Boring Portfolio

Boring Portfolio Report
Tuesday, November 25, 1997
by Greg Markus (TMF Boring@aol.com)


ANN ARBOR, Mich. (Nov. 25, 1997) -- Benchmarks for U.S. stocks rose Tuesday despite continuing turmoil in international markets. The S&P 500 gained 0.44% while the Nasdaq rose a more modest 0.13%.

The Boring Portfolio, alas, continues to suffer. It fell 0.28% today. After outpacing the S&P 500 for much of the year, the Borefolio has given back more than half of its 1997 gains in the past couple of months as first Oxford Health Plans (Nasdaq: OXHP) and then Green Tree Financial (NYSE: GNT) blindsided investors with announcements of one-time (we hope) charges that raise questions about the quality of the companies' accounting and earnings.

In the case of Oxford (which we unloaded), the questions are entirely appropriate. The company indisputable lost control of its revenues and costs. In Green Tree's case, which we've laid out in previous Boring recaps, the argument is less cut and dried. In both instances, though, the market's judgment is unambiguous: shoot first, ask questions later.

After making what looked like a tentative recovery this morning, Green Tree toppled back in heavy trading, dropping $7/16 to close at $30 7/8. According to First Call's fresh survey of analysts, consensus earnings estimates for 1998 remain at $3.64 per share for Green Tree, which means the stock is trading at 8.5 times next year's earnings -- about half the company's projected annual earnings growth rate over the next three to five years. On top of that, Green Tree pays a modest dividend.

This morning, Green Tree announced that its retail services division has reached an agreement with Agricredit Acceptance LLC to provide a retail revolving credit program through AGCO's independent farm equipment dealers and distributors in the U.S. and Canada. Agricredit Acceptance is the North American financing joint venture between farm equipment manufacturer AGCO Corp. (NYSE: AG) and Rabobank Nederland. The new program will offer farm equipment users a financing source for replacement parts and services. According to a press release, the program is currently being introduced to AGCO dealers and is expected to be formally launched in early February, 1998.

Headquartered in Duluth, Georgia, AGCO is a global manufacturer and distributor of agricultural equipment and replacement parts distributed under such brand names as AGCO Allis, Massey Ferguson, White, and Gleaner. Last year, AGCO had sales of $2.3 billion.

Tidewater (NYSE: TDW) also continued to sink along with most energy stocks ahead of tomorrow's (well, today's... almost) opening of OPEC meetings in Jakarta. Tidewater sank $9/16 with 1.7 million shares trading hands -- almost triple a typical day's activity for the stock.

The losing side was joined by Borders Group (NYSE: BGP) today -- a fairly unusual occurrence for this Borefolio leader. Borders fell $1 7/16 in above-average trading. I searched but could locate no news that might account for the drop.

On the upside, Cisco Systems (Nasdaq: CSCO) and Oracle (Nasdaq: CSCO) reversed yesterday's losses. Cisco picked up a buck on the bid, while Oracle rose $7/8. CNBC reported this morning that the software analyst at Merrill Lynch was "pounding the table" for Oracle following yesterday's cautionary update from his counterpart at Morgan Stanley.

Carlisle Companies (NYSE: CSL) recovered $1 1/2 of the $2 11/16 loss it experienced Monday, and FelCor Suite Hotels (NYSE: FCH), about which we've had little to say since picking up 200 shares earlier this month, edged up $1/16.

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TODAY'S NUMBERS
Stock  Change    Bid
CGO   -  1/16  26.38
BGP   -1 7/16  28.63
CSL   +1 1/2   41.81
CSCO  +1       84.25
FCH   +  1/16  36.75
GNT   -  7/16  30.88
ORCL  +  7/8   33.38
PMSI    ---    13.13
TDW   -  9/16  56.69
                   Day   Month    Year  History
        BORING   -0.28%  -4.29%  12.39%  29.33%
        S&P:     +0.44%   3.96%  28.36%  52.96%
        NASDAQ:  +0.13%  -0.29%  23.08%  52.65%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     28.63   154.30%
  8/13/96  200 Carlisle C    26.32     41.81    58.83%
  6/26/96  100 Cisco Syst    53.90     84.25    56.31%
   3/8/96  400 Prime Medi    10.07     13.13    30.35%
 12/23/96  100 Tidewater     46.52     56.69    21.84%
   3/5/97  150 Atlas Air     23.06     26.38    14.38%
 11/21/96  150 Oracle Cor    32.43     33.38     2.90%
   2/2/96  200 Green Tree    30.39     30.88     1.60%
  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  11450.00  $6947.51
  8/13/96  200 Carlisle C  5264.99   8362.50  $3097.51
  6/26/96  100 Cisco Syst  5389.99   8425.00  $3035.01
   3/8/96  400 Prime Medi  4027.49   5250.00  $1222.51
 12/23/96  100 Tidewater   4652.49   5668.75  $1016.26
   3/5/97  150 Atlas Air   3458.74   3956.25   $497.51
 11/21/96  150 Oracle Cor  4864.99   5006.25   $141.26
   2/2/96  200 Green Tree  6077.49   6175.00    $97.51
  11/6/97  200 FelCor Sui  7518.00   7350.00  -$168.00

                             CASH   $3021.10
                            TOTAL  $64664.85