Boring Portfolio Report
Wednesday, July 10, 1996

by Greg Markus (MF Boring)

ANN ARBOR, MI (July 10) -- Continued weakness in shares of Oxford Health Plans sent the Boring Portfolio down a bit less than one-half a percentage point in net value on Wednesday. That compared with a loss of over 1% for the suffering NASDAQ index and a gain of 0.20% for the S&P 500.

Wednesday's session was an interesting one. A poor quarterly report from Motorola yesterday evening added fuel to worries about slowing earnings growth for corporations in the remainder of 1996. Also late yesterday, the Semiconductor Industry of America issued its monthly book-to-bill report that, despite initially favorable surface appeal, was generally interpreted as offering relatively little evidence that the North American chip industry was pulling out of its current slump. (For details, see the reports on Motorola and the chip b/b elsewhere in Fooldom.)

Combine concerns about slow earnings growth with the prevailing hype about ballooning inflation and you've got the makings for yet another market sell-off -- which is exactly how Wednesday unfolded.

By late afternoon, the DJIA was flirting with loss-limiting trading collars, while the NASDAQ was off the equivalent of more than 100 Dow points. And then ... BUY! Once all the panicked individual investors had been upended and the change shaken out of their pockets, the institutions rolled in their computerized buying programs to vacuum the floor.

The DJIA staged a 69-point reversal to end the day up 22 points, while the NASDAQ managed to pare its losses nearly in half in the final hour or so of trading. Fascinating.

Prime Medical Services participated in the day's amusement, dropping as low as $14 1/8 at 1:30 PM only to end the day up one tick. (The Borefolio, as always, records the "bid" price, which was down $ 1/8 from yesterday's closing bid, to $15 1/8). Over one-half million PMSI electrons crossed the NASDAQ wires.

OXHP boarded the roller coaster for the down ride ... and then continued down, losing another $1 7/8 to close at a bid of $33 3/4. An item in today's Investor's Business Daily that highlighted yesterday's weakness in OXHP, along with the entire HMO group, probably didn't do the stock any good today. IBD noted that the HMO group now ranks 190th in its ranking of 197 groups based on six-month performance. Does that mean we're 190/197ths of the way to the bottom, then? Stay tuned.

If IBD shined its light on the Borefolio's weakest stock currently, it also noted our fastest rising one: Shaw Group. The newspaper informed readers that on Tuesday the stock had "pulled out of an 11-week base on 12 times its usual volume. IBD went on to say that SHAW's "earnings released last week for the May quarter were up 27%; sales more than doubled." Today, SHAW extended yesterday's impressive move by setting another new high on volume of 556,700 shares.

Borders Group lost fifty cents today along with a relatively weak retail industry. Green Tree and TXI, both of which will be reporting quarterly earnings within the next few days, also lost four-bits apiece. Cisco Systems, on the other hand, managed to tack on one quarter despite the overall weakness of the technology sector.

Cisco reported today that it had completed the purchase of StrataCom Inc., after a July 9 vote of approval by StrataCom shareholders. Under the terms of the agreement, one share of Cisco common stock will be exchanged for one share of StrataCom common stock in a transaction will be accounted for as a pooling of interests of the two companies. Cisco had alerted investors a while back that the transaction is expected to have a "slightly dilutive" impact on earnings in FY96, when one-time transaction costs are factored in. The continued strength of CSCO stock would seem to answer the question of what investors think of the longer-term implications of the merger.

That's it for tonight. All you Carolina Fools batten down real tight, heah?

(c) Copyright 1996, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.

Transmitted: 7/10/96