Boring Portfolio

Boring Portfolio Report
Wednesday,  November 19, 1997
by Greg Markus (TMFBoring@aol.com)


ANN ARBOR, Mich. (Nov. 19, 1997) -- The S&P 500 rose 0.68% Wednesday and the Nasdaq, which was in negative territory nearly all day, managed to close fractionally higher.

The Boring Portfolio continued to sag, although today's losses were nominal and well off their intraday lows. Once again, the losses were largely confined to Green Tree Financial (NYSE: GNT) and Tidewater (NYSE: TDW).

Green Tree ended the session off $13/16 at $30 3/4 in heavy trading of 3.9 million shares. The stock fell as low as $28 3/4 in the mid-afternoon following yesterday's downgrade by S&P of the company's senior debt and subordinated tranches backed by manufactured home (MH) loans.

Those downgrades were by only one notch. One (which is to say, I) would have thought they had been expected -- and thus already priced into the stock -- in light of Green Tree's recent disclosures and the news that debt rating services had placed the Tree under review. Furthermore, although the downgrades will probably nibble into the profit margins Green Tree enjoys on its MH loan securitizations, the impact will be relatively modest.

Nevertheless, some institutional investors were apparently unmoved by such logic and elected to chop their Green Tree holdings.

Late this afternoon, however, Dain Bosworth decided that enough was enough. Their analyst increased his rating on Green Tree to a "strong buy" from a "buy" and affirmed his $3.65 EPS estimate for 1998 -- which is the number that Green Tree has said it is comfortable with.

As for Tidewater, it continued to sink along with stocks of drillers and related services. There are various excuses offered in the media for the sell-off -- easing global tensions, heightened global tensions, worries about OPEC meeting next week, the old standby "profit-taking," etc., etc.

Unquestionably, the drillers and energy services sector has been red hot for much of 1997, and some of the stocks in the group were almost certainly ahead of themselves. Trading at 12x projected earnings for calendar year 1998, comparatively little debt, outstanding management, and solid growth prospects ahead of it, it's impossible for me to see how Tidewater could be characterized that way, however. Tidewater stays docked in our port.

Green Tree and Tidewater aside, a plurality of Borefolio stocks rose in Wednesday's trading. Carlisle Companies (NYSE: CSL) gained $5/8. The normally quiet company floated a press release this afternoon to celebrate the single largest contract it has ever received: a $68 million order for 2,590 refrigerated aluminum ISO marine containers. Production will begin next month and run through mid-1999. The containers are used for shipping perishable cargo and utilize state-of-the-art climate controls.

Speaking of "SOTA," Cisco Systems (Nasdaq: CSCO) rose $13/16 following CEO John Chambers's keynote presentation yesterday at the huge consumer electronics trade show in Las Vegas. His speech reiterated many of the points he covered at Cisco's annual shareholders' meeting last week.

I had hoped to devote some space to summarizing those points and my day at Cisco, but this Tree and Tide stuff pushed that out. I'll save that for Friday's recap. It's interesting stuff, so I hope you'll check it out.

          

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TODAY'S NUMBERS
Stock  Change    Bid
CGO   +  1/16  26.06
BGP   +  1/4   29.81
CSL   +  5/8   43.06
CSCO  +  13/16 83.13
FCH   -  3/16  36.75
GNT   -1 3/16  30.38
ORCL    ---    34.75
PMSI  -  1/8   13.00
TDW   -1 5/8   59.13
                   Day   Month    Year  History
        BORING   -0.26%  -3.00%  13.89%  31.06%
        S&P:     +0.68%   3.28%  27.52%  51.96%
        NASDAQ:  +0.05%   0.48%  24.03%  53.82%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     29.81   164.85%
  8/13/96  200 Carlisle C    26.32     43.06    63.58%
  6/26/96  100 Cisco Syst    53.90     83.13    54.22%
   3/8/96  400 Prime Medi    10.07     13.00    29.11%
 12/23/96  100 Tidewater     46.52     59.13    27.08%
   3/5/97  150 Atlas Air     23.06     26.06    13.03%
 11/21/96  150 Oracle Cor    32.43     34.75     7.14%
   2/2/96  200 Green Tree    30.39     30.38    -0.04%
  11/6/97  200 FelCor Sui    37.59     36.75    -2.23%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  11925.00  $7422.51
  8/13/96  200 Carlisle C  5264.99   8612.50  $3347.51
  6/26/96  100 Cisco Syst  5389.99   8312.50  $2922.51
 12/23/96  100 Tidewater   4652.49   5912.50  $1260.01
   3/8/96  400 Prime Medi  4027.49   5200.00  $1172.51
   3/5/97  150 Atlas Air   3458.74   3909.38   $450.64
 11/21/96  150 Oracle Cor  4864.99   5212.50   $347.51
   2/2/96  200 Green Tree  6077.49   6075.00    -$2.49
  11/6/97  200 FelCor Sui  7518.00   7350.00  -$168.00

                             CASH   $3021.10
                            TOTAL  $65530.48


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