Boring Portfolio

Buying Pentair
Monday, April 13, 1998
by Mark Weaver (MWEAV@aol.com)


ANN ARBOR, Mich. (April 13, 1998) -- Major market averages closed mixed on a glorious spring day here in the Midwest, with the S&P 500 off nominally and the Nasdaq up 5 points. The Boring Portfolio slipped 0.44%, with losing holdings outnumbering gainers four to two.

It's "spring ahead," Borefolio! Spring ahead!

Shares of Atlas Air (NYSE: CGO) continue to climb following the company's announcements late last week that it had successively placed $175 million in debt at 9.25% and secured a new customer. Proceeds from the debt placement will be used to repay amounts outstanding under Atlas's revolving aircraft credit facility and possibly to redeem some outstanding 12.25% debt later this year.

As for the new customer, Atlas has reached a long-term agreement to provide air freight services for Alitalia. To serve the Italian airline, Atlas will use one of two Boeing (NYSE: BA) 747-200s it had leased out to Philippine Airlines and is having converted from passenger to freighter configuration at Boeing's facility in Wichita, Kansas. According to Atlas, Alitalia has also contracted for additional peak season capacity in the third and fourth quarters of this year.

Atlas stock rose $11/16 to $35 11/6 in above-average trading volume.

Shares of Andrew Corp. (Nasdaq: ANDW) inched up $1/8 on the bid to $19 1/2. Andrew, based in Orland Park, Illinois, is slated to report its fiscal second-quarter results this Thursday, April 16, in the morning. Following the company's warning last month of delayed sales, analysts are looking for earnings of $0.24 per share, down from last year's $0.29. We'll be covering Andrew's follow-up conference call.

Carlisle Companies (NYSE: CSL) will also be reporting its quarterly results that morning, and we'll be covering their teleconference, too. According to First Call, analysts' consensus estimate is for EPS of $0.52. That would constitute a fine 21% increase over last year's $0.43.

Carlisle stock today gave back $7/16 of the $1 7/16 it gained last Thursday.

Cisco Systems (Nasdaq: CSCO) announced it has completed the acquisition of NetSpeed Inc. of Austin, Texas. Last month, The Kid announced a definitive agreement to acquire privately-held NetSpeed for 3.8 million shares of Cisco stock. NetSpeed develops Digital Subscriber Line (DSL) technology for increasing bandwidth to your and my desktop, thank you very much.

In connection with the acquisition, Cisco expects to take a one-time charge against after-tax earnings of between $0.15 and $0.18 per share in their current quarter, which ends this month.

Finally, after a diligent search for a new stock to add to the Borefolio, we announce tonight our intent to purchase 100 shares of Pentair Inc. (NYSE: PNR).

As always, the purpose of our announcement is not at all to recommend to you that you invest in Pentair yourselves. You'll conduct your own due diligence and reach your own decisions, of course. Rather, in offering our "buy" report, our objective is to provide for your consideration an example of the qualities we look for in an investment (which may differ from what you look for), how we do our homework, and why we decided to become part owners of Pentair.

If you agree with our decision, terrific. If you don't, that's fine, too. Either way, what matters is that we share our information and opinions and learn -- all of us -- from the process.

In a nutshell, we like Pentair, the company, because its well-managed, makes products that are leaders in their respective categories, conducts its business affairs honorably, has demonstrated a record of reliable, above-average growth and offers solid prospects for doing so a good while longer. We're buying Pentair, the stock, at this time because, in our opinion, it represents good value.

We invite you to read our report and offer your comments... um, just as soon as we open a folder for Pentair on our stock boards! You see, although it's a Fortune 500 company, Pentair is the kind of un-glitzy, diversified industrial firm that tends to be overlooked by online investors. In this, as in a number of other respects, Pentair reminds us of Carlisle Companies. Should Pentair perform as well for us as Carlisle has, this could be the beginning of a long-term relationship.

Oh, one other thing: Pentair reports its quarterly results on --you guessed it -- this Thursday morning. And we'll be covering that one, too.

Sounds like I'd better rest up.

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


TODAY'S NUMBERS
Stock  Change    Bid 
 ANDW  +  3/16  19.38 
 CGO   +1 7/8   35.00 
 BGP   +1 3/16  33.00 
 CSL   +1 7/16  48.94 
 CSCO  -1 1/4   66.94 
 FCH   -  1/2   35.75 
 
                   Day   Month    Year  History 
         BORING   -0.44%  -1.47%  -0.42%  25.31% 
         S&P:     -0.09%   0.72%  14.35%  78.52% 
         NASDAQ:  +0.26%  -0.58%  16.21%  75.31% 
  
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     32.75   190.95% 
   6/26/96  150 Cisco Syst    35.93     66.50    85.07% 
   8/13/96  200 Carlisle C    26.32     48.50    84.24% 
    3/5/97  150 Atlas Air     23.06     35.69    54.77% 
   11/6/97  200 FelCor Sui    37.59     35.00    -6.89% 
   1/21/98  200 Andrew Cor    26.09     19.50   -25.26% 
  
  
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  13100.00  $8597.51 
   6/26/96  150 Cisco Syst  5389.99   9975.00  $4585.01 
   8/13/96  200 Carlisle C  5264.99   9700.00  $4435.01 
    3/5/97  150 Atlas Air   3458.74   5353.13  $1894.39 
   11/6/97  200 FelCor Sui  7518.00   7000.00  -$518.00 
   1/21/98  200 Andrew Cor  5218.00   3900.00 -$1318.00 
  
                              CASH  $13625.51 
                             TOTAL  $62653.64