Boring Portfolio Report
ANN ARBOR, Mich. (Oct. 25) -- The Dow managed to post a 14 point gain on
Friday, which set it above the 6,000 mark once again. Other averages were
lower, however. The S&P 500 fell 0.19%, which brought its weekly loss
to 1.39%. The Nasdaq lost 4 points on the day (-0.36%) and 1.60% for the
week.
The Boring Portfolio had one of its worst weeks ever, flopping 4 percentage
points in net value. That includes a 0.86% loss on Friday, including transaction
costs associated with sales of TXI (at $57 1/4) and the Spiders (at $70 7/32).
As I noted when I bought them back in July, the Spiders were not intended
to be a long-term investment (although they certainly could be). Rather,
they were a way to make what I hoped would be a decent return on a bit of
cash in the Borefolio kitty until I could find something better to do with
it. Including transaction costs on both ends, I was able to make 9% on that
money in three months. I'll call that a win.
As for TXI, the Borefolio cleared about 5% on that investment -- a good bit
less than what could have been achieved had I sold the stock when it approached
fair value (near $70) earlier this year. Obviously, one could not foresee
in, say, May or June that steel prices would soften in September. On the
other hand, my own stated target price on TXI had been virtually achieved
some months ago, and I should have sold. I will try hard not to repeat that
mistake (but will assuredly make others).
Just so there's no confusion on this point: TXI has been outstanding at providing
information whenever I've called. Moreover, the company consistently exceeded
earnings expectations all through the year. But the stock price got ahead
of itself at one point, and that should have prompted me to pull the trigger.
One can always re-enter at a lower level (or even a higher one, if it makes
sense).
There was relatively little news on Boring stocks today. Cisco announced
it had completed its purchase of Telebit Corp. and its Modem ISDN Channel
Aggregation (MICA) technologies as per the terms of the July 22 agreement.
The total transaction value was worth approximately $200 million. As you
may recall, MICA provides Cisco with "high density modem technologies ideally
suited for the enterprise networking customer and Internet service provider
network environments." MICA technology enables the simultaneous support of
remote access users through both analog modems and ISDN devices.
Cisco's stock continued its recent bout of weakness on Friday, along with
most of the other stocks in the computer networking group. CSCO fell $ 3/4
and closed below the $60 mark. Should the drop continue much further, I'd
be sorely tempted to put some of the Borefolio's new-found cash to use here.
Speaking of recent weakness, shares of Borders Group continued their descent
from the top shelf, losing another $ 3/4 on Friday. There is absolutely no
news that might account for the drop, and the stock is undervalued by any
fair reading of the evidence. That said, BGP has made us a 42% gain on our
money in less than eight months, which is not exactly awful.
Prime Medical fell for a second day following its outstanding quarterly report.
As I noted in Thursday's recap, I can only assume that some investors may
have leaped to some incorrect conclusions from what appears on the surface
to be substantially declining net margins but is, in truth, a straightforward
consequence of the fact that Litho, Inc. (unlike the old PMSI) owns only
a minority stake in many of the lithotripter operations in which it partners.
With the solid cash flow coming in, PMSI's explicit strategy is to gradually
increase its stake in Litho Inc.'s partnerships, thereby generating increased
earnings growth from the same lithotripter operations.
I'm happy to report that not all Boring stocks fell on Friday. Quiet Carlisle
Companies gained a quarter-point, and Green Tree Financial sprouted up $
5/8.
Yesterday, Green Tree reported that it plans to significantly expand its
Western service center located in Rapid City, S.D. The expansion will add
approximately 32,000 square feet to the existing 105,000 square-foot facility.
When the expansion is completed next spring, the center will be able to
accommodate up to 1,000 employees.
In its conference call with analysts earlier this week, Green Tree noted
that the centralization of servicing operations at the Rapid City site will
help increase their efficiency, thereby enhancing profit margins.
This week-end has come none to soon for me. Time to get outdoors and forget
about stocks and such for a coupla days. Do have a great week-end, folks.
Transmitted: 10/25/96
Friday, October 25, 1996
BGP - 3/4 ...CSL + 1/4 ...CSCO - 3/4 ...GNT + 5/8
OXHP - 1/2 ...PMSI - 5/8 ...SLR - 1/4 ...
*Scroll down or expand screen for full portfolio accounting
Day Month Year History
BORING -0.86% -3.76% 12.03% 12.03%
S&P 500 -0.19% 1.98% 12.76% 12.76%
NASDAQ -0.36% -0.35% 17.45% 17.45%
Rec'd # Security In At Now Change
2/28/96 200 Borders Gro 22.51 32.00 42.14%
2/2/96 200 Green Tree 30.39 39.38 29.58%
3/8/96 400 Prime Medic 10.07 12.63 25.39%
6/26/96 100 Cisco Syste 53.90 59.13 9.69%
8/13/96 100 Carlisle Co 52.65 56.50 7.31%
10/15/96 100 Solectron C 54.52 53.38 -2.11%
5/24/96 100 Oxford Heal 48.02 45.38 -5.52%
Rec'd # Security Cost Value Change
2/28/96 200 Borders Gro 4502.49 6400.00 $1897.51
2/2/96 200 Green Tree 6077.49 7875.00 $1797.51
3/8/96 400 Prime Medic 4027.49 5050.00 $1022.51
6/26/96 100 Cisco Syste 5389.99 5912.50 $522.51
8/13/96 100 Carlisle Co 5264.99 5650.00 $385.01
1/29/96 100 Solectron C 5452.49 5337.50 -$114.99
5/24/96 100 Oxford Heal 4802.49 4537.50 -$264.99
CASH $15252.86
TOTAL $56015.36