Boring Portfolio

Boring Portfolio Report
Tuesday, December 23, 1997
by Greg Markus (

ANN ARBOR, Mich. (Dec. 23, 1997) -- A late afternoon sell-off sent major market averages sharply lower Tuesday. The Nasdaq and S&P 500 each fell about 1.5%

That's nothing compared with the Boring Portfolio's 2.5% slashing. With just a week left in 1997, the Borefolio continues its relentless slide. A couple of more days like this will erase utterly what little is left of this portfolio's annual gains.

After matching or beating the S&P 500's performance for a good part of the year, the Borefolio suffered dearly from the rapid-fire implosions of Oxford Health Plans (Nasdaq: OXHP), Green Tree Finance (NYSE: GNT) and Oracle (Nasdaq: ORCL). Three leaders in three different industries, yet the same result: spectacular crash-and-burn dives from at or near all-time highs to 52-week lows -- or worse, in the case of Oxford.

The Borefolio shed Oxford and Oracle, limiting to some degree further damage as Oxford continues to augur in. But we've held on to Green Tree, believing that the damage to this leading financial services company is already being repaired, that the fundamentals remain in tact, and that the stock will right itself reasonably soon.

Insiders at Green Tree apparently agree. They've been buying the stock fairly regularly since its crash.

The demise of Tidewater (NYSE: TDW) stock has been less dramatic -- more a steady ebbing away as opposed to a crescendo of selling... until today. TDW slumped $3 1/8 in active trading.

Continuing worries about the degree to which the slowdown of Asian economies will reduce the demand for oil in 1998 combined today with rumors about softening in dayrates for oil drillers, and that sent stocks of exploration and production companies sharply lower.

Among the worst hit was Tidewater, as an analyst at Salomon Smith Barney trimmed his earnings projections for the remainder of Tidewater's 1998 fiscal year (ending in March) and FY 1999. The analyst reportedly cited "slower than expected acceleration in day rates."

The analyst revised his fiscal '98 EPS estimate to $4.13 from $4.30 and dropped his FY '99 forecast all the way to $4.95 to $5.60.

Pretty impressive, huh?

Perhaps so. One might want to consider that, according to First Call, the analysts' old estimates were at the top end of the range. Even with the revision, the analysts' FY98 forecast is above the consensus of $4.09. As for the FY99 estimate, it's now below the consensus of $5.17, but it still represents a projection that Tidewater will grow EPS by 20% over the coming year.

For that kind of growth, investors can now pay less than 12-times projected earnings for the fiscal year ending in March, or less than 9-times projected profits for next fiscal year.

Perhaps the best source of information and insight anywhere -- and from both bears and bulls -- is right here in The Motley Fool, in the Oil and Gas folder inside the section for Industry & Market Analysis analysis. You might also wish to review a summary of Tidewater's recent conference call.

I also spoke briefly with the company today and received no information that would justify this sell-off. When I learn anything more, I'll pass it along.

--Greg Markus

Do your Foolish gift shopping now, in time for the Holidays. And consider the Fool's Industry Focus '98 book -- to learn not only about industry-leading stocks, but about the industries in which they operate as a whole -- and see which one company in each industry that our news and analysis team favors most.

Stock  Change    Bid
CGO   -1 1/8   22.44
BGP   +  1/4   30.13
CSL   -1 3/8   40.38
CSCO  -3 1/8   51.38
FCH   -  9/16  36.13
GNT   -  1/2   25.00
PMSI  -  1/4   12.75
TDW   -3 15/16 48.31

                   Day   Month    Year  History
        BORING   -2.48%  -7.98%   3.90%  19.56%
        S&P:     -1.53%  -1.70%  26.78%  51.08%
        NASDAQ:  -1.44%  -5.66%  16.95%  45.05%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     30.13   167.63%
  8/13/96  200 Carlisle C    26.32     40.38    53.37%
  6/26/96  150 Cisco Syst    35.93     51.38    42.97%
   3/8/96  400 Prime Medi    10.07     12.75    26.63%
 12/23/96  100 Tidewater     46.52     48.31     3.84%
   3/5/97  150 Atlas Air     23.06     22.44    -2.69%
  11/6/97  200 FelCor Sui    37.59     36.13    -3.90%
   2/2/96  200 Green Tree    30.39     25.00   -17.73%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  12050.00  $7547.51
  8/13/96  200 Carlisle C  5264.99   8075.00  $2810.01
  6/26/96  150 Cisco Syst  5389.99   7706.25  $2316.26
   3/8/96  400 Prime Medi  4027.49   5100.00  $1072.51
 12/23/96  100 Tidewater   4652.49   4831.25   $178.76
   3/5/97  150 Atlas Air   3458.74   3365.63   -$93.11
  11/6/97  200 FelCor Sui  7518.00   7225.00  -$293.00
   2/2/96  200 Green Tree  6077.49   5000.00 -$1077.49

                             CASH   $6427.47
                            TOTAL  $59780.60