical Shares up $3/4.
The other big gainer for the Borefolio was CISCO SYSTEMS (Nasdaq: CSCO) which has continued to rally following a favorable Oppenheimer report earlier this week. An upbeat Dow Jones News Service story which pointed to an easing of pricing pressures in the networking industry may have aided the shares today. The article notes that Cisco has begun shipping its new GSR high-end router and that these sales should boost second quarter earnings. For the first quarter Cisco is expected to earn $0.59 versus $0.47 last year. The kid was up $1 1/8 today.
OXFORD HEALTH PLANS (Nasdaq: OXHP) continued its volatile performance, dropping $1 1/4. The culprit was probably today's "Heard on The Street" column in The Wall Street Journal. Oxford was singled out by a hedge fund manager who is short the shares. Commenting on Oxford's success controlling medical costs and growing enrollments he was quoted as saying, "You have to question how long Oxford can keep it up." Now that is some strong analysis! The fact is, Oxford has consistently stated that enrollments are growing and costs are under control. Sporting some of the strongest management in the healthcare industry I believe the answer to the question is -- quite a while!
As regular readers know, the market selloff of the past couple of days was sparked by words from Alan Greenspan indicating that the current low-growth, low inflation environment was not sustainable. This reporter believes he has found the reason for Dr. Greenspan's fears. An explosion in real estate prices. More specifically, an explosion in the price of newly constructed outhouses.
The Philadelphia Inquirer has reported that the National Park Service recently paid $333,000 to construct a two-hole outhouse with no running water at the Delaware Gap Recreation Area. Now, I will grant that this sounds like one heck of an outhouse. It has a gabled slate roof, cottage-style porches (yes, a porch), and a Frank Lloyd Wright style cobblestone masonry foundation. To top it off, hikers can have their constitutional with absolutely no fear that the building will topple in an earthquake. It is earthquake proof, sporting a 29 inch thick foundation wall.
Last I checked this outhouse comes in at about twice the value of the median family home in the U.S. I don't know about you, but I want that outhouse included in the comps the next time my home is appraised!
The most ridiculous quote in the Reuter's article about this story is from Dennis Galvin, deputy director of the National Park Service. He said "Frankly, that's what we're paying for toilets." I put myself in nomination to be the contract manager for the Park Service outhouse program on the condition I get paid only in the per outhouse savings I undoubtedly could achieve.
Greenspan was right, there are indeed pockets of inflation in the economy, I am just surprised at where inflation has chosen to "rear its head"!
Drip Portfolio --
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The Fool Portfolio
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Evening News
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Daily Double -- Doubled. Why? Learn.
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historically
Stock Change Bid ATLS --- 26.25 BGP - 5/16 26.94 CSL + 3/16 45.13 CSCO +1 1/8 81.88 GNT + 3/4 49.50 ORCL - 1/8 37.13 OXHP -1 1/4 76.50 PMSI + 3/4 14.69 TDW +1 5/8 65.94
Day Month Year History
BORING +0.66% 3.32% 31.29% 51.08%
S&P: -0.33% 2.46% 31.03% 56.14%
NASDAQ: +0.23% 3.57% 35.23% 67.72%
Rec'd # Security In At Now Change
2/28/96 400 Borders Gr 11.26 26.94 139.31%
8/13/96 200 Carlisle C 26.32 45.13 71.42%
2/2/96 200 Green Tree 30.39 49.50 62.90%
5/24/96 100 Oxford Hea 48.02 76.50 59.29%
6/26/96 100 Cisco Syst 53.90 81.88 51.90%
3/8/96 400 Prime Medi 10.07 14.69 45.87%
12/23/96 100 Tidewater 46.52 65.94 41.73%
11/21/96 150 Oracle Cor 32.43 37.13 14.47%
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 10775.00 $6272.51
2/2/96 200 Green Tree 6077.49 9900.00 $3822.51
8/13/96 200 Carlisle C 5264.99 9025.00 $3760.01
5/24/96 100 Oxford Hea 4802.49 7650.00 $2847.51
6/26/96 100 Cisco Syst 5389.99 8187.50 $2797.51
12/23/96 100 Tidewater 4652.49 6593.75 $1941.26
3/8/96 400 Prime Medi 4027.49 5875.00 $1847.51
11/21/96 150 Oracle Cor 4864.99 5568.75 $703.76
3/5/97 150 Atlas Air 3458.74 3937.50 $478.76
CASH $8028.59
TOTAL $75541.09
