The Motley Fool: The Boring Portfolio

ANN ARBOR, Mich. (Sept. 24) -- I can't locate the precise quote at the moment, but Clinton-adviser James Carville said something to the effect that if reincarnation exists, he'd like to come back in his next life as the bond market. He said he didn't know a whole lot about what the bond market is or what it does. But he knew that lots of important people spent their entire working days trying to figure out what the bond market wants, what would keep it from getting too unsettled, and then trying to do satisfy its perceived needs.

Well, not today. The boys in the bonds had been clamoring for the Fed to hike interest rates -- at least a quarter-point and better yet a half-point -- in order to rein in all that galloping inflation out there (where?). Moreover, a tactical leak to the press last week revealed that 8 of 12 Fed regional banks were in favor of an increase in the discount rate (which stands at 5%). But in the end, the Fed left rates alone -- at least until after the November elections.

Neither bonds nor stocks knew exactly what to do following the Fed's non-news. Initially, bond prices rose (and interest rates fell). Stocks followed along for the ride, leaping 50-points. Soon thereafter, though, some folks apparently took the opportunity to sell into the rally.

The Dow ended the day down 20 points, and the yield on the long bond headed almost all the way back to where it began the day, although remaining just beneath the 7% mark. The S&P 500 slipped a point and a half (-0.13%), but the Nasdaq, aided by analyst upgrades of chip stocks, managed to hold onto a 4-point gain (+0.31%).

As for the Boring Portfolio, it did just fine, thanks, adding more than a percentage point to its net asset value and establishing a new high of $57,730. Five issues were up, three down fractionally, and one (TXI) unchanged on the day.

Running quickly through some highlights (in alphabetical order), Borders Group booked yet another solid gain, this time up $ 5/8 on volume of over 300,000 shares, 70% higher than average. Prudential initiated coverage of BGP with a "buy" rating today, which the cynical among us might use as an explanation for why the stock has been under such heavy accumulation recently.

Green Tree Financial was presumably helped by prospects for benign interest rates in the near term. GNT touched its all-time high of $38 3/4 in the mid-afternoon, but slipped back to "only" a $ 5/8 gain on the day on above-average volume.

Oxford Health Plans rose a healthy $1 1/8. No news. The other Boring healthcare stock, Prime Medical Services, had a quiet day today, slipping an eighth on sub-par volume.

Which brings us to Shaw Group. SHAW was piping hot today, spurting $3 on the bid side to set a new high of $34 1/2. Volume was an absolutely huge 411,200 shares. I've had a call into the company for a few hours before my deadline, and Laurie Schultz in Investor Relations is usually scrupulous about returning calls. I suspect that my message is still down in the queue today. As always, if I learn anything, I'll let you know.

The itsy-bitsy Spiders got washed down the water spout along with the S&P 500. Meantime, TXI appears to be establishing a base in the low $60s following its recent quarterly report. No problem. At $7.50/share projected for FY97 (ends May) and an industry multiple of 9, $67 1/2 (plus dividend) looks like fair value by the end of calendar 1996 to me.

Lastly, did you happen to notice the SOX semiconductor index today? It rose over 6% as a result of those upgrades by H&Q and Morgan Stanley. Former Borefolio holdings Lam Research and Kulicke & Soffa advanced 12% and 13% respectively, and on volume of historic proportions.

Is it time to put a nice, Boring chip stock back in the Borefolio? Folks on AOL are invited to submit their suggestions, pro or con, to the "Boring Stocks" folder.

(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.

TODAY'S NUMBERS

BGP + 5/8 ...CSL + 1/4 ...CSCO - 1/4 ...GNT + 5/8 ...OXHP +1 1/2
PMSI - 1/8 ...SHAW +3...SPY - 7/64...TXI ---...

*Scroll down or expand screen for full portfolio accounting

                   Day   Month    Year  History
        BORING   +1.12%   7.01%  15.46%  15.46%
        S&P 500  -0.13%   5.16%  10.29%  10.29%
        NASDAQ   +0.31%   6.46%  16.75%  16.75%


    Rec'd  #   Security     In At       Now    Change

  4/12/96 100 The Shaw Gr    18.84     34.50    83.11%
  2/28/96 200 Borders Gro    22.51     37.88    68.24%
   3/8/96 400 Prime Medic    10.07     13.88    37.80%
   2/2/96 200 Green Tree     30.39     37.88    24.64%
  6/26/96 100 Cisco Syste    53.90     60.38    12.01%
  1/29/96 100 Texas Indus    54.50     60.50    11.01%
  7/23/96 100 S&P Deposit    64.15     68.52     6.81%
  8/13/96 100 Carlisle Co    52.65     54.38     3.28%
  5/24/96 100 Oxford Heal    48.02     47.75    -0.57%

    Rec'd  #   Security      Cost     Value    Change

  2/28/96 200 Borders Gro  4502.49   7575.00  $3072.51
  4/12/96 100 The Shaw Gr  1884.16   3450.00  $1565.84
   3/8/96 400 Prime Medic  4027.49   5550.00  $1522.51
   2/2/96 200 Green Tree   6077.49   7575.00  $1497.51
  6/26/96 100 Cisco Syste  5389.99   6037.50   $647.51
  1/29/96 100 Texas Indus  5449.99   6050.00   $600.01
  7/23/96 100 S&P Deposit  6414.99   6851.56   $436.57
  8/13/96 100 Carlisle Co  5264.99   5437.50   $172.51
  5/24/96 100 Oxford Heal  4802.49   4775.00   -$27.49

                             CASH   $4428.44
                            TOTAL  $57730.00