Boring Portfolio Report
Tuesday, July 16, 1996

by Greg Markus (MF Boring)

ANN ARBOR, MI (July 16) -- I'm 47 years old. I remember the 1987 market meltdown. Heck, I even remember that Ursa Major of the early 1970s (when I was in graduate school). For years now, I've heard fellow baby-boomers and even older geezers snarl about all those "26 year-old fund managers who've never seen a bear market," all those hip-hopped Gen-Xers who will panic the first time they confront a real 15 or 20% "attitude adjustment" face to face.

Well, if nothing else has been accomplished the past few weeks, perhaps it will put a lid on that kind of talk. Because if you're still standing upright and you still have something invested in the market, then you're now a vet. You've seen history being made. And that which did not kill you, made you stronger.

Please don't misunderstand. Today may not have been the capitulation of this protracted sell-off. There may be more to come. No one knows. But whatever happens tomorrow, or next week, or next year, we'll always have these first precious weeks in July to remember, sweetheart.

On this day in history, July 16, 1996, the Dow-Jones Industrial Average spanned 220 points, trough to peak. We hit trading collars on both the downside and the upside, and nearly 685 million shares changed hand, a record. On the NASDAQ, the index was down *another* 43 points at 1 PM, and folks were seriously talking about where the next "support level" was, should the NASDAQ slide below the 1,000 mark. In all, 869 million shares were traded on the NASDAQ computers, another record.

Then in the late afternoon ... Shazam. At 4PM, the Dow actually ended in the plus column, although the S&P remained off a fraction of a percentage point. The NASDAQ ended the session down less than 7 points. Yawn. Indeed, if you'd spent the day at the beach and simply glanced at the closing values, you'd probably infer that not much happened today.

But whether you spent all day snorkeling or biting your nails to the nubbins while you alternated glances between your computer screen and CNBC, you're a vet. You made it. Congratulations.

OK, so let's take a quick look at the Borefolio. Four stocks up, two "unch," and TXI lower. Altogether, a net gain of six-tenths of a percentage point.

OXHP attempted to get out of bed and take a few steps again today, assisted by a reiterated "buy" review from Margo Vignola at Merrill-Lynch. Vignola pointed out what you've been hearing in this space for some time now: on August 6, OXHP will almost certainly report a gain on the order of 59% in EPS on a revenue rise of perhaps as much as 88%. Once again, the company will report unparalleled increases in enrollments. In the meantime, the stock is trading at "a steep discount to our 35% five year earnings growth rate."

Our other healthcare issue, Prime Medical ended unchanged, but the company nevertheless threw in the towel and postponed its planned secondary offering indefinitely. The press release noted that "Due to the unusually poor market condition, we have concluded that proceeding with the offering at this time is not in the best interests of the Company or its shareholders. We believe that the market is not adequately reflecting the company's true value."

True enough. PMSI has the financial wherewithal to hold off on the secondary, at least for a while yet. As I understand it, one immediate advantage of the postponement is that the hand-cuffs are now off the company and its institutional supporters, and they can now begin to go about the business of encouraging the share price back to more plausible levels.

Cisco Systems recovered from a deep mid-day loss to end the session unchanged. The stock has been under double pressure: from prevailing market wackiness and a less than glowing story in Forbes. As usual, the reporter's congenital tendency to frame everything in black/white, conflictual terms distorted the Forbes story hopelessly.

What could have been an informative and helpful story in Forbes about how switches and routers work together to improve internetworking came out instead as a battle to the death between Cisco's routers and competitors switches. Guys, it's not "either/or"; it's "both/and." And you do understand what StrataCom is about, right?

Borders regained some lost ground, but the shares are still trading on the table out front of the store at around 30% off. Possibly the news that Borders will be opening a new superstore in Omaha helped the stock today. Or possibly not. In any event. we'll take the $ 3/4.

TXI was down on inconsequential volume following an absolutely terrific earnings report and conference call with analysts. (My report on the TXI conference call may be found in the new section covering such calls, elsewhere in Fooldom.) TXI is yet another Borefolio stock trading well below fair value, which I would peg north of $70, based on trailing EPS of $7.05.

I'll close by acknowledging evidence of a leaf beginning to sprout on Green Tree and tipping my hat to Shaw Group, which in the midst of all the tumult, has remained within a tick of an all-time high. Impressive.

(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: 7/16/96