Boring Portfolio

Cisco's Smokin'
...while Felcor rings the bell
by Mark Weaver

SPRINGFIELD, IL (Aug. 6, 1998) -- The markets were up across the board today as small stocks, in an unusual move, out-performed large caps. Still, the market is struggling with the number of new lows outpacing new highs almost 14:1. For the day the Nasdaq was the big gainer, up 2.32%. The S&P posted a respectable 0.73% gain while the Borefolio split the difference, advancing 1.73%.

There was not a single losing stock in the Borefolio today!

Leading the charge was networking leader Cisco Systems (Nasdaq: CSCO) rising $2 5/8. The rationale behind the rise is readily apparent if you review Greg Markus' Cisco Systems Q4 Conference Call report. Greg also did a nice job of checking Cisco's valuation using discounted cash flow in last week's Boring Portfolio report. Quite simply, we've fallen for the leader of the pack (vroom, vroom).

Carlisle Companies (NYSE: CSL) moved up $1 5/16 today. Yesterday Carlisle announced it was bumping its dividend up a notch to $0.16, a 14% increase. One advantage of owning dividend-paying stocks is that with each bump in the dividend the effective yield of your original investment increases. Carlisle trades at a mere 13.4 times next year's estimates of $3.07 per share, a bargain low price for a high quality company.

Also crossing the wires today was news that Atlas Air (NYSE: CGO) is the leading freight carrier at Miami International Airport through the first six months of the year. This is a remarkable feat given that eighteen months ago the company had only one aircraft operating in the Latin American market. Now the company has five full time 747 cargo planes operating in and out of Miami. That is mighty impressive growth in a relatively short period of time.

Atlas ascended $7/16 today.

Borders Group (NYSE: BGP) and other big booksellers, both on-line and off, were the target of a lawsuit from Intimate Bookshop of Chapel Hill, North Carolina. This suit seeks class action status. The premise of the suit is that Borders et. al. used their size to extract discounts from publishers which were unavailable to small bookstores thereby forcing them out of business.

While, on the face of it, this suit seems preposterous (after all, the buying power of the large company has extracted discounts in any number of marketplace scenarios), a similar lawsuit by retail pharmacies directed at the pricing advantages given to pharmacy benefits managers (PBMs) was successful. The difference between the suits is the target. In the case of the pharmacies the PBMs weren't targeted, the drug companies were. In other words, is it the fault of Borders that the publishers gave in? Perhaps the problem is that the publishers won't give equivalent pricing to the small stores.

In the case of the pharmacies, they won a settlement. I would think it unlikely that, in its current form, today's lawsuit will affect Borders or any other bookseller in a meaningful way. Borders shrugged off this bit of news and rose $1/2.

Finally, FelCor (NYSE: FCH) had the distinction of ringing the final bell today at the NYSE (at least it wasn't Tuesday!!). FelCor celebrates the changing of the corporate name to FelCor Lodging Trusts which reflects the change from an "all suites" format resulting from the recently completed merger with Bristol Hotels.

I wish the stock had joined in the party with greater fervor but at least it was up $1/16.

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

08/06/98 Close

Stock  Change    Bid 
 ANDW    ---    16.25 
 CGO   +  7/16  34.56 
 BGP   +  1/2   29.63 
 CSL   +1 5/16  41.63 
 CSCO  +2 5/8   99.31 
 FCH   +  1/16  25.38 
 PNR   +  1/2   37.88 
 TBY   +  1/8   7.25 
                   Day   Month    Year  History 
         BORING   +1.73%  -3.55%  -3.37%  21.59% 
         S&P:     +0.76%  -2.77%  12.28%  75.29% 
         NASDAQ:  +2.32%  -2.29%  16.50%  75.75% 
     Rec'd   #  Security     In At       Now    Change 
   6/26/96  150 Cisco Syst    35.93     99.31   176.38% 
   2/28/96  400 Borders Gr    11.26     29.63   163.19% 
   8/13/96  200 Carlisle C    26.32     41.63    58.12% 
    3/5/97  150 Atlas Air     23.06     34.56    49.89% 
   4/14/98  100 Pentair       43.74     37.88   -13.41% 
   5/20/98  400 TCBY Enter    10.05      7.25   -27.82% 
   11/6/97  200 FelCor Sui    37.59     25.38   -32.50% 
   1/21/98  200 Andrew Cor    26.09     16.25   -37.72% 
     Rec'd   #  Security     In At     Value    Change 
   6/26/96  150 Cisco Syst  5389.99  14896.88  $9506.89 
   2/28/96  400 Borders Gr  4502.49  11850.00  $7347.51 
   8/13/96  200 Carlisle C  5264.99   8325.00  $3060.01 
    3/5/97  150 Atlas Air   3458.74   5184.38  $1725.64 
   4/14/98  100 Pentair     4374.25   3787.50  -$586.75 
   5/20/98  400 TCBY Enter  4018.00   2900.00 -$1118.00 
   1/21/98  200 Andrew Cor  5218.00   3250.00 -$1968.00 
   11/6/97  200 FelCor Sui  7518.00   5075.00 -$2443.00 
                              CASH   $5528.69 
                             TOTAL  $60797.44