Boring Portfolio

Boring Portfolio Report
Wednesday, October 15, 1997
by Greg Markus (TMF Boring@aol.com)


ANN ARBOR, Mich. (Oct. 15, 1997) -- Benchmark stock averages stumbled Wednesday, hit by the combination of a disappointing earnings report from technology bellwether INTEL (Nasdaq: INTC) and weakness in the bond market. The S&P 500 and Nasdaq each fell about half a percentage point in value, as did the Boring Portfolio.

Two Boring businesses reported third-quarter results this morning. CARLISLE COMPANIES (NYSE: CSL) earned $0.63 per share, up 26% over the year-ago period and three cents above analysts' consensus expectation. Sales increased 25% to $316 million.

Sales and earnings in Carlisle's Transportation Products and General Industries segments were up sharply as compared with a year ago. These are the segments that turn out everything from lawn mower wheels to truck trailers to aerospace wiring to ceramic dinnerware. Sales in the company's Construction Materials segment, in contrast, were down 4%, owing to some softness in the roofing market; but the segment saw pretax earnings rise 13%, thanks to tighter cost controls.

Looking ahead, company management said they are "optimistic about the remainder of 1997 and anticipate another year of solid performances in 1998." The stock fell $1 1/4 in unremarkable trading, nonetheless.

The Motley Fool will be providing a synopsis of Carlisle's conference call shortly. But those of you who can't wait to learn more about trends in plastic bumper production or stainless container pricing can dial 800-633-8284 and enter reservation number 3130621 to hear the taped replay. The replay is available until 5:00 PM EDT tomorrow (Oct. 16).

GREEN TREE FINANCIAL (NYSE: GNT) posted quarterly earnings of $0.85 per share, up 39% over the year-ago period and two cents ahead of the consensus forecast.

Loan volume in the quarter totaled $4.5 billion, a full 50% increase over the $3.0 billion posted in last year's Q3. The company's home equity/home improvement (HE/HI) and consumer retail lending more than doubled, to $1.42 billion. Commercial and equipment lending increased 59%, to $1.48 billion. Although these newer business lines showed the most dramatic gains, the Tree continued to grow its more mature manufactured home (MH) finance business, as well: loan volume rose 13% to $1.6 billion.

Not only did the sheer volume of financing increase, credit quality remained healthy, as well. On a dollar basis, 60-plus day delinquencies on MH loans totaled 1.18%, as compared with 1.19% at the end of 1996. Delinquency rates for the newer business lines (HE/HI, consumer retail, and commercial/equipment) were comparably low -- well under one percent -- and flat.

One item I noticed was that Green Tree's total securitizations during the quarter were "only" 23% above those of Q3 1996, as compared with the 50% increase in loan volume. That's worth noting because Green Tree records a "gain on sale" only when it bundles a package of loans and sells ("securitizes") them to investors. What this means is that Green Tree was able to exceed the Street's earnings expectations while at the same time adding substantially to its portfolio of loans available for securitization in future quarters. I'm impressed.

After all that build-up, it comes as something of an anticlimax to report that GNT lost $1 5/16 in average trading volume. There may have been some selling on the news occurring, but today's back-up in interest rates weighed upon many financial stocks, as well. We'll be providing a summary of Green Tree's follow-up conference call, held earlier today, shortly.

Turning briefly to other Borefolio stocks, CISCO SYSTEMS (Nasdaq: CSCO) rose $2 1/4 to close at a bid of $83 3/16 -- just under an all-time high. The stock was upgraded by PaineWebber from a "neutral" to a "buy." I haven't looked yet to see what price Cisco was trading at when PaineWebber cut the Kid to "neutral," but it's a certainty it was well below 83 bucks.

In Tuesday's recap, I whined about how the Borefolio had seen but a 10.8% return on its 11-month investment in ORACLE (Nasdaq: ORCL). Such complaining must have displeased the financial kahunas, as they trimmed ORCL by $1 1/16 today, reducing the Borefolio gains to 7.5%.

That'll teach me.

Drip Portfolio -- Randy on finding value.
The Fool Portfolio -- Bumbling through a recap.
Fool Message Boards -- Speak your mind!
Evening News -- All the news, early.
Daily Double
-- Good business... how to find it?
Daily Trouble -- What caused the trouble?
Fool Four -- 23% annualized, historically


TODAY'S NUMBERS
Stock  Change    Bid
ATLS  +  7/16  27.50
BGP   -  3/16  26.75
CSL   -1 1/4   46.38
CSCO  +2 1/4   83.19
GNT   -1 5/16  48.50
ORCL  -1 1/16  34.88
OXHP  -  1/2   73.50
PMSI  +  1/8   14.00
TDW   +  3/4   65.13
                   Day   Month    Year  History
        BORING   -0.51%   2.37%  30.08%  49.68%
        S&P:     -0.47%   1.95%  30.37%  55.36%
        NASDAQ:  -0.54%   2.24%  33.49%  65.56%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     26.75   137.65%
  8/13/96  200 Carlisle C    26.32     46.38    76.16%
   2/2/96  200 Green Tree    30.39     48.50    59.61%
  6/26/96  100 Cisco Syst    53.90     83.19    54.34%
  5/24/96  100 Oxford Hea    48.02     73.50    53.05%
 12/23/96  100 Tidewater     46.52     65.13    39.98%
   3/8/96  400 Prime Medi    10.07     14.00    39.04%
   3/5/97  150 Atlas Air     23.06     27.50    19.26%
 11/21/96  150 Oracle Cor    32.43     34.88     7.53%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  10700.00  $6197.51
  8/13/96  200 Carlisle C  5264.99   9275.00  $4010.01
   2/2/96  200 Green Tree  6077.49   9700.00  $3622.51
  6/26/96  100 Cisco Syst  5389.99   8318.75  $2928.76
  5/24/96  100 Oxford Hea  4802.49   7350.00  $2547.51
 12/23/96  100 Tidewater   4652.49   6512.50  $1860.01
   3/8/96  400 Prime Medi  4027.49   5600.00  $1572.51
   3/5/97  150 Atlas Air   3458.74   4125.00   $666.26
 11/21/96  150 Oracle Cor  4864.99   5231.25   $366.26

                             CASH   $8028.59
                            TOTAL  $74841.09