Tuesday, September 30, 2008

Further China Thoughts

I posted about some of the China stocks in MFI last week. At the same time CAST had a secondary offering, which diluted their stock and drove the price down sharply. The question was asked, "if they have cash, why the secondary offering?"

I do not have an answer. But I do have a thought. I actually was speaking with some one who lives in Hong Kong last week. We were talking about differences between Chinese and Americans. He felt one huge difference is the differing views on debt and savings. The Chinese save a tremendous amount of their money, while Americans (as we know) live on credit.

I believe this mentality goes towards companies as well. That is why the Chinese companies carry a lot of cash and little debt. While Americans would argue that this form of financial engineering does not maximize return on equity for stockholders, I have to admit that the American's use a excessive credit isn't working out so well (that is meant to be an understatement).

So my thought, after the long-winded intro, is that CAST didn't use their cash because they like the security of having cash on the balance sheet. I have sent them the question.

Sunday, September 28, 2008

Three New Stocks

In my automatic portfolio, which is competing (in a nice way) against the Magic Diligence portfolio, I will be adding three new stocks tomorrow. As a remindre, if a stock is on the top 25 list for the 1st time in a year (I check on the weekend) it gets added to the portfolio.

So far the portfolio has held up pretty well, beating the S&P 500 benchmark by 6.1%. Steve's portfolio is leading by 6.97%.

TRA is the first stock. This is Terra Industries, which is in the fertilizer business. I did own them, but actually sold them a week ago when the market spiked. That was a good move (at least so far) as I got $42.50 and they got crushed to $30.42 last week. Of course the big question is whether fertilizer prices will stay at or near their current prices, which are close to an all-time high. I am pretty split on TRA. At $30 it seems a lot of downside is priced in. But I have seen interviews where farmers say they are shifting to other crops with lower fertilizer costs.

SCMP is the second stock. I don't know much about this small pharma company. Their earnings have been a bit uneven. They do have a bunch of cash. Seems like they are at least worth looking at, though these smaller pharmas often have a limited pipeline. That being said, the same comment was true about VPHM, and they're up 50% recently.

DTLK is the third new stock. They have been hanging around the lists for a long time, but never the top 25. This is a small data storage company That is like so many beaten down smaller high tech companies. They have a bunch of cash and are making money, yet stock proce is down. I guess the market is saying their "moat" is short-lived. I have lost my stomach for these sorts of companies.

We'll see how the trio of newbies do, they certainly all seem cheap, but so do many, many, many other stocks. We'll see what happens tomorrow.

Thursday, September 25, 2008

Billions and Billions

Wow, lots of money and opinions runnings around out there. I wish I had Warren Buffet's $5b, Everyone is saying he is showing confidence in the US financial system with his investment in Goldman Sachs. I see an extraordinary sweetheart deal, not "confidence". Confidence would be to buy their common stock, straight-up. Instead, he got bonds at a 10% yield AND he got the right to buy up to $5b in stock at $115 per share for the next 5 years. That is all upside with no risk of downside, nor does he have to layout the cash. Can you spell "sweetheart"?

The other billion dollar debate sloshing out there is the $700B "economic plan" the congress is considering. I guess my reaction to the Buffet deal that if he can get that sweetheart deal for his $5b, the govt should get something great for their $700b.

I have attached two links that I think are great reading about the $700b. One is by Jim Jubak, who is well-known. The second is by John Hussman,a Phd who runs several mutual funds and has been extremely astute in weekly commentary about the markets. I'd encourage everyone to bookmark his site and read every Monday morning.

Let's not rush to blow $700 billion

September 22, 2008 - An Open Letter to the U.S. Congress Regarding the Current Financial Crisis

Monday, September 22, 2008

China Syndrome

Fun movie. I actually saw Michael Douglas the other day. He is definitely starting to look older. Sadly, I didn't see his "better half", Catherine Zeta-Jones, though my wife has seen her a couple of times.

Seems like the movie title is appropriate in many ways. For those that haven't seen the movie is is about a big bad utility company that cuts corners building a nuclear power plant and it almost melts down, which for obvious reasons is called the China Syndrome.

I don't know about other investors out there, but I feel like I have been witnessing a meltdown of Wall Street. I guess the multi-billion dollar question is whether we have avoided the complete meltdown or whether we're just at a pause.

My MFI (and non-MFI for that matter) portfolio is in shambles. I am doing worse than the benchmarks, but to be honest, the benchmark isn't doing so hot either... it may simply be a race to see who gets to zero 1st.

As long as I am employed and have a long time line, I am not too upset. I went through the crash of 2001-02 and I am pretty sure the world won't end. Doesn't mean I am thrilled to be over 20% down, but c'est la vie. Things will work out in the long haul.

I used the title China Syndrome for another reason... not that nuclear power is coming back into vogue, rather that China really caught my eye today. This was obviously a dreadful day, pretty much across the board... but not entirely across the board.

Look at these MFI stocks that are based in China today:

CHCG: +3.6%
QXM: -2.9%
CAST: +8.2%
KHD: +9.2%
AOB: -2.2%
CSKI: +11.7%

Now I don't know how other people's portfolios did today, but I think these 5 stocks (all on the lists) had stunning numbers for such a crummy day. Coincidence? I think not. Jubak had an extremely interesting article about China today, basically painting them as a potential white knight to jump start the world economy. The Chinese stock market is down 64% this past year (which is certainly reflected in these stocks, which are extraordinarily cheap if you believe their financials) and the Govt is now taking steps to get growth back above 10% (Cure for crisis: Chinese medicine?).

I am going to keep both eyes on this trend. If these stocks go "green" (meaning the combination of momentum and value that I discussed 8 days ago) I may pull the trigger (especially on CSKI, which I do not own) for my next tranche.

Saturday, September 20, 2008

New Stock in Top 25

A new stock hit the top 25 this weekend and will be placed in my mechanical portfolio, which is doing pretty well. The stock is TTWO. For those that don't play video games, they are the manufacturer of Grand Theft Auto, a very popular game which gained some notoriety a couple of years ago when some pornagraphic scenes were imbedded in the code and could be pulled up by pressing a hot button. Wal Mart and other had to pull the game from their shelves.

The most recent news has been TTWO fighting off a hostile takeover a la Microsoft and Yahoo. Electronic Arts pulled their bid and thus Take Two dropped from about $22 to a hair over $16 where they closed on Friday.

Looking at the financials, revenues for Take Two seem very uneven. I guess they make a bunch of their money when a new edition is released.

I would not buy them in real life... I am not a big fan of their management. We'll see how they do in my model portfolio. But if EA wants them, there must be some intrinsic value and perhaps there is a higher bid down the road.

Oh BTW some one must've been listening to my "Where Art Thou?" last week. I see where KSW just came back on the top 25. Next up, WSTG.

Friday, September 19, 2008

Update of Model Portfolio vs Magic Diligence

I heard the Frankie Valli song "Oh What a Night" (I think the actual title is something else) the other day, but it could be changed to "Oh What a Week!". The good news is that I did not panic and sell everything at the bottom in the middle of the week and ended up somehow virtually flat.

I do have many good friends at AIG and am very sympathetic to hard-working people that were totally uninvolved with the events that drove them into the ground, yet they have lost a good chunk of their retirement savings. I am sure the same is true at Lehman, but I don't know people there.

I know a lot of people are debating what the Fed and the Treasury dept have done this past week, but I am not sure they had any choice. I am actually glad that they were decisive. I am unconvinced that they "bailed" out these firms in the general use of the term. You could argue that they got AIG at pennies on the dollar and will make money. And you could argue that if they buy blocks of these "subprime" mortgages at 30 cents on the dollar, they could make money as well. I am glad to see the govt driving hard bargains. I will admit that taxpayers will bear a heavy burden with Fannie and Freddie, but those were quasi-govt entities so there was immense pressure to step in. In fact, I'd like to see Paulson stay on as Sec of Treasury for the next administration, I am not sure many people could have done what he has done. It burns me to hear people suggest that he didn't step in with his "plan" until Goldman Sachs was threatened. I am sure he had been trying to push such a plan for several weeks, but there had to be absolute fear before he could get congress to agree.

I will say I do not understand the whole argument about short-selling. I'll leave that debate for smarter people. I did have one stock, GNW go from $15 at the start of the week, to under $5 on Thursday at the bottom andthey closed today at $15.25, up 66% today! Wish I had doubled down!

My MFI portfolio was up 4.4% today, I am sure that is a all-time record for me. Hard to be too excited as for the week I was down. I will be interested to watch the beaten down construction/infratstructure stocks I profiled last week. If the logjam of credit is loosened by the Paulson plan, they could really move. The market clearly thought so, here are how they moved Thursday & Friday:

KHD: +15%
PCR: +25%
KBR: +18%
FWLT: +13%

(IAR was up 44% if anyone had the courage to buy them). Some stocks, such as KG, were actually down.

Here is how my model portfolio is performing, over 7% better than benchmark, but Magic Diligence is up over 9%.

Symbol Date Original Current Dividend S&P O S&P D Stock Chg S&P Chg Diff
DTPI 2/2/08 4.75 4.51 - 139.58 1.31 -5.1% -10.1% 5.1%
AIRV 2/13/08 5.08 5.67 - 136.37 1.31 11.6% -8.0% 19.6%
CITP 2/16/08 9.98 12.50 - 135.14 1.31 25.3% -7.2% 32.4%
PRXI 2/16/08 4.29 2.51 - 135.14 1.31 -41.5% -7.2% -34.3%
CAST 2/23/08 5.06 2.82 - 135.62 1.31 -44.3% -7.5% -36.8%
GSB 3/12/08 2.08 1.33 - 131.36 1.31 -36.1% -4.5% -31.5%
IGC 3/12/08 3.70 4.90 - 131.36 1.31 32.4% -4.5% 36.9%
LGTY 3/12/08 6.70 6.30 - 131.36 1.31 -6.0% -4.5% -1.5%
MRX 3/12/08 19.45 18.71 0.08 131.36 0.67 -3.4% -5.0% 1.6%
DEPO 3/22/08 2.74 3.26 - 132.08 0.67 19.0% -5.5% 24.5%
NVTL 3/22/08 8.98 6.62 - 132.08 0.67 -26.3% -5.5% -20.8%
VRGY 3/22/08 17.42 18.70 - 132.08 0.67 7.3% -5.5% 12.9%
DLX 4/6/08 19.58 14.87 0.50 136.89 0.67 -21.5% -8.8% -12.7%
NTRI 4/6/08 14.94 22.48 0.18 136.89 0.67 51.6% -8.8% 60.5%
IUSA 4/6/08 5.28 7.12 - 136.89 0.67 34.8% -8.8% 43.7%
LRCX 4/11/08 41.08 33.44 - 133.38 0.67 -18.6% -6.4% -12.2%
SLXP 4/11/08 6.47 6.87 - 133.38 0.67 6.2% -6.4% 12.6%
CHRD 4/19/08 5.03 5.37 - 138.48 0.67 6.8% -9.9% 16.6%
QXM 4/26/08 6.26 3.49 - 139.60 0.67 -44.2% -10.6% -33.6%
MDP 5/9/08 33.79 30.08 0.43 138.90 0.67 -9.7% -10.2% 0.5%
OMPI 5/9/08 7.11 10.59 - 138.90 0.67 48.9% -10.2% 59.1%
PPD 5/9/08 43.45 43.65 - 138.90 0.67 0.5% -10.2% 10.6%
ELNK 5/25/08 9.21 8.06 - 137.64 0.67 -12.5% -9.3% -3.1%
FTAR.ob 5/25/08 4.37 3.50 - 137.64 0.67 -19.9% -9.3% -10.6%
CHKE 5/31/08 27.25 25.31 0.50 140.35 0.67 -5.3% -11.1% 5.8%
APKT 7/5/08 4.62 7.54 - 126.31 - 63.2% -1.7% 64.9%
CSKI 7/5/08 11.06 10.74 - 126.31 - -2.9% -1.7% -1.2%
VALU 7/5/08 32.00 42.71 0.40 126.31 - 34.7% -1.7% 36.5%
QCOR 7/26/08 4.84 6.48 - 125.48 - 33.9% -1.1% 35.0%
MSTR 8/1/08 60.56 58.95 - 126.16 - -2.7% -1.6% -1.0%
NVDA 8/8/08 11.00 11.41 - 129.37 - 3.7% -4.1% 7.8%
SWIR 8/8/08 12.41 10.47 - 129.37 - -15.6% -4.1% -11.6%
CF 8/8/08 134.65 119.43 - 129.37 - -11.3% -4.1% -7.2%
SIGM 8/8/08 15.93 17.41 - 129.37 - 9.3% -4.1% 13.3%
EGMI.OB 9/5/08 0.69 0.62 - 124.42 - -10.3% -0.2% -10.0%
KHD 9/15/08 21.68 20.99 - 126.09 - -3.2% -1.6% -1.6%

Totals 1.4% -6.1% 7.5%
57.1% of stocks beat the S&P 500 Benchmark



Sunday, September 14, 2008

Momentum + Value

Randy H had a great link on the Yahoo board that discussed findings by Finance professors that Value investing PLUS momentum outperform pure value investing (http://www.nytimes.com/2008/09/14/business/yourmoney/14stra.html). I find this interesting as I no doubt do not wait for the momentum component.

So I decided to take today's MFI list and determine which stocks get a "green bar" in Clearstation, which is a momentum signal.

Here they are:


I will go ahead and set this up as a test portfolio for fun.

Saturday, September 13, 2008

Where Art Thou?

Ah yes, classic Romeo and Juliet. While I am still a fan of MFI (despite having not exactly excelled thus far), one thing that I do not understand is the disappearance of stocks from the MFI website. My understanding is that the website uses Compustat data, which is the same as Fidelity. So my thesis is that if I can calculate the two factors through Fidelity, then the MFI website should be able to do it. Let us look at two examples.

WSTG - this is a software/programming company that I used to own. They have become very small cap, with a market cap of $35m. I showed they disappeared after the end of April, even though at the time their March 31st financials gave them stellar ratios of 21% and >100%. They had an excellent June and by my calc now have ratios of 26% and >100%. So why aren't they on the list?

Looking at their financials (which I show below) I note that there are two items with "n/a". That being operating income befofre depreciation and stock compensation expense. Perhaps that throws them out?

Q2 2008
Total Revenue 48.096
Cost of Goods Sold 43.798
Selling, General and Administrative Expenses 3.074
Operating Income Before Depreciation N/A
Depreciation & Amortization --
Operating Income After Depreciation 1.224
Interest and Related Expense 0
Nonoperating Income (Expense) 0.146
Special Items 0
Pretax Income 1.37
Income Taxes 0.547
Minority Interest - Income Account 0

Income Before Extraordinary Items 0.823
Dividends - Preferred/Preference 0

Income Before Extraordinary Items - Available for Common 0.823
Common Stock Equivalents - Dollar Savings 0

Income Before Extraordinary Items - Adjusted for Common Stock Equivalents 0.823
Extraordinary Items and Discontinued Operations 0
Extraordinary Items 0
Discontinued Operations 0
Net Income (Loss) 0.823

Earnings per Share --
EPS - Basic - Excluding Extraordinary Items 0.19
EPS - Basic - Including Extraordinary Items 0.19
EPS - Basic - Excluding Extraordinary Items - TTM 0.73
EPS - Diluted - Excluding Extraordinary Items 0.18
EPS - Diluted - Including Extraordinary Items 0.18
Diluted - Excluding Extraordinary Items TTM 0.7
EPS from Operations - Basic 0.19
EPS from Operations - Basic TTM 0.73
EPS from Operations - Diluted 0.18
From Operations - Diluted TTM 0.7
Common Share Used to Calculate: --
EPS Basic 4,417.00
EPS Diluted 4.505

Q2 2008
Foreign Exchange Adjustment 0.004
Stock Compensation Expense N/A

Now let us look at candidate 2, a current holding of mine: KSW. This is a contracting firm that installs heating and air conditioning in NYC. They have a rock solid balance sheet and very steady earnings.

They fell off the charts about March 22nd, likely just after Dec 31st quarter came on line. At that time they had a stunning EY of 30% and a ROC exceeding 100%. Hmm, looking at their financials, it seems pretty clear why they are not currently on the list. Most detailed items for this quarter are "n/a". However, we know they had a good quarter. We also know that based on the quarter ending March 31st that they'd have an EY of 46% and ROC well in excess of 100%.

What is the lesson? There are likely numerous excellent companies that are NOT on the lists because of minor quirks in their data, that a computer might toss out, but a human reading the press release and the financials could still work through. Are these worthwhile stocks to own? That might depend on whether you think there is an "MFI premium", meaning so many people follow MFI that stocks pop when they appear on the list. This approach would allow people to "front run" the list. Of course, I am utterly unconvinced that such a premium currently exists, but would be curious what others think.

KSW Quarterly Financial Statements

Quarterly Balance Sheet
Currency in Millions of U.S. Dollars. Shares in Thousands.

Q2 2008 Q1 2008
6/30/2008 3/31/2008
Current Assets
Cash and Short-Term Investments N/A 17.749
Receivables N/A 24.661
Inventories N/A 0.658
Other Current Assests N/A 0.417
Current Assets - Total N/A 43.485

Long-Term Assets
Property Plant and Equipment - Net N/A 0.259
Other Assets Total N/A 0.194
Goodwill N/A 0
Assets - Total N/A 43.938
Liabilities and Shareholders' Equity

Q2 2008 Q1 2008
6/30/2008 3/31/2008
Current Liabilities
Debt in Current Liabilities N/A 0
Accounts Payable N/A 20.707
Income Taxes Payable N/A 0
Current Liabilities - Other N/A 4.946
Current Liabilities - Total N/A 25.653

Long-Term Liabilities
Long-Term Debt N/A 0
Deferred Taxes and Investment Tax Credit N/A 0
Liabilities - Other N/A 0
Liabilities - Total N/A 25.653
Minority Interest - Balance Sheet N/A 0

Shareholders' Equity
Preferred Capital N/A 0
Common Equity - Total N/A 18.285
Common Capital N/A 0.063
Capital Surplus/Share Premium Reserve N/A 13.259
Retained Earnings N/A 4.963
Treasury Stock N/A 0
Shareholders' Equity - Total N/A 18.285
Liabilities and Shareholders' Equity - Total N/A 43.938
Common Shares Outstanding 6,281.00 6,281.00

Q2 2008 Q1 2008
6/30/2008 3/31/2008
Invested Capital - Total N/A 18.285
Working Capital (Balance Sheet) N/A 17.832
Financial Services Companies -- --

Real Estate Investment Trust Companies -- --

Friday, September 12, 2008

Construction Stocks

One thing about MFI is that certain sectors will often start appearing on the lists as there is a rotation out of that sector. Does that mean the stocks are not worthy of our attention? I don't have the answer, but here is a quick profile of some construction/engineering stocks that are on the list.

FWLT - I have to laugh seeing these guys. They have been a Cramer Fav for a long time. Up 10% today (perhaps not still on list?) they have dropped 50% from their 52 week high. They are buying back stock, they have a huge backlog and a ton of cash. The problem? They do a lot of their construction in Oil & Gas industry. The drop in price of oil has scared off investors. I'd like to think that people planning projects of $100m+ are thinking beyond the wild fluctuations of oil caused by speculators in their LT planning.

KBR - this is a relatively recent spin-off from HAL and is like a chapter from JG 1st book which talks about how buying a spin-off from a larger company has potential for nice future returns. KBR was also up 9% today and is pretty much FWLT, 2nd verse. Under $20 from a 52 week high of $45, they have a solid balance sheet, do heavy construction and have a good backlog of about $12b.

KHD - I am thinking about buying these guys. Like KBR, they are at $22, down from $45. KHD is a Hong Kong company and rather than being straight up construction, they supply equipment and supplies (like cement) to construction companies. They have a focus on Asia and Eastern Europe. The mazing thing is they have almost $15 per share in cashola. Then backlog has almost doubled in past year to 1.3b.

PCR - another stock I am considering, they are involved more with construction for the leisure industry (perhaps riskier) but are branching into municipal work, such as Las Vegas airport. They have been crushed from $65 to $25. Like the others, they have a big wad of cash, over $15 per share. They have about $8b in backlogs, which is about 18 months of work for them.

Enough about construction. I did have one stock announce earnings today: QXM. They were on par with many of my earnings of late... they sucked (Qiao Xing Mobile Reports Second Quarter 2008 Operating Results). The stock was down as much as 24% at its low for the day, but rallied to finish down 15%. When I read the report a few things caught my eye.
  1. It was clearly not a great quarter as revenues were down substantially (-54% y o y).
  2. They still made money. Gross margins were up and they had operating income of $11m.
  3. They said they are quite bullish aboout the rest of 2008 as they have rolled out a new phone that is selling well and has high margins.
Now let us step back and think for a second. This is a company with a market cap of $198m. Even with this "disaster" quarter, that would be a respectable annualized p/e ratio of about 5. Now going a step further, they have $401m in cash per Fidelity... so over 2x their market cap. Finally they said they expect the operating income for the 3rd and 4th quarters to be about equal as 3rd and 4th quarter of 2007.

They could be lying. But on Sept 12th, they should have a pretty good bead on 3rd quarter sales. If they are not lying, that implies operating income in the 2nd half of 2008 = ~$50m. For a company with $198m market cap and $400m in cash? It seems too good to be true. If smarter people than me can explain what is wrong with this view, let me know.... please!

Anyway, I am bullish on QXM and may buy more if I can scrape together a couple rubles. I figure I'll either be rich someday on QXM, or disappointed once again as I chase after the holy grail. I think I'll call it a wrap. I need to find out how Hurricane Ike is doing. Working in insurance industry makes the weather channel must see TV from time to time!

Saturday, September 06, 2008

Mechanical Portfolio

I have attached the latest update of my mechanical portfolio which is simply new stocks in the top 25 screen each Monday. EMBI will be the newest addition on Monday. Over the portfolio is up a snappy 9.1%, trailing the MD portfolio, which is up 9.9%.

Symbol Date Original Current Dividend S&P O S&P D Stock Chg S&P Chg Diff
DTPI 2/2/08 4.75 6.19 - 139.58 1.31 30.3% -9.9% 40.2%
AIRV 2/13/08 5.08 5.04 - 136.37 1.31 -0.8% -7.8% 7.0%
CITP 2/16/08 9.98 11.27 - 135.14 1.31 12.9% -7.0% 19.9%
PRXI 2/16/08 4.29 3.16 - 135.14 1.31 -26.3% -7.0% -19.4%
CAST 2/23/08 5.06 3.87 - 135.62 1.31 -23.5% -7.3% -16.2%
GSB 3/12/08 2.08 1.47 - 131.36 1.31 -29.3% -4.3% -25.0%
IGC 3/12/08 3.70 4.88 - 131.36 1.31 31.9% -4.3% 36.2%
LGTY 3/12/08 6.70 6.31 - 131.36 1.31 -5.8% -4.3% -1.5%
MRX 3/12/08 19.45 19.89 0.08 131.36 0.67 2.7% -4.8% 7.4%
DEPO 3/22/08 2.74 4.25 - 132.08 0.67 55.1% -5.3% 60.4%
NVTL 3/22/08 8.98 6.22 - 132.08 0.67 -30.7% -5.3% -25.4%
VRGY 3/22/08 17.42 18.86 - 132.08 0.67 8.3% -5.3% 13.6%
DLX 4/6/08 19.58 15.65 0.50 136.89 0.67 -17.5% -8.6% -8.9%
NTRI 4/6/08 14.94 19.29 0.18 136.89 0.67 30.3% -8.6% 38.9%
IUSA 4/6/08 5.28 6.81 - 136.89 0.67 29.0% -8.6% 37.6%
LRCX 4/11/08 41.08 32.33 - 133.38 0.67 -21.3% -6.2% -15.1%
SLXP 4/11/08 6.47 6.62 - 133.38 0.67 2.3% -6.2% 8.5%
CHRD 4/19/08 5.03 5.86 - 138.48 0.67 16.5% -9.7% 26.2%
QXM 4/26/08 6.26 4.61 - 139.60 0.67 -26.4% -10.4% -16.0%
MDP 5/9/08 33.79 28.48 0.43 138.90 0.67 -14.4% -9.9% -4.5%
OMPI 5/9/08 7.11 9.20 - 138.90 0.67 29.4% -9.9% 39.3%
PPD 5/9/08 43.45 43.04 - 138.90 0.67 -0.9% -9.9% 9.0%
ELNK 5/25/08 9.21 9.08 - 137.64 0.67 -1.4% -9.1% 7.7%
FTAR.ob 5/25/08 4.37 3.60 - 137.64 0.67 -17.6% -9.1% -8.5%
CHKE 5/31/08 27.25 22.72 0.50 140.35 0.67 -14.8% -10.9% -3.9%
APKT 7/5/08 4.62 6.00 - 126.31 - 29.9% -1.5% 31.4%
CSY 7/5/08 11.06 12.77 - 126.31 - 15.5% -1.5% 17.0%
VALU 7/5/08 32.00 40.97 0.40 126.31 - 29.3% -1.5% 30.8%
QCOR 7/26/08 4.84 5.24 - 125.48 - 8.3% -0.8% 9.1%
MSTR 8/1/08 60.56 64.25 - 126.16 - 6.1% -1.4% 7.5%
NVDA 8/8/08 11.00 11.67 - 129.37 - 6.1% -3.8% 9.9%
SWIR 8/8/08 12.41 11.89 - 129.37 - -4.2% -3.8% -0.4%
CF 8/8/08 134.65 131.20 - 129.37 - -2.6% -3.8% 1.3%
SIGM 8/8/08 16.93 15.47 - 129.37 - -8.6% -3.8% -4.8%

Totals 2.9% -6.2% 9.1%
60.% of stocks beat the S&P 500 Benchmark



Better Shop Around

With the markets crashing, but MFI stocks beginning to truly outperform once again (per my tracking portfolios) I think it is time to put new cash at work in MFI. The five I am considering for my September tranche include:

KHD - this is a hong-kong based company involved in providing constriction/building equipment worldwide. Pro Forma profits are up 88% year over year AND their backlog is up 96%! Their business is coming from Russia, Eastern Europe and Asia (A Hidden Play on Infrastructure). They also have 280m of excess cash against their 730m market cap. Looks like a solid company to me.

NWS - This is a magic Diligence pick, that Steve gave away for free. Obviously this is broadcasting and newspapers. Also they own Myspace.com (which I have never used). They have lots of well-branded content such as the Simpsons and American Idol, plus the Wall Street Journal!

BOLT - I already have some shares, but am allowed a second bite at the apple. They have dropped under $18 as they have tangential exposure to oil/gas. They are high-tech in helping oil & gas companies look for the black gold. Frankly, I don't think that since oil has dropped to $105 that companies are going to stop looking for the stuff... so the drop seems like a buying opportunity. They have also already said that they think 2009 will be another stellar year.

PPD - Pre-paid legal, sounds a bit like a gimmick. But what caught my eye is that renowned value investor Seth Klarman is a buyer. I feel that gives it the good housekeeping seal. And they are on the top 25 list.

I got bad news on NOK on Friday, the stock dropped about 13% as they warned about reduced market share (Nokia's Reduced Outlook Sends Shares Down 13%). I still like the company a lot, but I am certainly feeling snakebit lately (actually for the past 13 months, but even with the decline I had a decent week last week compared to the benchmarks.

I saw where one of my original MFI stocks, UST is being bought by Altria. It was up over 22% on Friday. I guess I should have bought them again, they've been on the lists (Altria Holds Deal Talks to Buy UST).

There is also a new stock on the top 25 list... EMGI. A little small for my stomach of late (35m market cap), but they look interesting. They will definitely be on my list competing against MD as I know this is first time they have been listed.