Boring Portfolio Report
Thursday, July 10, 1997
by Greg Markus (TMF Boring)

ANN ARBOR, Mich. (July 10, 1997) -- Benchmark stock averages closed higher on Thursday, as did the Boring portfolio.

The Borefolio ended its two-day string of teen-sy losses with a teen-sy gain: +0.14%. With advancing holdings outnumbering losers by six to three, and with four stocks at or near record highs, there's plenty to cheer about.

BORDERS GROUP <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGP)") else Response.Write("(NYSE: BGP)") end if %> gained a dollar on good volume to close at an all-time high of $26. OXFORD HEALTH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OXHP)") else Response.Write("(Nasdaq: OXHP)") end if %> picked up two bucks as shares of the premiere HMO dance around the $80 mark.

And PRIME MEDICAL SERVICES <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PMSI)") else Response.Write("(Nasdaq: PMSI)") end if %> is staging a mini-rally. Yesterday the stock advanced $1/2 in above-average trading activity. Today the stock rose $5/16 -- once again with higher than average volume.

A fine as those gains are, they do little to distract attention from the plane wreck on center stage. Shares of ATLAS AIR <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATLS)") else Response.Write("(Nasdaq: ATLS)") end if %> plummeted $4 1/4 on enormous volume of 2.7 million shares after Merrill Lynch cut its near-term rating on the stock to "neutral" from "accumulate" and its long-term rating to "accumulate" from "buy."

More significant than the ratings labels, Merrill reportedly cut its estimate for the June quarter to $0.20 a share from $0.50, its 1997 full-year estimate to $1.15 from $2.15, and 1998 to $2.70 from $3.20 a share.

As folks who have watched as Atlas shrugged off one-third of its market capitalization in the past three days can probably guess, the analyst at Merrill is concerned about Atlas's ability to control costs associated with the "Five FedEX Freighters from Hell" and the implications the return of those aircraft will have on Atlas's fleet capacity going forward.

As severe as Merrill's announced cuts in its EPS forecasts are, it should be noted that their $3.20 per share forecast for 1998 was at the high end of the range; and even with today's scalping, the $2.70 estimate is within a nickel of the consensus.

Atlas has additional aircraft in the pipeline for delivery, both in the remainder of this year and next year. And if the company is able to put those planes into service without any (more) glitches, the $2.70 looks do-able. And with even a multiple of 12, the stock could likely be back into the mid-$30s within 12 months.

I just got off the phone with Atlas. Well, not actually with the Greek god himself but rather with the folks in Atlas Air's investor relations office. They weren't able to comment directly on quarterly earnings numbers, but I was informed that the FedEx planes continue to be used in servicing customers and presumably will be for the balance of the year. Moreover, Atlas's customers have suffered no inconvenience. The problem is the higher-than-anticipated costs of keeping the planes flying -- a problem that will be eliminated once they are returned to FedEx early next year.

It would hardly be surprising if additional analysts were to cut their earnings estimates over the next few days. Indeed, I'd be surprised if that didn't happen.

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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.

Stock  Change    Bid
ATLS  -4 1/4   22.00
BGP   +1       26.00
CSL   -  3/16  35.13
CSCO  +  1/16  76.31
GNT   +  1/4   35.50
ORCL  +  1/2   52.00
OXHP  +2       79.25
PMSI  +  5/16  11.81
TDW   -  5/8   44.25

                   Day   Month    Year  History
        BORING   +0.14%   1.84%  13.88%  31.04%
        S&P:     +0.69%   3.23%  23.36%  47.00%
        NASDAQ:  +0.29%   3.39%  15.48%  43.23%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     26.00   130.98%
  5/24/96  100 Oxford Hea    48.02     79.25    65.02%
  6/26/96  100 Cisco Syst    53.90     76.31    41.58%
  8/13/96  200 Carlisle C    26.32     35.13    33.43%
   3/8/96  400 Prime Medi    10.07     11.81    17.32%
   2/2/96  200 Green Tree    30.39     35.50    16.82%
 11/21/96  100 Oracle Cor    48.65     52.00     6.89%
   3/5/97  150 Atlas Air     23.06     22.00    -4.59%
 12/23/96  100 Tidewater     46.52     44.25    -4.89%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49  10400.00  $5897.51
  5/24/96  100 Oxford Hea  4802.49   7925.00  $3122.51
  6/26/96  100 Cisco Syst  5389.99   7631.25  $2241.26
  8/13/96  200 Carlisle C  5264.99   7025.00  $1760.01
   2/2/96  200 Green Tree  6077.49   7100.00  $1022.51
   3/8/96  400 Prime Medi  4027.49   4725.00   $697.51
 11/21/96  100 Oracle Cor  4864.99   5200.00   $335.01
   3/5/97  150 Atlas Air   3458.74   3300.00  -$158.74
 12/23/96  100 Tidewater   4652.49   4425.00  -$227.49

                             CASH   $7788.54
                            TOTAL  $65519.79