The Motley Fool: The Boring Portfolio

ANN ARBOR, Mich. (Sept. 25) -- The Dow was down for most of Wednesday but managed to get its head above water in the late afternoon to close up 3 points. The S&P 500 added a fraction of a point (+0.03%), while the Nasdaq average continued its run to catch up to the big-cap indexes, gaining another 9 points today (+0.77%).

The big story on the Nasdaq was Foolfolio stock 3Com, which connected for a 14% gain today as a result of a superb quarterly earnings report (full details available in a special Fool News collection). Meantime, the Borefolio's networkers, Cisco Systems, drafted behind 3Com to move ahead $2 3/4 (bid-side) and set its own new high.

As noted in a story in Wednesday's Investor's Business Daily, 3Com is out to eat into Cisco's overwhelming share of the internetworking market. Cisco owns half of the worldwide $3.7 billion router market, while 3Com has about 10%. On the other hand, 3Com was numero uno in switches in 1995, with a 25% share. Cisco was a percentage point or two back. Cisco's acquisition of StrataCom earlier this year, though, puts 3Com's lead in doubt.

Please don't get me wrong, I think 3Com is a great company -- and it's obviously one powerful stock. As the IBD article notes, 3Com arguably has "a better sense of how to serve the small-office market than anyone else." Nevertheless, Cisco is willing to cede no market to no one. As George Kelly, managing director at Morgan Stanley, says in the IBD story, "I don't think anybody can catch Cisco," which has become "the Microsoft of networking."

In any event, I personally wouldn't get too wrapped up in the battlefield or footrace metaphors that journalists like to use to frame this (and nearly every other) story they write. The networking biz is perhaps the fasting growing industry in the world, and both 3Com and Cisco (and their shareholders) will assuredly prosper.

Even with today's new high, CSCO is trading at barely 30-times projected EPS for the current FY (ending in July). That's well below Cisco's short-term *and* long-term estimated growth rates. What a bargain.

Speaking of bargains, shares of Oxford Health Plans slipped a bit today, probably owing to a number of mediocre earnings reports from companies in the healthcare industry, including Manor Care, Owen Healthcare, and Apria Healthcare. The fates of those businesses have virtually nothing to Oxford, however, which is on track to earn something in the neighborhood of $1.70/share in the coming year.

The new issue of Fortune ranks Oxford fifth on the magazine's list of America's 100 fastest-growing publicly-traded companies. Last year, Oxford came in at number 86. With more than 1.32 million members, Oxford is thus not only one of the fastest growing health plans in the country but one of the fastest growing companies, period. Hence its honored place in the Borefolio, regardless of any short-term weakness in the stock.

While we're on the topic of magazines, I'm told that the latest issue of Individual Investor lists Shaw Group among its "hot stocks," which undoubtedly accounts for SHAW's piping hot performance the past couple of days. Today the stock rose another $5/8.

Also gaining $ 5/8 (hey, I'm doing great on segues today!) was Green Tree Financial. The yield on the long bond slipped another basis points, to 6.93%. That kind of interest rate environment is ideal for Green Tree's growth. And grow it did, to close at $38 1/2, just beneath its all-time high -- and still a good buy.

TODAY'S NUMBERS

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

*Scroll down or expand screen for full portfolio accounting

                   Day   Month    Year  History
        BORING   +0.80%   7.86%  16.38%  16.38%
        S&P 500  +0.03%   5.19%  10.32%  10.32%
        NASDAQ   +0.77%   7.28%  17.64%  17.64%


    Rec'd  #   Security     In At       Now    Change

  4/12/96 100 The Shaw Gr    18.84     35.13    86.42%
  2/28/96 200 Borders Gro    22.51     37.50    66.57%
   3/8/96 400 Prime Medic    10.07     14.38    42.77%
   2/2/96 200 Green Tree     30.39     38.50    26.70%
  6/26/96 100 Cisco Syste    53.90     63.13    17.12%
  1/29/96 100 Texas Indus    54.50     60.00    10.09%
  7/23/96 100 S&P Deposit    64.15     68.63     6.98%
  8/13/96 100 Carlisle Co    52.65     54.38     3.28%
  5/24/96 100 Oxford Heal    48.02     46.88    -2.39%

    Rec'd  #   Security      Cost     Value    Change

  2/28/96 200 Borders Gro  4502.49   7500.00  $2997.51
   3/8/96 400 Prime Medic  4027.49   5750.00  $1722.51
  4/12/96 100 The Shaw Gr  1884.16   3512.50  $1628.34
   2/2/96 200 Green Tree   6077.49   7700.00  $1622.51
  6/26/96 100 Cisco Syste  5389.99   6312.50   $922.51
  1/29/96 100 Texas Indus  5449.99   6000.00   $550.01
  7/23/96 100 S&P Deposit  6414.99   6862.50   $447.51
  8/13/96 100 Carlisle Co  5264.99   5437.50   $172.51
  5/24/96 100 Oxford Heal  4802.49   4687.50  -$114.99

                             CASH   $4428.44
                            TOTAL  $58190.94