The Boring Portfolio, 07/09/97: Boring Port Report

Boring Portfolio Report
Wednesday, July 9, 1997
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (July 9, 1997) -- Several rounds of computerized profit-taking erased all of yesterday's gains for the Dow and most of those for the S&P 500 sending those averages lower by 1.51% and 1.22%, respectively. Trading volume on the NYSE approached 600 million shares -- heavy, man, heavy.

Strength in chip and networking stocks kept the Nasdaq in positive territory. The Nazz added 1.5 points to yesterday's 14-point gain to establish a new record at 1487. Nasdaq volume totaled a mammoth 718 million shares.

Winners outnumbered losers two to one in the Boring Portfolio, but the port suffered its second consecutive "teen-sy" loss nonetheless: -0.13%.

On Tuesday, OXFORD HEALTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %> zipped up $4 1/8 on no news. Today, it zipped back down $3 (on the bid), also on no news.

Oil-sector stocks were generally down today, as the market reacted to reports from the American Petroleum Institute and the International Energy Agency in Paris (France, not Texas) that forecast plentiful supplies of crude oil for the remainder of 1997 despite strong demand in the U.S. and internationally. Oil analysts noted that Iraq's probable return to oil markets in the next month or so will add to supplies.

Not surprisingly, this news was no help to TIDEWATER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDW)") else Response.Write("(NYSE: TDW)") end if %> stock, which sank $1 1/16.

As noted here previously, the situation for oil services companies such as Tidewater is a bit more complicated than "Lower crude prices: bad; higher prices, good." As long as oil prices maintain a level sufficient to justify continued exploration and drilling, the services outfits will do just fine.

In a Reuters story today, for example, Oppenheimer analyst Carol Lau said that her company expects "strong earnings from our offshore drilling universe to continue and believe at current prices, the valuations in the group are compelling."

In her opinion, peak earnings for the sector are still perhaps three years away.

And as drilling activity and dayrates go, so goes marine services activity and rates for Tidewater.

Some folks have suggested that we check out trucking stocks as a kind of hedge against dramatically lower oil prices. Hey, I like trucks.

Oil stocks weren't the only weak group today, stocks of financial services companies -- and indeed the financial sector generally -- fell pretty much across the board, and that despite a yield on the long bond that continued to slip toward 6.50%. An early warning from WELLS FARGO <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WFC)") else Response.Write("(NYSE: WFC)") end if %> certainly did nothing to set a positive tone.

In any event, shares of GREEN TREE FINANCIAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GNT)") else Response.Write("(NYSE: GNT)") end if %> dropped $1 3/4. Financial stocks sneeze, and Green Tree's leaves get blown off.

Interestingly (to me, anyway), analysts had nice things to say about a handful of manufactured home producers and MH community REITS today. Solomon Brothers raised CLAYTON HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CMH)") else Response.Write("(NYSE: CMH)") end if %> from a "hold" to a "buy" and initiated coverage of OAKWOOD HOMES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OH)") else Response.Write("(NYSE: OH)") end if %> with a "buy." Meantime, folks at PaineWebber pinned an "attractive" rating on SUN COMMUNITIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SUI)") else Response.Write("(NYSE: SUI)") end if %>, MANUFACTURED HOME COMMUNITIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MHC)") else Response.Write("(NYSE: MHC)") end if %>, and CHATEAU COMMUNITIES <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPJ)") else Response.Write("(NYSE: CPJ)") end if %>.

On the upside -- which, as noted above, is where most Borefolio stocks could be found -- BORDERS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGP)") else Response.Write("(NYSE: BGP)") end if %> gained $1/2, presumably helped by favorable industry news on retail sales. CISCO SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> surfed along with a strong networking group to established a new high at $76 1/4. And PRIME MEDICAL SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMSI)") else Response.Write("(Nasdaq: PMSI)") end if %> rose $1/2 on double the stock's average trading volume.

ORACLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %> gained $5/8. CARLISLE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CSL)") else Response.Write("(NYSE: CSL)") end if %> picked up its usual quiet $1/8. Even ATLAS AIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATLS)") else Response.Write("(Nasdaq: ATLS)") end if %> joined in, ascending $1/4.

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(c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.

TODAY'S NUMBERS

Stock  Change    Bid
ATLS  +  1/4   26.25
BGP   +  1/2   25.00
CSL   +  1/16  35.31
CSCO  +1 9/16  76.25
GNT   -1 3/4   35.25
ORCL  +  5/8   51.50
OXHP  -3       77.25
PMSI  +  1/2   11.50
TDW   -1 1/16  44.88

                   Day   Month    Year  History
        BORING   -0.13%   1.69%  13.71%  30.85%
        S&P:     -1.22%   2.53%  22.52%  46.00%
        NASDAQ:  +0.10%   3.09%  15.15%  42.81%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     25.00   122.10%
  5/24/96  100 Oxford Hea    48.02     77.25    60.85%
  6/26/96  100 Cisco Syst    53.90     76.25    41.47%
  8/13/96  200 Carlisle C    26.32     35.31    34.14%
   2/2/96  200 Green Tree    30.39     35.25    16.00%
   3/8/96  400 Prime Medi    10.07     11.50    14.22%
   3/5/97  150 Atlas Air     23.06     26.25    13.84%
 11/21/96  100 Oracle Cor    48.65     51.50     5.86%
 12/23/96  100 Tidewater     46.52     44.88    -3.55%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  10000.00  $5497.51
  5/24/96  100 Oxford Hea  4802.49   7725.00  $2922.51
  6/26/96  100 Cisco Syst  5389.99   7625.00  $2235.01
  8/13/96  200 Carlisle C  5264.99   7062.50  $1797.51
   2/2/96  200 Green Tree  6077.49   7050.00   $972.51
   3/8/96  400 Prime Medi  4027.49   4600.00   $572.51
   3/5/97  150 Atlas Air   3458.74   3937.50   $478.76
 11/21/96  100 Oracle Cor  4864.99   5150.00   $285.01
 12/23/96  100 Tidewater   4652.49   4487.50  -$164.99

                             CASH   $7788.54
                            TOTAL  $65426.04