Whole Lot of Shaking

Kind of a flat day, but still plenty to talk about!

DLX - sit down, but I have some news... I am in the black on DLX!!! This is a stock that was down close to 50% at one time meaning (for math challenged readers) that it has doubled since then. This may be the greatest lesson I have learnt from MFI, it doesn't pay to sell when everyone else is panicking. Historically I held embarrassingly few stocks for a year. I get emotional. With MFI I feel obligated to hold.

TBL - Cramer mentioned TBL on his show last night. He thinks that VFC may acquire TBL. I don't think JC would say that just because it makes sense. An added point is where I saw that investment bankers have super-incentive to get deals done before Jan 1st. And TBL has hired GS (ironically where JC used to work) to explore opportunities.

Speculating on a potential takeover is a way to make some extra money in the market, and right now Cramer believes outdoor apparel maker Timberland (TBL - commentary - Cramer's Take - Rating) is a takeover target worth an investment.

In fact, Cramer believes VF Corp. (VFC - commentary - Cramer's Take - Rating) "might very well try to buy the company."

When VF Corp.'s CEO Mackey McDonald was a guest on Cramer's "Mad Money" show last week, Cramer asked him if he would consider buying Timberland. And although the chief executive was not at liberty to give a straightforward answer, he didn't say no and he didn't rule it out.

Over the past few years, VF Corp. has made many acquisitions, and in all likelihood, it should continue to do so, Cramer said. When VF Corp. bought each brand, the company integrated it into its outdoor coalition.

It should be able to get Timberland into more stores as it has "tremendous bargaining power," Cramer said, adding he believes VF could do a lot more for Timberland than Timberland could do for itself.

Moreover, Timberland has hired Goldman Sachs to find a buyer for the company.

BLDR - interesting little MF article about BLDR. Apparently Warburg-Pincus PE has been accumulating some shares. May explain some of the recent spikes.

Builders FirstSource a source for gains?
I'm usually not much for institutional purchases, but construction supply wholesaler Builders FirstSource intrigues me...

And that's in spite of a not-so-great third quarter. Sales were down 11.5% year over year while per-share GAAP net income declined by 40%. Management attributed the shortfalls to a 20% decline in housing starts and a 14% drop in lumber prices.

But there's more to the story. Despite poor economic trends, Builders FirstSource managed to add 200 basis points to gross margin and gain market share.

What's more, the firm earlier this month announced a deal to acquire Waid Home Center to boost its presence in Alabama. Waid sold $25 million worth of building supply materials during 2005, executives say. Perhaps that's why the shares are up roughly 16% since the earnings report on October 26?

Maybe. Or maybe it's because the shares are, well, cheap. Capital IQ reports that Builders FirstSource trades for just 8.8 times next year's earnings, which is an 18% discount to its projected long-term growth rate of 10.75%.

Having seen how ORCT & DLX have bounced back so well. I have decided not to sell any stocks for tax purposes in 2006. That means the gains I made on early sales of IVII, NCG & NSS will just have to be taxed at full freight. I will be doing all my tracking pre-tax, though people should recognize that is a disadvantage (typically I believe) for MFI as there will likely be more taxes. Maybe a few years down the road I will do a post-tax analysis... it won't be difficult given the records I maintain.

FDG announced their distribution for the 4th quarter today (Fording Announces 2006 Fourth Quarter Cash Distribution). I think it was 95 cents (Canadian). That most be about 85 cents US, which annualizes to $3.40. On a $22 stock that must be about a 15% yield. Ties with what I wrote about the Canadian Trusts yesterday... look for them to bounce back during next quarter from their shellacking.

Silly Sidecar Stuff - While my MFI portfolio is trailing the benchmark by roughly $4,000; I have made over $19,000 buying MFI stocks in my side car! That is phenomenal as I have really only been doing that since August 15th and I rarely have more than $50,000 in the stocks. My IRA is very happy (up 38% YTD). While I don't count these gains in my MFI numbers, I truly feel it is a benefit of following 30 quality stocks closely and having funds at the ready when one is on sale. Here is a list of the transactions:

MFI Side Plays		Gain/Loss
FORD	07/06/06	527
TGIS	08/15/06	1,803
PONR	08/15/06	138
PONR	08/15/06	380
BBSI	09/07/06	2,116
FTO	09/11/06	(297)
PTSC	08/15/06	347
PTSC	06/06/06	(1,413)
NSS	08/30/06	3,558
PONR	08/12/06	1,191
BBSI	09/07/06	1,058
EZEN	09/14/06	2,615
PTSC	09/20/06	125
PTSC	09/20/06	508
PTEN	09/28/06	(275)
PTEN	10/04/06	0
PLAY	10/09/06	1,920
ASPV	10/19/06	(42)
ASEI	11/06/06	2,204
TRLG	11/08/06	(357)
CLE	11/09/06	2,905
HW	11/29/06	704
OVTI	12/01/06	189