Boring Portfolio Report
ANN ARBOR, Mich. (Dec. 4) -- Yesterday, market averages were higher for most
of the session only to sell off in the closing hour. Today, pretty much the
opposite. Significant selling occurred from the opening bell -- sending the
Dow down as much as 75 points for a while -- only to recover substantially
in the late afternoon. The Dow ended the day off 20 points, or -0.31%. The
S&P500 dropped a bit more percentage-wise, -0.43%, while the Nasdaq slipped
a bit less, -0.26%). Small-cap stocks, however, fared reasonably well.
The Boring Portfolio moved pretty much in line with the market, losing 0.38%
in value, not counting a few bucks interest on its cash reserves.
Our gorillas got lost in the mist today, as funds lightened up on their big-cap
holdings. After dropping more than $3 yesterday, CSCO skidded another $2
1/8, to $63 1/4. Meantime, ORCL slumped $ 2 7/8, sending its price below
where I picked up the stock a couple of weeks ago. Shares of Solectron, the
other member of the Borefolio's tech trio, also lost ground: -$1 1/8.
There was no relevant news on any of these stocks that I could locate. All
three are, of course, shares in some of the finest companies in the world,
and at current prices they range from not unreasonably priced (ORCL) to quite
attractive (CSCO). Oracle is slated to report quarterly earnings in a couple
of weeks, which should provide some insight into what Larry and the gang
intend to do in the coming year. Analysts are expecting EPS of 28 to 29 cents
for the November quarter, which would represent a 30% advance over last year.
Green Tree got trimmed today, too. Weakness in GNT over the past couple of
days may be associated with some indications from the manufactured home (MH)
industry that sales have been softening a bit recently.
I certainly wouldn't dismiss such news, as it could indeed impact Green Tree's
MH loan business to a degree. On the other hand, it's important to recall
that Green Tree has substantially diversified its operations in the past
year, so that MH loans represent only around half of its total originations.
In particular, Green Tree's home equity (HE) loan business is growing far
faster than the MH biz is slowing. Green Tree will probably originate something
like $800 million in HE loans in 1996 -- its very first year in this biz.
Half of that total could occur in the fourth quarter alone. That's pretty
impressive.
Mike Millman, at Lehman Brothers, says he is expecting Green Tree to offer
four large securitizations for sale in the next several weeks. Those offerings
have gotten very good receptions this year, and with prevailing interest
rates at fairly benign levels, the company should realize a fine profit on
the securitizations.
As I've noted here before, indications are that Green Tree could earn around
three bucks a share in 1997. Slap a market multiple onto that -- a multiple
that Green Tree has traded at or higher historically -- and you're well into
the mid-$50s by summertime.
Not all was doom and gloom in Boringville. Borders Group was up, Oxford Health
was up, and Carlisle hit an all-time high.
Perhaps most notably, Prime Medical put the world on notice today that it
intends to enter into a joint venture with EDAP Technomed, Inc., the manufacturer
of the Prostatron microwave thermotherapy device used to treat benign prostatic
hyperplasia (BPH). Wall Street traders, discerning the significance of this
news immediately, sent the stock up a full point on heavy volume, to close
at a bid of $12 7/8.
According to the press release -- and a quick online consult with The Motley
Fool's chief nephrologist (no Foolin'), Dr. Mark Weaver -- I understand that
BPH is a non-cancerous enlargement of the prostate that restricts the urethra,
thus making, uh, "voiding" difficult. BPH affects an an estimated 7.5 million
men in the U.S. and is quite common among older males. As for how this translates
into dollars and cents, Prime Medical estimates that BPH related expenditures
in the U.S. run as much as $5 billion annually.
Drug therapy is the most common form of treatment for BPH, but over 350,000
men annually go under the knife for a transurethral resection of the prostate
for relief.
Oh, momma. As Boring is fast-approaching prime BPH years, he wants to hear
more about this Prostatron alternative.
Referring again to the press release, the Prostatron utilizes microwave therapy
and is the only FDA-approved device for this kind of treatment, having received
such approval just last month. As for the treatment itself, it's performed
on an outpatient basis, "eliminating hospitalization and thereby reducing
the cost."
Dr. Weaver -- aka MF Uptrend, and Chief of Nephrology at a suburban St. Louis
hospital -- tells me that the Prostatron is one of a few new treatments for
BPH. "The machines are too expensive for an individual urologist to buy,
and probably not widely accepted enough for many hospitals to purchase them,"
he said.
Weaver cautioned that the urologists at his hospital remain to be convinced
about the efficacy of the Prostatron treatment -- or other newly introduced
alternatives, such as a (fairly expensive) transurethral system for needle
ablation of BPH offered by Vidamed (VIDA:OTC).
As the Prostatron treatment becomes more widely known and available, however,
urologists may, shall we say, warm up to it.
Which is where Prime Medical comes in. Prime currently provides lithotripsy
services to over a quarter of all practicing urologists in the country. As
part of the company's joint venture with EDAP, Prime plans to develop mobile
Prostatron routes to serve hospitals and surgery centers. "As we have done
in lithotripsy," Prime's chairman Ken Shifrin says, "urologists, many of
whom currently utilize our lithotripters, will become partners in these routes."
There will be a quiz tomorrow on all this, so study up.
Wednesday, December 4, 1996
Stock Change Bid
--------------------
BGP + 3/8 37.00
CSL + 3/4 59.50
CSCO -2 1/8 63.25
GNT -1 3/8 38.63
ORCL -2 7/8 46.75
OXHP +1 1/8 58.88
PMSI +1 12.88
SLR -1 1/8 58.00
Day Month Year History
BORING -0.38% -0.65% 18.97% 18.97%
S&P 500 -0.43% -1.57% 19.86% 19.86%
NASDAQ -0.26% 0.34% 24.60% 24.60%
Rec'd # Security In At Now Change
2/28/96 200 Borders Gr 22.51 37.00 64.35%
3/8/96 400 Prime Medi 10.07 12.88 27.87%
2/2/96 200 Green Tree 30.39 38.63 27.11%
5/24/96 100 Oxford Hea 48.02 58.88 22.59%
6/26/96 100 Cisco Syst 53.90 63.25 17.35%
8/13/96 100 Carlisle C 52.65 59.50 13.01%
10/15/96 100 Solectron 54.52 58.00 6.37%
11/21/96 100 Oracle Cor 48.65 46.75 -3.91%
Rec'd # Security In At Value Change
2/28/96 200 Borders Gr 4502.49 7400.00 $2897.51
2/2/96 200 Green Tree 6077.49 7725.00 $1647.51
3/8/96 400 Prime Medi 4027.49 5150.00 $1122.51
5/24/96 100 Oxford Hea 4802.49 5887.50 $1085.01
6/26/96 100 Cisco Syst 5389.99 6325.00 $935.01
8/13/96 100 Carlisle C 5264.99 5950.00 $685.01
10/15/96 100 Solectron 5452.49 5800.00 $347.51
11/21/96 100 Oracle Cor 4864.99 4675.00 -$189.99
CASH $10570.94
TOTAL $59483.44
Transmitted: 12/4/96