Boring Portfolio

Bore Week in Review
Friday, May 1, 1998
by Greg Markus (TMF Boring

Philadelphia, PA (May 1, 1998) -- A week that began with a sharp selloff finished on an up note, with the S&P 500 gaining 0.83% and the Nasdaq rising 0.27% in Friday's trading. The Boring Portfolio advanced 0.65% in value, thanks to gains in five of its seven holdings together with a tallying of accumulated interest on the Borefolio's cash balance and dividends received during the month of April.

And a good month it was. Our Boring basket of seven stocks grew by 2.08% in April, more than doubling the 0.91% rise registered by the S&P 500 and even outlegging the Nasdaq's 1.78% gain.

Recapping the week that was, Monday saw our REIT holding, FelCor Suite Hotels (NYSE: FCH), release its first quarter results. Funds from operations (FFO) for the quarter totaled $0.94 per share, up 18% from the year-ago period and a penny ahead of analysts' consensus forecast, as provided by First Call.

(In REIT-speak, FFO is short-hand for net earnings plus depreciation and amortization -- or what's often referred to as "cash flow" in the non-REIT world; for reasons discussed in our FelCor "buy" report, the REIT industry generally employs FFO rather than earnings per share as a measure of profitability.)

With its most recent results factored in, FelCor has now averaged greater than 15% annual FFO growth over the past ten quarters. Moreover, the pending merger of FelCor and Bristol Hotels (NYSE: BH) will create the largest non-paired hotel REIT, thus greatly expanding FelCor's presence in the domestic hotel industry. Yet the stock has traded with a bargain-basement multiple in the single-digits for most of the year to date, as REIT stocks in general and FelCor's shares in particular got no respect from investors.

Happily for us, there are signs that the market is at last beginning to see what we see in FelCor, which is good value. Trading activity in the stock was comparatively heavy this week, and with Friday's $1/4 gain to $35 1/4, FCH rose $1 1/2 this week.

It was a good week for Cisco Systems (Nasdaq: CSCO), as well. On Monday, Cisco debuted its long-awaited Catalyst 8500 series of Layer-3 switch-routers. Midweek, The Kid announced a series of new products and partnerships to advance its strategy of integrating data, voice, and video communications over packetized digital networks.

To prove the point, Cisco also announced during the week that it is supplying switches for Fleet Financial Group's (NYSE: FLT) new Wide Area Network (WAN). Once the work is completed, the Boston-based financial giant will be able to consolidate all of its business-critical applications, electronic banking services, data traffic from its 1400 cash machines, voice communications, and other applications over a single backbone.

Cisco's stock rose $9/16 to a bid of $73 5/8 on Friday and gained $1 3/4 for the week. The company will release results for its April quarter on Tuesday, May 5, after the closing bell. As is our custom, we'll be covering the follow-up conference call and providing you with a timely summary.

April came and went without any sign of The much anticipated e-commerce operation of Borders Group (NYSE: BGP) had been slated for launch in April, but it is once again missing in inaction. Borders stock rose fractionally Friday to $32 11/16 and gained $3/4 for the week.

I'm off from Philly for home. See you next week.

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

Stock  Change    Bid 
 ANDW  -  7/16  22.06 
 CGO   -  1/4   38.75 
 BGP   +  9/16  32.69 
 CSL   +  1/8   50.88 
 CSCO  +  5/16  73.56 
 FCH   +  1/4   35.25 
 PNR   +  1/16  43.31 
                   Day   Month    Year  History 
         BORING   +0.65%   0.65%   3.85%  30.68% 
         S&P:     +0.83%   0.83%  15.52%  80.34% 
         NASDAQ:  +0.27%   0.27%  19.30%  79.97% 
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     32.69   190.39% 
   6/26/96  150 Cisco Syst    35.93     73.56   104.72% 
   8/13/96  200 Carlisle C    26.32     50.88    93.26% 
    3/5/97  150 Atlas Air     23.06     38.75    68.05% 
   4/14/98  100 Pentair       43.74     43.31    -0.98% 
   11/6/97  200 FelCor Sui    37.59     35.25    -6.23% 
   1/21/98  200 Andrew Cor    26.09     22.06   -15.44% 
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  13075.00  $8572.51 
   6/26/96  150 Cisco Syst  5389.99  11034.38  $5644.39 
   8/13/96  200 Carlisle C  5264.99  10175.00  $4910.01 
    3/5/97  150 Atlas Air   3458.74   5812.50  $2353.76 
   4/14/98  100 Pentair     4374.25   4331.25   -$43.00 
   11/6/97  200 FelCor Sui  7518.00   7050.00  -$468.00 
   1/21/98  200 Andrew Cor  5218.00   4412.50  -$805.50 
                              CASH   $9447.76 
                             TOTAL  $65338.39