Boring Portfolio

Rays of Hope for Andrew?
Wednesday, April 1, 1998
by Greg Markus (TMF Boring)

PRINCEVILLE, Hawaii (April 1, 1998) -- After going six for six yesterday, the Borefolio saw five of its six investments rise Wednesday for a net gain of 0.61%. No foolin'.

Gee, maybe I should go away on vacation more often.

Now that end-of-quarter "window dressing" is over, portfolio managers may begin moving some cash into beaten down shares of fundamentally strong companies. In my opinion, Andrew Corp. (Nasdaq: ANDW) figures among the leading candidates in that category.

After rising earlier this year, Andrew stock sold off last month after the company warned of slower-than-expected sales, citing delays in the bidding process for B-band cellular licenses in Brazil, weak Asian economies, and a slowing of the buildout of PCS infrastructure in the U.S.

One of those obstacles now appears to be removed, and there are encouraging signs regarding a second one.

First, Brazil (the country, not the movie). After a frustrating seven-month delay due to legal disputes, bids for licenses to operate cellular services in five remaining areas of this country of 160 million inhabitants were opened yesterday at the Communications Ministry in Brasilia. Bidding consortiums include such major international telecommunications giants as SBC Communications (NYSE: SBC), AT&T (NYSE: T), Korean Mobile Telecom, Germany's Mannesmann Eurokom, and Bell Canada.

Once the lucky winners have been announced, the infrastructure buildout can begin; and Andrew's Brazilian offices will undoubtedly be hard at work to capture their share of the business.

On the Asian front, Japan's new fiscal year began today following a week in which the governing Liberal Democratic Party unveiled a $124 billion economic stimulus plan -- the largest in Japanese history.

Citing an NHK public television report, Associated Press said the economic plan calls for a combination of tax cuts and public works expenditures, which could include "massive spending on high-tech infrastructure projects, such as upgrading telecommunications links or installing new fiber optic cables for Internet access."

Details of the spending package will be finalized after the Japanese Parliament passes the 1998 budget in coming weeks.

Although far from a done deal, the proposal is surely a welcome development for Andrew Corp., not to mention Cisco Systems (Nasdaq: CSCO), a core Borefolio holding.

Andrew's stock rose $1 1/8 to $20 15/16 in heavy trading today, while Cisco gained $15/16 to $69 5/16.

Shares of FelCor Suite Hotels (NYSE: FCH) continue to creep higher, picking up $1/8 to $37 3/16. Late last night, FelCor announced that a quarterly dividend of $0.55 per share will be paid on April 30 to shareholders of record at the close of business on April 15, 1998.

That means us, and that means $110 in FelCor dividends will find their way into the Borefolio soon.

In last night's recap, I mentioned that my partner Mark Weaver and I invested in FelCor because we concluded that it represented good value and because we thought it would be prudent to add a somewhat defensive real estate holding to the Borefolio in view of what we judged to be fairly lofty stock market valuations.

That's true, but that's only half the case for FelCor. The other half is that the REIT's management is experienced and highly respected in the hotel industry, and they know how to put together deals that serve shareholders well, such as the recently announced acquisition of Bristol Hotel (NYSE: BH).

On top of that, we've found the company ready and willing to answer any questions we might have as we continue our education in REITs and FelCor.

Mark has stayed in a number of FelCor's Embassy Suite Hotels. The company is the world's largest owner of hotels bearing that brand. I've stayed at FelCor's Sheraton property in Philadelphia and a couple of its Doubletrees. We like 'em.

Upon the closing of FelCor's planned merger with Bristol, FelCor will also become the world's largest owner of Holiday Inns.

FoolWatch -- It's what's going on at the Fool today.

Stock  Change    Bid 
 ANDW  +1 1/8   20.94 
 CGO   +  1/2   33.06 
 BGP   -  1/4   33.81 
 CSL   +  1/8   49.25 
 CSCO  +  15/16 69.31 
 FCH   +  1/8   37.19 
                   Day   Month    Year  History 
         BORING   +0.61%   0.61%   1.70%  27.96% 
         S&P:     +0.58%   0.58%  13.53%  77.24% 
         NASDAQ:  +0.65%   0.65%  16.89%  76.34% 
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     33.81   200.39% 
   6/26/96  150 Cisco Syst    35.93     69.31    92.89% 
   8/13/96  200 Carlisle C    26.32     49.25    87.08% 
    3/5/97  150 Atlas Air     23.06     33.06    43.39% 
   11/6/97  200 FelCor Sui    37.59     37.19    -1.07% 
   1/21/98  200 Andrew Cor    26.09     20.94   -19.75% 
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  13525.00  $9022.51 
   6/26/96  150 Cisco Syst  5389.99  10396.88  $5006.89 
   8/13/96  200 Carlisle C  5264.99   9850.00  $4585.01 
    3/5/97  150 Atlas Air   3458.74   4959.38  $1500.64 
   11/6/97  200 FelCor Sui  7518.00   7437.50   -$80.50 
   1/21/98  200 Andrew Cor  5218.00   4187.50 -$1030.50 
                              CASH  $13625.51 
                             TOTAL  $63981.76