The Motley Fool: The Boring Portfolio

The Dow tacked 29 points onto yesterday's 23 point rise to set yet another record at 5,933.97. The S&P 500 hit its third consecutive new high, as well, gaining a solid 0.72% on the session. NYSE trading volume was a decent but unfrenetic 441 million shares. The Nasdaq index gained nearly 15 points, or 1.20%, to close at 1,236.12, just a few points shy of its record.

As for the Boring Portfolio, it rose 0.83% today, beating the S&P but failing to match the Naz. The Borefolio set its own new high, as well: $58,835.33 in net value, not counting some odd interest and dividends that will get tallied in as soon as we get the monthly statement from the broker.

Five Borefolio holdings rose on Wednesday, including Borders and Cisco, while three stocks dipped: Oxford Health, Prime Medical Services and (once again) TXI.

Shares of Borders Group booked a $2 1/2 gain on double the stock's average daily volume to close at $39 1/4 -- another all-time high. I could locate no news as yet that might account for the move.

Green Tree Financial is recorded in the Borefolio books as rising $ 1/8 to $40 1/8, based on the stock's closing price today relative to where it was yesterday at 4pm. GNT shares actually rose to $40 5/8 in some later trading Tuesday, however, and so GNT is "officially" down $ 1/2. In any event, GNT set its own record high either yesterday or day, depending upon how you choose to count it.

As I was driving my daughter to her swim meet this afternoon (and then rushed back home to file my Borefolio recap before her first event starts), I heard on National Public Radio that Green Tree's Larry Coss, "the highest-paid CEO in America," will be interviewed on NPR's "Morning Edition" on Thursday. If you've got RealAudio capability on your Web browser, chances are pretty good that you'll be able to click over to the NPR Website and listen to the interview at your leisure.

The Borefolio's 100 S&P Depository Receipts, better known as Spiders, creepy-crawled to their own all-time high today, as well. We've gotten a nice 8.29% gain out these Amex arachnids since purchasing them ten weeks ago, not counting a few bucks in dividends. Not bad.

Cisco gained $1 3/4 to close at a bid of $63 3/4 -- not quite a new high, but close. Carlisle picked up a quarter-point, also. If CSL can do that one more time, that'll match its all-time high, too.

On the down side, Oxford Health spent part of Wednesday north of the $50 mark, a region it hasn't visited much recently. But it appears that a few folks decided that fifty bucks was a convenient jumping-off spot, and stock ended up losing $2 1/8.

TXI lost a quarter-point today, also. The latest EPS projections as provided by First Call show TXI's numbers unchanged, but a some analysts have recently revised their estimates downwards for TXI's 85%-owned Chaparral Steel operation, sending the consensus forecast down to $1.33 for the fiscal year, lower by 12 cents from where it stood a month ago.

That revision is probably appropriate given recent price reductions for lightweight wide-flange beams, Chaparral's chief product. When I spoke with TXI today, however, the company told me that they remain comfortable with analysts' consensus estimate of $7.50 or so for the fiscal year ending May 1997. TXI's best view of the situation is that gains on the cement/aggregates/concrete side of the business should pretty much counter-balance any weakness on the steel side. (Back in the late 1980s, it was the steel operation that helped offset weakness in the c/a/c biz. What goes around comes around.)

As a consequence of the lower stock price in the face of unchanged consolidated earnings projections, the S&P analyst who last month lowered his rating on the company from "buy" to "hold" based upon the stock's recent price appreciation just turned around and raised TXI back to a "buy" again.

TXI is in the construction biz, and as such it's financial success depends in no small way upon prevailing macroeconomic conditions (such as interest and employment rates) as well as upon prevailing prices in the cement and steel industries. The company hardly sits back and drifts in whatever direction those winds happen to be blowing, however.

On the c/a/c side of the business, TXI is continuously searching for -- and even creating -- new markets for its products, such as selling sand to golf courses in the Dallas area. The company also continuously develops new products and processes, such as its newly patented CemStar cement process that uses slag, a waste byproduct of steel production, to increase cement production capacity by as much as 15%, basically "for free." TXI is also constantly on the look-out for acquisitions, provided they can contribute to overall return on equity from day one.

On the steel side, Chaparral is literally a B-School case study in how to run a business "smart" by educating workers and turning over to them the authority as well as the knowledge to make the business run right. Chaparral is no slouch when it comes to product innovation, either. The company is set to debut a new super-lightweight (as well as aesthetically pleasing) steel beam that's created by slicing one of their current "bantam" beams in half length-wise, removing some of the material from the rib part of the bisected beam, and then welding it back together again so that it has hexagonal holes in it that reduce weight without compromising strength. Because of its lower weight, this new "Castelite" beam (I hope I spelled that right) could find new applications in areas in which the somewhat heavier bantam beams weren't practical.

All of which is to say that I see a lot to admire about TXI. But there are also some definite challenges that the company faces due to softer beam prices. TXI's annual shareholders meeting is coming up on October 15. My current thinking is, as usual, to make no hasty moves with regard to the stock one way or the other.

TODAY'S NUMBERS

BGP +2 1/2 ...CSL + 1/4 ...CSCO +1 3/4 ...GNT + 1/8 ...OXHP -2 1/8
PMSI - 1/8 ...SPY +15/32...TXI - 1/4 ...

*Scroll down or expand screen for full portfolio accounting

                   Day   Month    Year  History
        BORING   +0.83%   1.09%  17.67%  17.67%
        S&P 500  +0.72%   0.97%  11.65%  11.65%
        NASDAQ   +1.20%   0.75%  18.75%  18.75%


    Rec'd  #   Security     In At       Now    Change

  2/28/96 200 Borders Gro    22.51     39.25    74.35%
   3/8/96 400 Prime Medic    10.07     13.38    32.84%
   2/2/96 200 Green Tree     30.39     40.13    32.04%
  6/26/96 100 Cisco Syste    53.90     63.75    18.27%
  7/23/96 100 S&P Deposit    64.15     69.47     8.29%
  1/29/96 100 Texas Indus    54.50     58.75     7.80%
  8/13/96 100 Carlisle Co    52.65     56.13     6.60%
  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   7850.00  $3347.51
   2/2/96 200 Green Tree   6077.49   8025.00  $1947.51
   3/8/96 400 Prime Medic  4027.49   5350.00  $1322.51
  6/26/96 100 Cisco Syste  5389.99   6375.00   $985.01
  7/23/96 100 S&P Deposit  6414.99   6946.88   $531.89
  1/29/96 100 Texas Indus  5449.99   5875.00   $425.01
  8/13/96 100 Carlisle Co  5264.99   5612.50   $347.51
  5/24/96 100 Oxford Heal  4802.49   4775.00   -$27.49


                             CASH   $8025.95
                            TOTAL  $58835.33