The Motley Fool: The Boring Portfolio

PRINCEVILLE, Hawaii (March 31, 1998) -- The Boring Portfolio went six for six on this last day of the first quarter of 1998, sending the net value of the portfolio higher by 1.61%.

Shares of Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %> rose one dollar to a bid of $68 3/8. Cisco announced today that it has hired Paul Bosco to lead the company's initiative to develop products and services for the commercial cable industry.

Bosco comes to Cisco from U.S. West's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: USW)") else Response.Write("(NYSE: USW)") end if %> MediaOne unit (formerly Continental Cablevision), where he served as vice president of Internet products and technology. Bosco will become general manager of Cisco's Cable Products and Solutions team, which works on products that enable commercial cable companies to offer advanced data, voice, and video services to their subscribers.

In addition to rolling out a number of new products for the cable market recently, Cisco has forged alliances with Sony <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SNE)") else Response.Write("(NYSE: SNE)") end if %>, Samsung <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SSNGF)") else Response.Write("(Nasdaq: SSNGF)") end if %>, General Instrument <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GIC)") else Response.Write("(NYSE: GIC)") end if %>, Com21, and Terayon to offer soup-to-nuts solutions for cable companies that include everything from a Cisco uBR7246 (catchy name, huh?) universal broadband router to the multimedia modem that the cable guy would install at your residence or office -- or mine, if I'm lucky.

With this setup, you could then watch Seinfeld reruns, phone your mom in Florida, and click in to Fool.com simultaneously, all through one broadband pipe.

Also very nice is that shares of FelCor Suite Hotels <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FCH)") else Response.Write("(NYSE: FCH)") end if %> edged up $1/16 to $37 1/16. According to the latest data from First Call, analysts' consensus estimates of FelCor's 1998 and 1999 funds from operations (FFO) have increased in the wake of last week's news that FelCor will acquire Bristol Hotels <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BH)") else Response.Write("(NYSE: BH)") end if %> and its 109 hotels for $1.9 billion, including the assumption of $700 million in debt.

Analysts now see FelCor achieving FFO of $3.84 per share this year, up three cents from last week's consensus forecast, and $4.35 per share in 1999, a nine-cent increase over the previous forecast. For what it's worth, the consensus recommendation on the stock also moved up a click, to 1.4 from 1.5, where "1" signifies a "strong buy" and "2" a "buy" rating.

At its current price, FelCor stock trades at less than 10-times this year's projected FFO, a discount to the REIT market. The stock also yields a dividend of around 6%.

My partner Mark Weaver and I invested in FelCor last fall because we concluded that it represented good value and because we thought it would be prudent to add a somewhat defensive real estate holding to the Borefolio in view of what we judged to be fairly lofty valuations of the U.S. equities markets.

With First Call reporting today that it has trimmed first-quarter, second-quarter, and full-year earnings growth estimates for the S&P 500 yet again and with interest rates having moved up somewhat from their early-year lows, we're more pleased than ever to lodge a piece of our portfolio in FelCor.

Finally, Borders Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGP)") else Response.Write("(NYSE: BGP)") end if %> booked a $1 1/16 gain today on trading of nearly 1 million shares. Trading action in the stock has been fairly active lately, although there's been no specific news that might account for it.

If Borders is going to meet its target of launching its e-commerce site, Borders.com, during the company's fiscal first quarter, it's got four weeks left in which to do so.

TODAY'S NUMBERS

Stock  Change    Bid 
 ANDW  +  9/16  19.81 
 CGO   +  7/8   32.56 
 BGP   +1 1/16  34.06 
 CSL   +  7/8   49.13 
 CSCO  +1       68.38 
 FCH   +  1/16  37.06

                   Day   Month    Year  History 
         BORING   +1.61%   0.56%   1.07%  27.18% 
         S&P:     +0.75%   4.99%  13.53%  77.24% 
         NASDAQ:  +0.93%   3.68%  16.89%  76.34% 
  
     Rec'd   #  Security     In At       Now    Change 
   2/28/96  400 Borders Gr    11.26     34.06   202.61% 
   6/26/96  150 Cisco Syst    35.93     68.38    90.28% 
   8/13/96  200 Carlisle C    26.32     49.13    86.61% 
    3/5/97  150 Atlas Air     23.06     32.56    41.22% 
   11/6/97  200 FelCor Sui    37.59     37.06    -1.40% 
   1/21/98  200 Andrew Cor    26.09     19.81   -24.06% 
  
  
     Rec'd   #  Security     In At     Value    Change 
   2/28/96  400 Borders Gr  4502.49  13625.00  $9122.51 
   6/26/96  150 Cisco Syst  5389.99  10256.25  $4866.26 
   8/13/96  200 Carlisle C  5264.99   9825.00  $4560.01 
    3/5/97  150 Atlas Air   3458.74   4884.38  $1425.64 
   11/6/97  200 FelCor Sui  7518.00   7412.50  -$105.50 
   1/21/98  200 Andrew Cor  5218.00   3962.50 -$1255.50 
  
                              CASH  $13625.51 
                             TOTAL  $63591.14