Boring Portfolio

Window Undressing?
Wednesday, March 25, 1998
by Greg Markus (TMF Boring)


ANN ARBOR, MICH. (March 25, 1998) -- A blue-chip rally fizzled on Wednesday, but an announcement of better-than-expected earnings from Microsoft (Nasdaq: MSFT) helped propel the Nasdaq higher by 0.67% to another record closing.

The Boring Portfolio enjoyed a good day, as well. It rose 0.72%, thanks to strength in Atlas Air (NYSE: CGO) and Cisco Systems (Nasdaq: CSCO). Atlas picked up $1 1/4 in unremarkable trading to hit $33, a couple of dollars shy of a 52-week high. Cisco extended its recent surge by tacking on $1 1/4 to reach an all-time high of 69 7/16 (bid).

As you probably know, portfolio managers typically engage in some "window dressing" during the last few days of a quarter, moving money into strong, popular stocks and out of disappointing, butt-ugly ones -- all for the purpose of making the quarterly portfolio update look good. Some of this window-dressing activity may account for at least part of the recent interest in Cisco.

Happily, we don't need to add The Kid to our bag o' stocks. It's been nestled there for almost two years.

Window-dressing in the opposite direction (window undressing?) perhaps accounts for some of Andrew Corp's (Nasdaq: ANDW) slip to the $20 mark today. Andrew's stock got hammered earlier this month after the company warned of projected weak sales in the current quarter... within weeks after offering an upbeat view of the coming year in a conference call.

Not good. Not good at all...

...unless you're the sort of investor who hankers after temporarily beaten-down stocks of high-quality companies in good growth industries. If you're one of those, Andrew may well be worth a look.

As we know only too well, earnings projections sometimes have a way of not materializing. That said, analysts have pared down their forecasts for Andrew considerably since the March 10 warning, so it's fair to say that there's precious little optimism left in the projections. Based on the analysts' consensus EPS forecast of $1.25 for Andrew's 1998 fiscal year, which ends in September, the stock today trades at a P/E multiple of only 16.0 -- or better than a 24% discount to the S&P 500.

Admittedly, the PCS buildout in the U.S. has slowed of late, but does anyone believe that we'll see a declining investment in wireless communications infrastructure domestically over the next few years?

If the case at home is reasonably compelling, surely the situation abroad is even more so. Southeast Asian economies are a mess now, but that too shall pass. And as it does, telecommunications spending is likely to figure as both cause and effect of the recovery.

Similarly, investment in Brazilian wireless communications is bogged down in litigation surrounding the bidding for new B-band licenses and the privatization of that country's long-distance telephone system. But sooner or later those hassles will get resolved, and Andrew will put its base of operations in South America to good use.

You'll do your own homework and make your own investment decisions, of course. To do otherwise would run directly counter to everything we're about here. But if you're so inclined, the Motley Fool's stock message boards are a good place to gather information and discuss the company with other investors. Andrew's home page on the Web is another worthwhile site to check out. It contains information on the company and its product lines, recent press releases, and a link to the company's filings on Edgar.

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


TODAY'S NUMBERS
Stock  Change    Bid 
 ANDW  -  5/16  20.00 
 CGO   +1 1/4   33.00 
 BGP   +  3/16  34.31 
 CSL   -  1/4   48.19 
 CSCO  +1 11/16 69.44 
 FCH   +  1/4   35.88 
 
                   Day   Month    Year  History 
         BORING   +0.72%   0.46%   0.98%  27.06% 
         S&P:     -0.34%   5.01%  13.55%  77.27% 
         NASDAQ:  +0.67%   3.05%  16.18%  75.27% 
  
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     34.31   204.83% 
   6/26/96  150 Cisco Syst    35.93     69.44    93.24% 
   8/13/96  200 Carlisle C    26.32     48.19    83.05% 
    3/5/97  150 Atlas Air     23.06     33.00    43.12% 
   11/6/97  200 FelCor Sui    37.59     35.88    -4.56% 
   1/21/98  200 Andrew Cor    26.09     20.00   -23.34% 
  
  
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  13725.00  $9222.51 
   6/26/96  150 Cisco Syst  5389.99  10415.63  $5025.64 
   8/13/96  200 Carlisle C  5264.99   9637.50  $4372.51 
    3/5/97  150 Atlas Air   3458.74   4950.00  $1491.26 
   11/6/97  200 FelCor Sui  7518.00   7175.00  -$343.00 
   1/21/98  200 Andrew Cor  5218.00   4000.00 -$1218.00 
  
                              CASH  $13625.51 
                             TOTAL  $63528.64