Boring Portfolio

Boring Portfolio Report
Wednesday, October 29, 1997
by Greg Markus (MF Boring)

ANN ARBOR, Mich. (Oct. 29, 1997) -- U.S. stock benchmarks closed mixed on Wednesday, with the Dow up 8 points but the S&P 500 and Nasdaq ending the day modestly lower.

The Boring Portfolio continued its recovery, rising 1.86%, thanks in part to an upbeat earnings report from ATLAS AIR (Nasdaq: ATLS) and a positive follow-through in the market to yesterday's report from PRIME MEDICAL SERVICES (Nasdaq: PMSI). A summary of Prime's conference call is now available. A summary of Atlas's call, conducted earlier today, will be posted in The Motley Fool shortly.

Atlas Air reported net earnings of $0.28 per share on revenues of $104.2 million. The earnings beat the Street's consensus number by four cents and topped the high-end estimate by a penny. It was also the first quarter ever for the company in which revenues exceeded $100 million. ATLS gained $1 3/8 to $26 in active trading.

Beyond that -- and until I get the conference call summary written up -- I'll simply refer you to Atlas's press release and summarize a few points from the call.

First, Atlas enjoyed substantially lower maintenance costs and improved performance in the quarter from the five aircraft leased from FedEx. Atlas management said they expect this to continue in the current quarter; because of that, they upped their guidance for total block-hours to be flown in Q4 by approximately 1000 hours, to 21,000 to 21,500. Given Atlas's recent history of disappointing the Street, CFO Rick Shuyler emphasized that management would not upgrade their guidance unless they were very confident about the numbers.

Second, delays at BOEING (NYSE: BA) could possibly push-out delivery of the four new 747-400s Atlas has on order. Management outlined their plans for filling any capacity gaps should that occur. Specifically, Boeing is working closely with Atlas to secure three aircraft for short-term lease, and Boeing will also compensate Atlas for losses due to delivery delays. In addition, Atlas is working on its own to secure early release of aircraft from Philippine Airlines to Atlas.

Finally, in addressing concerns about possible effects of financial turbulence in Asia on Atlas's business, the company pointed out that all of their contracts are dollar-denominated and non-cancelable -- and that indeed nearly all aspects of the global air freight industry are conducted in U.S. dollars rather than in local currencies. Also, in the opinion of Atlas's management, devaluation of Asian currencies might well make goods from that continent even more attractive in world markets, thereby increasing rather than decreasing the need for air freight handlers. As it is, worldwide demand for lift capacity if exceptionally strong.

Moving from the air to the sea, TIDEWATER (NYSE: TDW) was the sole Borefolio holding that dipped today. TDW receded $ along with many of the other drilling and oil services stocks that provided one of the few pockets of relative strength during the market meltdown.

Other than the gaping crater left by the implosion of OXFORD HEALTH PLANS (Nasdaq: OXHP) on Monday, the Borefolio now looks pretty much as it was prior to the recent market turbulence. At this moment, that may be a bit like saying that except for one nasty gash from an iceberg, the Titanic was barely scratched. Unlike the Titanic, though, portfolios recover over time. We've already begun cleaning up the debris and intend to replace Oxford with a new investment very soon.

I didn't sell OXHP today, mostly because I never succeeded in getting broker on the phone when I attempted to do so. According to our stated policy, the Ox will be gone within five trading days of last night's decision to sell the stock. In any event, OXHP rebounded $1 13/16 to $27 3/16. Trading volume was, once again, immense.

I see that Oxford was targeted by at least two additional shareholder suits, bringing the count to three that I'm aware of. Please don't write me asking for names of the lawyers. They aren't paying me any commish to move action their way. If you care to join any of the suits (and that's strictly your business, not mine), the information is widely available by checking the usual sites for business news on the Web or AOL.

Stock  Change    Bid
ATLS  +1 3/8   26.00
BGP   +  3/8   25.75
CSL   +1 1/16  44.69
CSCO  +  9/16  80.50
GNT     ---    44.50
ORCL  +  3/8   35.06
OXHP  +1 13/16 27.19
PMSI  +1 1/16  13.06
TDW   -  1/2   63.44
                   Day   Month    Year  History
         BORING   +1.86%  -7.45%  17.60%  35.33%
        S&P:     -0.23%  -2.97%  24.09%  47.87%
        NASDAQ:  +0.17%  -4.90%  24.16%  53.99%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     25.75   128.76%
  8/13/96  200 Carlisle C    26.32     44.69    69.75%
  6/26/96  100 Cisco Syst    53.90     80.50    49.35%
   2/2/96  200 Green Tree    30.39     44.50    46.44%
 12/23/96  100 Tidewater     46.52     63.44    36.35%
   3/8/96  400 Prime Medi    10.07     13.06    29.73%
   3/5/97  150 Atlas Air     23.06     26.00    12.76%
 11/21/96  150 Oracle Cor    32.43     35.06     8.11%
  5/24/96  100 Oxford Hea    48.02     27.19   -43.39%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  10300.00  $5797.51
  8/13/96  200 Carlisle C  5264.99   8937.50  $3672.51
   2/2/96  200 Green Tree  6077.49   8900.00  $2822.51
  6/26/96  100 Cisco Syst  5389.99   8050.00  $2660.01
 12/23/96  100 Tidewater   4652.49   6343.75  $1691.26
   3/8/96  400 Prime Medi  4027.49   5225.00  $1197.51
   3/5/97  150 Atlas Air   3458.74   3900.00   $441.26
 11/21/96  150 Oracle Cor  4864.99   5259.38   $394.39
  5/24/96  100 Oxford Hea  4802.49   2718.75 -$2083.74

                             CASH   $8028.59
                            TOTAL  $67662.97