Merger Mania!!
Thursday, June 4, 1998
by Mark Weaver
(MWEAV)
SPRINGFIELD, IL (June 4, 1998) -- The markets surged forward today as technology stocks rebounded from recent weakness. A wave of high-priced mergers in the telecommunications equipment sector has also ignited interest. Yesterday it was Tellabs (Nasdaq: TLAB) and Ciena (Nasdaq: CIEN), today it is Alcatel (NYSE: ALA) and DSC Communications (Nasdaq: DIGI). These huge deals continue the merger wave we've seen over the past several months.
On the day, the S&P 500 gained 1.12% while the tech-heavy Nasdaq pumped up 1.59%. The Borefolio split the difference, rising 1.28%. We had six winners today and only two losers.
There was, as has become all too typical of late, no news to report. No news has typically been good news for Boring stocks.
Leading the charge today, in sympathy with the technology stocks generally, was Cisco Systems (Nasdaq: CSCO), up $2 3/16. Cisco is still a bit off its all time highs but, in general, has held up quite well in the recent tech turbulence. While Cisco carries the most premium price of any stock in the Borefolio, it also carries the most premium prospects. Earlier in the week Sprint announced the intent to overhaul its systems to handle data, voice and video. Cisco is destined to be a big part of that process.
That is the beauty of picking the more "boring" end of the internet/connectivity sector. The routers and switches that Cisco makes will be in demand no matter who wins the contest for providing services. While the "backbone" of the internet may not be the subject of dinner conversations, it is one heck of a way to make a buck.
On the downside, Felcor Suites Hotels (NYSE: FCH) dropped $3/8. Felcor now yields 6.3% -- pretty tasty in my opinion. It is my opinion that Felcor is the victim of sector-related weakness. While the REIT sector may be cooling off some, there is no sign that Felcor's growth is slowing. In fact, over the past few months we have seen a steady stream of acquisitions announced by our favorite hotel owner. I have not seen anything that would make me think that Felcor isn't a tremendous value at these prices.
Speaking of value... for any that are interested in some good reading I heartily recommend David Dreman's latest book, "Contrarian Investment Strategies: The Next Generation." This book dispels multiple misconceptions about the way the market works. The emphasis is on picking stocks with good value and exercising patience. I was most impressed with the quality of the statistical data that Mr. Dreman uses to support his arguments.
Once you've read the book, use his methods and find a stock. I just about guarantee it will be Boring.
FoolWatch -- It's what's going on at the Fool today.
Stock Change Bid ANDW + 1/4 21.00 CGO - 1/8 33.56 BGP + 3/4 32.38 CSL + 3/16 47.94 CSCO +2 3/16 76.81 FCH - 3/8 33.56 PNR + 13/16 42.00 TBY + 1/4 9.81 |
Day Month Year History
BORING +1.28% -0.18% 1.03% 27.12%
S&P: +1.12% 0.37% 12.82% 76.13%
NASDAQ: +1.59% -0.50% 12.71% 70.03%
Rec'd # Security In At Now Change
2/28/96 400 Borders Gr 11.26 32.38 187.62%
6/26/96 150 Cisco Syst 35.93 76.81 113.76%
8/13/96 200 Carlisle C 26.32 47.94 82.10%
3/5/97 150 Atlas Air 23.06 33.56 45.56%
5/20/98 400 TCBY Enter 10.05 9.81 -2.31%
4/14/98 100 Pentair 43.74 42.00 -3.98%
11/6/97 200 FelCor Sui 37.59 33.56 -10.71%
1/21/98 200 Andrew Cor 26.09 21.00 -19.51%
Rec'd # Security In At Value Change
2/28/96 400 Borders Gr 4502.49 12950.00 $8447.51
6/26/96 150 Cisco Syst 5389.99 11521.88 $6131.89
8/13/96 200 Carlisle C 5264.99 9587.50 $4322.51
3/5/97 150 Atlas Air 3458.74 5034.38 $1575.64
5/20/98 400 TCBY Enter 4018.00 3925.00 -$93.00
4/14/98 100 Pentair 4374.25 4200.00 -$174.25
11/6/97 200 FelCor Sui 7518.00 6712.50 -$805.50
1/21/98 200 Andrew Cor 5218.00 4200.00 -$1018.00
CASH $5429.76
TOTAL $63561.01
