Boring Portfolio

The Shedding o' the Green
Tuesday, March 17, 1998
by Greg Markus (TMF Boring)

ANN ARBOR, MICH. (March 17, 1998) -- The Boring Portfolio joined the Nasdaq in shedding a bit o' the green in celebration of St. Patrick's Day. The S&P 500 managed a nominal rise, despite continuing reductions in analysts' projections of 1998 earnings for its constituent companies.

Borders Group (NYSE: BGP) and Andrew Corp. (Nasdaq: ANDW) extended Monday's losses by falling fractionally today in heavy trading. I saw no news on either company.

Atlas Air (NYSE: CGO) continues to gain altitude. The stock rose $11/16 to $34, buoyed by an upgrade by Morgan Stanley to "outperform" from "neutral." The brokerage established a $40 price target based on a multiple of 20 times its 1998 earnings estimate of $2.00 per share.

That multiple is a bit above the industry average, which is in the mid-teens, but I suppose one could justify it based on Atlas's substantial near-term growth prospects now that the company has reliable new capacity coming on line and has begun to sign new contracts. Either way, we like our investment in Atlas.

Other than that bit of news, not a heck of a lot happened in Boringville today. Shares of Cisco Systems (Nasdaq: CSCO) picked up $1/8. After the closing bell, however, rival Bay Networks (NYSE: BAY) warned that it expects to record a sequential decline in operating income in its March quarter, with revenues down about 10% from the December quarter. Bay attributed the shortfall to "weaker than anticipated demand in many of the company's customer segments."

Formed from the merger of Wellfleet Communications and SynOptics Communications in 1994, Bay was initially a larger player than Cisco. Bay has faced continuing challenges in getting its cross-country merged operations on track, however, and sales have been basically flat the past couple of years.

Whether or not this latest bit of news will affect Cisco's share price remains to be seen. Which is a waffly way of saying that I personally don't see why Bay's problems should be viewed as being at all relevant to Cisco's situation, but then you never know how the market will react.

Lastly, I noticed that in his annual message to Berkshire Hathaway (NYSE: BRK.A) shareholders, chairman Warren Buffett wrote that in view of current market conditions, it "may be some time before we find opportunities that get us truly excited."

The Sage of Omaha reminded his readers that, unlike a baseball player, an investor can wait on as many pitches as he likes until just the right one comes along to swing at.

"Nevertheless," he wrote, "just standing there, day after day, with my bat on my shoulder is not my idea of fun."

Mine either.

My partner, Mark Weaver, and I continue to do our homework, diligently searching for good value. We wish the search was easier, but it ain't. We do have a number of good prospects, however, and as soon as we decide to take a swing, we'll let you know.

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

Stock  Change    Bid 
 ANDW  -  5/8   20.56 
 CGO   +  11/16 34.00 
 BGP   -  1/2   31.63 
 CSL   -  5/8   46.56 
 CSCO  +  1/8   64.44 
 FCH   -  9/16  35.00 
                   Day   Month    Year  History 
         BORING   -0.71%  -2.80%  -2.30%  22.93% 
         S&P:     +0.11%   2.96%  11.34%  73.81% 
         NASDAQ:  -0.50%   0.50%  13.30%  70.93% 
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     31.63   180.96% 
   6/26/96  150 Cisco Syst    35.93     64.44    79.33% 
   8/13/96  200 Carlisle C    26.32     46.56    76.88% 
    3/5/97  150 Atlas Air     23.06     34.00    47.45% 
   11/6/97  200 FelCor Sui    37.59     35.00    -6.89% 
   1/21/98  200 Andrew Cor    26.09     20.56   -21.19% 
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  12650.00  $8147.51 
   6/26/96  150 Cisco Syst  5389.99   9665.63  $4275.64 
   8/13/96  200 Carlisle C  5264.99   9312.50  $4047.51 
    3/5/97  150 Atlas Air   3458.74   5100.00  $1641.26 
   11/6/97  200 FelCor Sui  7518.00   7000.00  -$518.00 
   1/21/98  200 Andrew Cor  5218.00   4112.50 -$1105.50 
                              CASH  $13625.51 
                             TOTAL  $61466.14