Boring Portfolio

Q3 Ends on Down Note
...and Boring moves to a new beat

by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (Sept. 30, 1998) -- Traders both around the world and here at home were distinctly underwhelmed with the quarter-point rate cut that the Fed announced Tuesday afternoon. That, along with what has become a ritual of earnings warnings ahead of the coming avalanche of quarterly financial reports, sent stocks sharply lower Wednesday. The Dow, S&P 500, and Boring Portfolio all slumped around 3% in value, while the Nasdaq held its losses to 2.32%.

With only three of its eight holdings closing lower, the Borefolio would have fared pretty well had it not been for a 12% flop in shares of Borders Group (NYSE: BGP). BGP ended the session at $22 1/4, down $2 15/16.

Since stocks of other booksellers fell nowhere near that far, I can only surmise that some folks lost patience with the company's failure to announce the grand opening of the "new, improved" Website in September, as Borders management had indicated they would in a conference call last month.

A quick check reveals that, indeed, the new site is up and running -- although I have to say that a press release attesting to the fact might have been a nice touch.

A quick tour of left me favorably impressed. The search capabilities are much improved, there's increased content (reviews, excerpts), gift-wrapping, and a slicker check-out procedure. Now if only they let folks know about it!

Cisco Systems (Nasdaq: CSCO) and Andrew (Nasdaq: ANDW) both fell as telecom stocks continued to weaken on concerns about softening industry conditions in Asia and, now, Europe. Cisco lost $2 13/16 to $61 13/16, while Andrew lost $1/4 to $13 1/4. Poor Andrew actually opened at $11 this morning, and so the fact that it ended the session where it did might be taken as a sign that the bottom has at last been plumbed.

Or not.

FelCor (NYSE: FCH) this morning declared a quarterly dividend of $0.55 per share, which works out to a not-too-shabby 9% annual rate. In a press release the REIT said its board decided to hold the dividend where it was rather than raise it in light of "uncertainty" in the capital markets and the fact that holders of the common stock will receive a one-time windfall dividend of between $0.30 and $0.50 per share at the end of the year as a consequence of the recent acquisition of Bristol Hotels.

FelCor's stock closed unchanged at $24 15/16. Also unchanged were shares of Pentair (NYSE: PNR) and TCBY (NYSE: TBY).

Bucking unfavorable headwinds, Atlas Air (NYSE: CGO) climbed $1/16 to $28 11/16 after the company announced it had entered into an agreement to acquire three 727-200 freighters currently being operated by Cargolux.

According to the press release, all three aircraft will be delivered to Atlas in the fourth quarter and two of them will immediately be leased back to Cargolux under standard Atlas aircraft, crew, maintenance and insurance (ACMI) contracts. Cargolux is an existing Atlas customer, having contracted earlier this year for one of Atlas Air's new 747-400 freighters.

The three aircraft being acquired are already compliant with strict "stage-three" noise standards and have Gneral Electric (NYSE: GE) engines. They also include nose and side main-cargo doors, and are configured for maximum, high-gross weight freighter operations.

With these aircraft and the previously announced delivery of three new 747-400s scheduled for this fall, Atlas will have a total of 28 freighters by year end.

Finally, Carlisle Companies (NYSE: CSL) gained $13/16 to $38 15/16. Somehow, I just knew that Carlisle would come through with a gain to send me off on this last day for me here in Borefolio-land.

Look for fellow Fools Dale Wettlaufer and Alex Schay to take over Borefolio duties from me and my partner Mark Weaver tomorrow. As for myself, I'm already off on assignment to interview an executive at a major electronics company in New England, and I hope to be reporting back to you on that very soon.

All the best, folks.

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

09/30/98 Close

Stock  Change    Bid 
 ANDW  -  1/4   13.25 
 CGO   +  1/16  28.69 
 BGP   -2 15/16 22.25 
 CSL   +  13/16 38.94 
 CSCO  -2 13/16 61.81 
 FCH     ---    24.31 
 PNR     ---    32.25 
 TBY     ---    6.13 
                   Day   Month    Year  History 
         BORING   -3.04%  10.11% -14.43%   7.67% 
         S&P:     -3.05%   6.21%   4.80%  63.61% 
         NASDAQ:  -2.32%  12.98%   7.86%  62.72% 
     Rec'd   #  Security     In At       Now    Change 
   6/26/96  225 Cisco Syst    23.96     61.81   158.03% 
   2/28/96  400 Borders Gr    11.26     22.25    97.67% 
   8/13/96  200 Carlisle C    26.32     38.94    47.91% 
    3/5/97  150 Atlas Air     23.06     28.69    24.41% 
   4/14/98  100 Pentair       43.74     32.25   -26.27% 
   11/6/97  200 FelCor Sui    37.59     24.31   -35.32% 
   5/20/98  400 TCBY Enter    10.05      6.13   -39.02% 
   1/21/98  200 Andrew Cor    26.09     13.25   -49.21% 
     Rec'd   #  Security     In At     Value    Change 
   6/26/96  225 Cisco Syst  5389.99  13907.81  $8517.82 
   2/28/96  400 Borders Gr  4502.49   8900.00  $4397.51 
   8/13/96  200 Carlisle C  5264.99   7787.50  $2522.51 
    3/5/97  150 Atlas Air   3458.74   4303.13   $844.39 
   4/14/98  100 Pentair     4374.25   3225.00 -$1149.25 
   5/20/98  400 TCBY Enter  4018.00   2450.00 -$1568.00 
   1/21/98  200 Andrew Cor  5218.00   2650.00 -$2568.00 
   11/6/97  200 FelCor Sui  7518.00   4862.50 -$2655.50 
                              CASH   $5750.59 
                             TOTAL  $53836.53