ANN ARBOR, Mich. (April 21, 1998) -- The Boring Portfolio continued its steady advance Tuesday, and once again Atlas Air (NYSE: CGO) and Cisco Systems (Nasdaq: CSCO) led the way. Altogether, the Borefolio gained 0.53%, with winning stocks outnumbering losers four to three.
In active trading, Atlas tacked on $1 7/16 to yesterday's $2 1/4 ascent, pushing the stock past the $40 mark. The stock is benefiting from the upside surprise in Monday's quarterly earnings report and, more importantly, from a clearer sense of the company's situation for the balance of 1998 and beyond, thanks to a pair of new contracts with customers, securing of financing to expand Atlas' fleet size, and increased confidence that Atlas will be able to place its five Boeing (NYSE: BA) 747-400 freighters with customers before the new aircraft begin joining the fleet this summer.
For its part, Cisco rose $1 9/16 to a bid of $73 13/16, extending its push into record ground.
You may recall that Cisco CEO John Chambers was in Australia a few weeks back, reportedly to confer with customers. Well, Cisco announced today that it will be partnering with Telstra, the largest telecom company in the Land of Oz, to offer Business Connect, the first of a planned range of networking and communications solutions for Aussie businesses of all sizes.
Good on ya, mates!
On the downside (as opposed to Down Under), shares of FelCor Suite Hotels (NYSE: FCH) sagged $5/8 to $34 in active trading. REIT shares have lagged the market this year, but as I said in Monday's recap, the softness in FelCor's stock mystifies me. The company has come out of nowhere to transform itself into the largest non-paired share hotel REIT on the planet by securing one smart deal after another. Yet the stock languishes, even if the 6% dividend helps to assuage some of the frustration.
FelCor announced today that it has taken the next step towards its planned acquisition of the Bristol Hotel (NYSE: BH) properties by filing with the Securities and Exchange Commission an intent to offer 32.4 million shares of common stock.
Stocks often weaken a bit following news of additional shares entering the market, typically out of concern -- sometimes appropriate, sometimes not -- that earnings will suffer dilution as a result. In the case at hand, though, I personally find it hard to argue that taking on more debt makes more sense than increasing equity. And, presumably, few if any FelCor shareholders hold the opinion that the company shouldn't do the deal.
We'll find out soon, at any rate, as shareholders will have to approve the deal at FelCor's annual meeting on April 28.
FelCor also announced that at the annual meeting, Hervey Feldman, the company's original board chairman, will retire and assume the title of Chairman Emeritus. Feldman will continue to be involved in FelCor's growth and strategic planning, according to the company.
Michael Rose, former chairman of Promus Hotel Corp. (NYSE: PRH), has been nominated to fill the vacancy created by Feldman's retirement, and Donald McNamara, currently chairman of Bristol, will become FelCor's new board chairman upon the completion of the merger of Bristol into FelCor, assuming shareholder approvals of the merger. Richard North, financial director of Bass plc and Robert Lutz, Chairman and CEO of Amresco Inc. (Nasdaq: AMMB), will also join FelCor's board of directors upon completion of the merger.
You've made all those changes on your FelCor batting roster, yes?
Stock Change Bid ANDW + 1/8 23.63 CGO +1 7/16 40.13 BGP - 1/16 32.25 CSL - 1/8 50.75 CSCO +1 9/16 73.81 FCH - 5/8 34.00 PNR + 7/16 44.69
Day Month Year History BORING +0.53% 2.82% 3.93% 30.77% S&P: +0.24% 2.23% 16.07% 81.19% NASDAQ: +0.89% 3.71% 21.24% 82.90% Rec'd # Security In At Now Change 2/28/96 400 Borders Gr 11.26 32.25 186.51% 6/26/96 150 Cisco Syst 35.93 73.81 105.42% 8/13/96 200 Carlisle C 26.32 50.75 92.78% 3/5/97 150 Atlas Air 23.06 40.13 74.02% 4/14/98 100 Pentair 43.74 44.69 2.16% 1/21/98 200 Andrew Cor 26.09 23.63 -9.45% 11/6/97 200 FelCor Sui 37.59 34.00 -9.55% Rec'd # Security In At Value Change 2/28/96 400 Borders Gr 4502.49 12900.00 $8397.51 6/26/96 150 Cisco Syst 5389.99 11071.88 $5681.89 8/13/96 200 Carlisle C 5264.99 10150.00 $4885.01 3/5/97 150 Atlas Air 3458.74 6018.75 $2560.01 4/14/98 100 Pentair 4374.25 4468.75 $94.50 1/21/98 200 Andrew Cor 5218.00 4725.00 -$493.00 11/6/97 200 FelCor Sui 7518.00 6800.00 -$718.00 CASH $9251.26 TOTAL $65385.64