Boring Portfolio Report
Friday, July 26, 1996

by Greg Markus (MF Boring)

ANN ARBOR, MI (July 26) -- The Boring Portfolio underperformed the S&P 500 and NASDAQ indexes on Friday, hurt by a full point drop in shares of Prime Medical Services. For the week, however, the Borefolio registered a net gain of $140 (+0.27%), while the S&P 500 and NASDAQ clocked losses of -0.44% and -1.66%, respectively.

I'm told that the recoveries of Big Board and, especially, NASDAQ stocks on Thursday and Friday suggest to some "observers" that the bottom the recent market correction has been plumbed. Of the truth of that, I have no idea. But then neither do they. Sounds possible, though.

What I do know is that I'm delighted with the make-up of the Boring Portfolio, which was filled out earlier this week by the addition of 100 S&P 500 Depository Receipts -- or Spiders, as they're known on the AMEX, where they trade. The Spiders, which derive their value from an investment trust's ownership of shares in the 500 largest corporations in America, provide the Borefolio with some desirable big-cap exposure and offer a sensible place to park a chunk of its cash reserves.

With the Spider buy, the Borefolio is now 92% invested in stocks. Truth be told, I'd even like to put that remaining four thousand bucks to work ASAP. After all, this is intended to be a *stock* portfolio, and my sense is that the market correction, whether completed or not, has made compelling medium- to long-term buys out of a number of high quality stocks.

Friday brought no specific news on any Borefolio issues. Prior to the market open, an earnings warning came from Value Health, a provider of managed-care benefit programs to corporations, insurance carriers, and other organizations. In the past couple of months, such warnings have often resulted in reactionary sell-offs of healthcare stocks. This time at least, it appears that investors discriminated between troubled companies like Value Health, on the one hand, and high-quality operations such as Oxford, on the other. In fact, with today's $2 1/8 gain, OXHP actually managed to rise 13% in value during this difficult week for stocks.

The same cannot be said for the Borefolio's other healthcare holding, Prime Medical Services. Shares of the Texas-based stonebuster have gotten crunched ever since it announced a secondary offering to cover costs of the merger with Lithotripters, Inc. Despite the fact that the secondary has been officially delayed, some folks have apparently decided to take a wait-and-see posture towards PMSI, perhaps until after quarterly earnings are reported.

That report should probably occur on Tuesday morning. As posted in First Call, the consensus expectation of four analysts covering the stock is for EPS of $0.12. That consensus includes a $0.03 estimate from one analyst, who has elected to include one-time acquisition costs in his projection. Normally, such idiosyncratic charges (or gains) are backed out of EPS estimates, so as to provide a clearer picture of the long-run trend of the underlying business. Consequently, the median analyst estimate of $0.14 is perhaps a better benchmark against which to measure PMSI's quarterly performance.

PMSI's loss of one buck on Friday occurred on volume of 66,600 shares, which is barely 40% of its average daily volume over the past 30 trading days.

There's really not a lot more to say, Borefolio-wise. Cisco's $2 jump on Friday suggests the stock is not being unduly affected by the short-circuit over at Robot (USRX). Despite a quarter-point slip on the bid side on Friday, SHAW continues to impress, having risen $1/8 for the week and taken over second place from PMSI in the Boring standings. Borders Group and TXI were also net gainers for the week.

I can't believe it's already the last week-end in July! I trust you'll make appropriate use of it. I sure intend to.

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Transmitted: 7/26/96