Boring Portfolio

Boring Portfolio Report
Thursday, December 4, 1997
by Mark Weaver (mweav@aol.com)


St. Louis, MO (Dec. 4, 1997) -- The stock market was up moderately in early trading today but settled back to close on the downside. The S&P 500 was down 0.38% and the Nasdaq Composite lost 0.11%. The Borefolio bucked the trend and rose nearly 1%, up 0.95% on the day.

Five Boring stocks were up while four declined.

Borders Group (NYSE: BGP) was the big winner, up $1 3/8 today even though retail sales reported for November were mixed. Like all retailers, the Christmas season is the most important time of the year for Borders. Borders doesn't report monthly retail sales numbers so there is no direct indication of how its sales went in November. The retail sales report included bullish news about the Thanksgiving weekend and that probably boosted enthusiasm for Borders and other booksellers.

Cisco Systems (Nasdaq: CSCO) was down $1/2 today in spite of what would appear to be good news. First of all, Deutsche Bank included Cisco on its "best ideas for 1998" list. Deutsche Bank considers companies with the ability to compete in the global market to be the best ideas for the coming year, and they felt Cisco deserved a spot on that short list. In addition, Ascend Communications (Nasdaq: ASND) announced that it was happy with earnings estimates for the coming quarter, sending that beleaguered stock up over $3. Unfortunately, the celebration didn't spread to include "the Kid."

Green Tree Financial (NYSE: GNT) was in the news again today. Fitch IBCA lowered its ratings on Green Tree to 'A-' from 'A'. The downgrade "reflects heightened competition in Green Tree's core market, untested strategic initiatives to reduce MFH (manufactured homes) refinancings, an overall decline in risk adjusted capital, which has been exacerbated by the announced writedown, and rapid growth in relatively unseasoned business lines." Greg Markus has discussed all of this in detail in prior reports. The Fitch press release went on to point out that, in essence, most of these concerns have been or are being addressed by Green Tree. The market didn't seem too upset by all of this, Green Tree rose $11/16.

Prime Medical Services (Nasdaq: PMSI) rarely has news, but earlier in the week the company announced that the FDA has approved the use of a new Prostatron software protocol. This protocol allows the urologist to use a higher dose of energy, allowing the doctor to deal with obstructing prostates and larger size prostate glands. This expands the utility of the Prostatron and should be good news for Prime Medical. The stock was down $1/8 today.

FelCor Suite Hotels (NYSE: FCH) has been virtually newsless since our purchase. That is usually the case with real estate investment trust (REIT) stocks; watching them is a bit like watching paint dry. Well, that trend came to an abrupt halt today as FelCor announced the acquisition of the 309 room Sheraton Burlington Hotel and Conference center located in Burlington, Vermont. This was the 29th hotel acquired by FelCor this year. Also of significant was the fact that this hotel will convert from being franchised to being managed by an affiliate of ITT Sheraton Corp. This provides solid proof of FelCor's ongoing relationship with ITT Sheraton. This is reassuring given ITT's impending takeover by Starwood. Fears of a loss of this source of business have weighed on FelCor's stock ever since the announcement of the ITT-Starwood deal.

Also of note is that Greg Markus did some preemptive investigative work on the Burlington Sheraton. He was a guest there some time ago and reports that this is a fine hotel. This has been FelCor's pattern -- good hotels in good locations. FelCor rose $13/16 on the news.

The only point plus loser for the Borefolio today was Tidewater (NYSE: TDW), which is being rocked back and forth as though it were on the rough seas its boats navigate. Oil service stocks, including Tidewater, were up smartly in early trading but fell along with oil prices later in the day. Continued rumblings of the UN allowing Iraq to ship more oil continue to rock the market. As Greg said earlier in the week, the current $18.60 price for a barrel of oil remains above the exploration break even point. There is no reason to expect exploration cutbacks at these prices. Tidewater was down $1 9/16.

I couldn't help but notice the continued swoon in former Borefolio holding Oxford Health Plans (Nasdaq: OXHP) today. The stock was down more than $2. Evidently Board Chairman Stephen Wiggins had a conflict that precluded his scheduled appearance at an analyst conference today. The conflict occurred with less than 1 hour's notice. This raised the fear that he didn't appear because he didn't have anything good to say. It was only last August when the company had nothing but good to say. What would the efficient markets mavens have to say about this situation? All I know is that all of the news is not "in the stock" as they espouse.

Also on the medical front comes news that "Two studies presented this week at the Radiological Society of America's annual meeting in Chicago caution that youngsters face serious injury if they accidentally topple TV sets from their stands." While this may seem obvious to most, the reports go on to suggest that TV's be kept in cabinets or on stands that are not easily toppled. Add this to the long list of the dangers of television for children...

Let's be careful out there.


TODAY'S NUMBERS
Stock  Change    Bid
CGO   -  1/16  27.50
BGP   +1 3/8   31.00
CSL   +  1/8   43.44
CSCO  -  1/2   86.38
FCH   +  13/16 36.31
GNT   +  11/16 30.00
ORCL  +  1/16  30.25
PMSI  -  1/8   13.44
TDW   -1 9/16  57.75

                   Day   Month    Year  History
        BORING   +0.95%   1.31%  14.40%  31.64%
        S&P:     -0.38%  -0.17%  31.37%  56.54%
        NASDAQ:  -0.11%  -1.06%  24.97%  54.99%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     31.00   175.40%
  8/13/96  200 Carlisle C    26.32     43.44    65.01%
  6/26/96  100 Cisco Syst    53.90     86.38    60.25%
   3/8/96  400 Prime Medi    10.07     13.44    33.46%
 12/23/96  100 Tidewater     46.52     57.75    24.13%
   3/5/97  150 Atlas Air     23.06     27.50    19.26%
   2/2/96  200 Green Tree    30.39     30.00    -1.28%
  11/6/97  200 FelCor Sui    37.59     36.31    -3.40%
 11/21/96  150 Oracle Cor    32.43     30.25    -6.73%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  12400.00  $7897.51
  8/13/96  200 Carlisle C  5264.99   8687.50  $3422.51
  6/26/96  100 Cisco Syst  5389.99   8637.50  $3247.51
   3/8/96  400 Prime Medi  4027.49   5375.00  $1347.51
 12/23/96  100 Tidewater   4652.49   5775.00  $1122.51
   3/5/97  150 Atlas Air   3458.74   4125.00   $666.26
   2/2/96  200 Green Tree  6077.49   6000.00   -$77.49
  11/6/97  200 FelCor Sui  7518.00   7262.50  -$255.50
 11/21/96  150 Oracle Cor  4864.99   4537.50  -$327.49

                             CASH   $3021.10
                            TOTAL  $65821.10