Boring Portfolio

Felcor.com?
...maybe that would create some interest
by Mark Weaver
(MWEAV)

SPRINGFIELD, IL (July 23, 1998) -- The markets headed south today in a broad retreat. Almost no sector was unaffected by the decline. On the day the S&P lost more than 2%, the Nasdaq 1.75%, and the Borefolio dropped a significant but less severe 1.46%. It wasn't pretty.

Seven of our eight stocks declined. The sole winner was our "Internet" stock Cisco Systems (Nasdaq: CSCO), which rose $5/8 to $99 1/8 on no news. Cisco is trading near the century mark and near all-time highs.

In the news, Andrew (Nasdaq: ANDW) announced that its Earth Station Antennas have been CE certified. This means that the antennas have met the very stringent standards of the European Union. The company stated that this amounts to a "passport" for the use of these antennas in the EU market.

Greg has posted his summary of the Felcor Suites Hotels (NYSE: FCH) Conference Call, and it makes for entertaining reading. As Greg reported last night, Felcor has done a dynamite job of meeting expectations but has been caught up in the dump REIT fever over the past 6-8 months. In a note to me earlier today, Greg pointed out that insiders have been buying the stock heavily at these prices.

I was also intrigued by the fact that Felcor shareholders will be receiving a special $0.30-0.50 dividend later this year as the result of the Bristol merger. Combine that with the $0.55 in regular quarterly dividends (which will, in all likelihood, be increased in September), and you have an effective yield of well over 7.3% for the balance of the year. But dividends are pretty boring... even though they are quite profitable.

I couldn't help but notice that Amgen (Nasdaq: AMGN) was up over 6% today to a 52-week high. The cause of the rise was better-than-expected earnings. Two months ago I noted that on a discounted cash flow basis, Amgen looked undervalued compared to other drug companies. The stock has risen 24% since that time. In contrast, Merck (NYSE: MRK) has sunk over the past week as earnings did not match forecasts. Companies that are in favor get rosy estimates, while those out of favor tend to get pessimistic appraisals.

It strikes me that while the fundamentals are strong, Felcor is definitely out of favor. Ultimately the pendulum of public opinion will swing back to match the performance of the company. We will be here to capitalize!

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


07/23/98 Close

Stock  Change    Bid 
 ANDW  -  3/8   17.81 
 CGO   -  11/16 36.63 
 BGP   - 1 3/4  35.06 
 CSL   -  3/4   46.75 
 CSCO  +  3/4   99.13 
 FCH   -  1/16  29.69 
 PNR   -  1/4   40.00 
 TBY   -  1/16  8.38 
 
                   Day   Month    Year  History 
         BORING   -1.46%   0.78%   5.09%  32.23% 
         S&P:     -2.09%   0.52%  17.45%  83.35% 
         NASDAQ:  -1.75%   2.14%  23.23%  85.91% 
  
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     35.06   211.49% 
   6/26/96  150 Cisco Syst    35.93     99.13   175.86% 
   8/13/96  200 Carlisle C    26.32     46.75    77.59% 
    3/5/97  150 Atlas Air     23.06     36.63    58.84% 
   4/14/98  100 Pentair       43.74     40.00    -8.56% 
   5/20/98  400 TCBY Enter    10.05      8.38   -16.63% 
   11/6/97  200 FelCor Sui    37.59     29.69   -21.02% 
   1/21/98  200 Andrew Cor    26.09     17.81   -31.73% 
  
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  14025.00  $9522.51 
   6/26/96  150 Cisco Syst  5389.99  14868.75  $9478.76 
   8/13/96  200 Carlisle C  5264.99   9350.00  $4085.01 
    3/5/97  150 Atlas Air   3458.74   5493.75  $2035.01 
   4/14/98  100 Pentair     4374.25   4000.00  -$374.25 
   5/20/98  400 TCBY Enter  4018.00   3350.00  -$668.00 
   11/6/97  200 FelCor Sui  7518.00   5937.50 -$1580.50 
   1/21/98  200 Andrew Cor  5218.00   3562.50 -$1655.50 
  
                              CASH   $5528.69 
                             TOTAL  $66116.19 
 

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