Boring Portfolio Report
ANN ARBOR, Mich. (Dec. 5) -- The Boring Portfolio posted a half-percent gain
in net value today, helped by a dollar rise in Cisco and a two buck jump
in Oxford Health, which broke through the $60 barrier to establish a new
high of $60 7/8 on good volume. Solectron picked up $1/2, while Prime Medical
extended yesterday's Prostatron-powered advance to close above $13, up $1/4
on volume of nearly 400,000 shares.
By way of comparison, the Dow managed a 14 point gain (+0.22%), and the Nasdaq
gained 3 (+0.24%) to re-cross the 1300 line and set a new high. The S&P
500 was off a fraction of a point, however (-0.10%).
Interest rates moved up sharply following a larger than expected decline
in weekly jobless claims. The yield on the benchmark 30-year Treasury hit
6.50%, which certainly didn't help interest-sensitive stocks such as the
Borefolio's Green Tree Financial.
Green Tree lost a fraction today on exceptional volume of nearly 1 million
shares. The stock closed off its lows, however, which could signal that the
selling has about run its course.
None of this is of much concern to folks whose investment horizons are gauged
in months or years rather than hours of days. GNT remains a high-quality
stock of the leading company in its field -- and priced right, too. Analysts
expect Green Tree to grow EPS by 35% in the coming year, yet the stock is
priced at less than 13-times projected earnings of $2.94 per share. Oh, did
I mention you get a bit of a dividend, too?
As noted above, Oxford Health set a new high today. A couple of days ago,
CEO Stephen Wiggins confirmed at an investor conference that he "expects
earnings and revenue to grow about 60% to 70% this year and sees an additional
half million new members added."
The CEO was being modest. With but a few days left in the year, the consensus
of analysts is that Oxford will make $1.22 per share this year, up 72% over
last year's (split-adjusted) $0.71. As for 1997, right now analysts are looking
for $1.73 -- or 42% EPS growth. And in the past those estimates have had
a tendency to move up on a fairly regular basis.
Speaking of Oxford's likely growth in the coming year, I noticed a story
on the wires tonight to the effect that Pennsylvania's State Public Welfare
Department will delay start-up of its HealthChoices program one month, until
Feb. 1, giving Medicaid recipients in Philadelphia and surrounding counties
additional time to choose a managed health-care plan. One of the four options
being offered is Oxford.
When it begins, the Pennsylvania plan will be one of the largest Medicaid
managed-care programs in the nation. The press release notes that "about
370,000 Medicaid recipients in the five-county area are already receiving
their health care through an HMO. Nearly 70,000 AFDC and Healthy Beginnings
recipients are currently in fee-for-service and will need to choose a plan
by Feb. 10, and another 100,000 General Assistance and SSI recipients are
currently in fee-for-service and will need to be in HealthChoices by July
1."
Now I don't pretend to be informed about the Pennsylvania plan, but my first
impression is that it certainly has the potential both to control costs and
to improve the quality of healthcare that recipients receive -- particularly
if one of their options is Oxford. And from the perspective of a shareholder,
I know that Oxford is on record as stating that they will not participate
in Medicaid or Medicare plans that don't turn a profit. So this could shape
up to be a good deal all 'round.
Lastly tonight, I was thumbing through the Dec. 9 issue of Fortune magazine
the other day, perusing their annual rankings of companies in terms of "market
value-added" (MVA). What should I see but that, for the second straight year,
one company easily led all the others in terms of being "the most efficient
wealth creator" -- i.e., the highest ratio of MVA to its total capitalization.
If you guessed Cisco, you guessed right.
Oops! Almost forgot: last night I gave warning that there'd be a quiz today.
Please complete the following: Lithotripter is to Prostatron as kidney stone
is to _____.
Hey, who says you can't learn all kinds of neat stuff surfin' around out
here in cyberspace?
Thursday, December 5, 1996
Stock Change Bid
--------------------
BGP - 1/8 36.88
CSL - 1/8 59.38
CSCO +1 64.25
GNT - 5/8 38.00
ORCL --- 46.75
OXHP +2 60.88
PMSI + 1/4 13.13
SLR + 1/2 58.50
Day Month Year History
BORING +0.48% -0.17% 19.54% 19.54%
S&P 500 -0.10% -1.67% 19.75% 19.75%
NASDAQ +0.24% 0.58% 24.90% 24.90%
Rec'd # Security In At Now Change
2/28/96 200 Borders Gr 22.51 36.88 63.80%
3/8/96 400 Prime Medi 10.07 13.13 30.35%
5/24/96 100 Oxford Hea 48.02 60.88 26.76%
2/2/96 200 Green Tree 30.39 38.00 25.05%
6/26/96 100 Cisco Syst 53.90 64.25 19.20%
8/13/96 100 Carlisle C 52.65 59.38 12.77%
10/15/96 100 Solectron 54.52 58.50 7.29%
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 7375.00 $2872.51
2/2/96 200 Green Tree 6077.49 7600.00 $1522.51
5/24/96 100 Oxford Hea 4802.49 6087.50 $1285.01
3/8/96 400 Prime Medi 4027.49 5250.00 $1222.51
6/26/96 100 Cisco Syst 5389.99 6425.00 $1035.01
8/13/96 100 Carlisle C 5264.99 5937.50 $672.51
10/15/96 100 Solectron 5452.49 5850.00 $397.51
11/21/96 100 Oracle Cor 4864.99 4675.00 -$189.99
CASH $10570.94
TOTAL $59770.94
Transmitted: 12/5/96