New Mechanical Stock - Jan 28 2010

Kind of weird, the MFI website wasn't updated this weekend. They seem to be a little less on the ball of late. Hope that isn't a trend. My "Cruncher" really isn't ready to go live. So I ended up using Thursday's run and closing pricing for my Mechanical portfolio. With that approach, there was one new stock added (and it probably will drop off this week): NATH. While I love their hot dogs and am a fan of the stock (I owned it in the past once), it is a very low volume stock and even buying a relatively small amount is difficult. So I'll take a pass.

I don't think I commented on the most excellent earnings last week by RTN (Raytheon Reports Strong Fourth Quarter and Full-Year 2009 Results; Reaffirms Outlook for Continued Growth in 2010). I really like having some of these big cap stocks in my mix. Sure they're up "just" 17%, but it is (in my mind) a 17% that I am not likely to have to give back. They are super solid earnings, cash flows and dividends. A classic stock that MFI identified as the market going "nuts" on 10/30 when they hit the top 30 list at 45.28. Another one is Pfizer, which hit the top 50 list at 6/5/09 at 14.51 and is up about 30%.

I think that is why my mechanical portfolios are working better than other approaches as it identifies some really quality stocks when they bottom out... so you get them cheap. Here is the top 30 inforce list right now:

Symbol		Original	Current	Dividend	S&P O	S&P D	Stock Chg	S&P Chg	Diff
COH	2/14/09	13.97	35.27	-	82.76	2.18	152.5%	34.4%	118.1%
DELL	2/21/09	8.41	13.22	-	77.42	2.18	57.2%	43.7%	13.5%
SOLR	2/21/09	4.22	5.78	-	77.42	2.18	37.0%	43.7%	-6.7%
DECK	2/28/09	41.27	99.50	-	73.93	2.18	141.1%	50.5%	90.6%
FWLT	2/28/09	15.04	28.89	-	73.93	2.18	92.1%	50.5%	41.6%
HCKT	2/28/09	2.56	2.65	-	73.93	2.18	3.5%	50.5%	-46.9%
MWW	2/28/09	6.59	15.59	-	73.93	2.18	136.6%	50.5%	86.1%
PTIE	2/28/09	4.53	5.34	-	73.93	2.18	17.9%	50.5%	-32.6%
TRLG	2/28/09	10.22	19.36	-	73.93	2.18	89.4%	50.5%	39.0%
qlti	3/6/09	1.41	4.64	-	68.92	2.18	229.1%	61.4%	167.7%
exbd	3/6/09	12.96	23.64	0.74	68.92	2.18	88.1%	61.4%	26.7%
FIX	3/13/09	9.73	11.86		76.09	2.18	21.9%	46.2%	-24.3%
DBTK	3/13/09	6.65	10.39	-	76.09	2.18	56.2%	46.2%	10.1%
LOOP	3/13/09	5.77	9.41	-	76.09	2.18	63.1%	46.2%	16.9%
PRO	3/27/09	4.29	8.19	-	81.61	1.62	90.9%	35.6%	55.3%
ACN	4/9/09	27.71	41.19	-	85.81	1.62	48.6%	29.0%	19.7%
INFI	4/16/09	5.83	6.12	-	87.08	1.62	5.0%	27.1%	-22.1%
TSRA	5/1/09	14.52	17.25	-	87.89	1.62	18.8%	25.9%	-7.1%
RST	5/1/09	29.83	18.09	-	87.89	1.62	-39.4%	25.9%	-65.3%
ulcm	5/1/09	8.72	10.00	-	87.89	1.62	14.7%	25.9%	-11.2%
TYPE	5/1/09	3.80	9.12	-	87.89	1.62	140.0%	25.9%	114.1%
CRAY	5/1/09	3.98	4.71	-	87.89	1.62	18.3%	25.9%	-7.6%
INT	5/8/09	41.90	48.78	-	92.98	1.62	16.4%	19.0%	-2.6%
IPHS	5/15/09	15.03	20.18	-	88.71	1.62	34.3%	24.8%	9.5%
GNI	5/29/09	86.75	90.40	3.60	92.53	1.62	8.4%	19.6%	-11.3%
UTA	5/29/09	7.90	9.27	-	92.53	1.62	17.3%	19.6%	-2.3%
FRX	6/5/09	23.66	29.47	-	94.55	1.62	24.6%	17.1%	7.5%
ONTY	6/11/09	2.60	4.84	-	95.08	1.62	86.2%	16.4%	69.7%
VM	6/11/09	4.24	5.50	-	95.08	1.62	29.7%	16.4%	13.3%
BPI	6/19/09	16.74	14.65	-	92.04	0.51	-12.5%	19.0%	-31.5%
MTXX	7/2/09	5.77	4.70	-	91.84	0.51	-18.5%	19.3%	-37.8%
JTX	7/2/09	5.74	2.79	-	91.84	0.51	-51.4%	19.3%	-70.7%
GIGM	7/24/09	4.98	2.76	-	98.06	0.51	-44.6%	11.7%	-56.3%
CBI	7/31/09	13.95	20.72	-	98.81	0.51	48.5%	10.9%	37.6%
BR	7/31/09	17.27	21.86	0.28	98.81	0.51	28.2%	10.9%	17.3%
LO	7/31/09	73.72	76.73	-	98.81	0.51	4.1%	10.9%	-6.8%
ITWO	8/7/09	14.36	19.73	-	101.20	0.51	37.4%	8.3%	29.1%
BKE	8/14/09	26.54	31.50	2.00	100.79	0.51	26.2%	8.7%	17.5%
GTLS	8/14/09	20.73	16.46	-	100.79	0.51	-20.6%	8.7%	-29.3%
PRIM	8/14/09	6.95	8.11	0.05	100.79	0.51	17.4%	8.7%	8.7%
SEPR	8/14/09	18.12	23.00	-	100.79	0.51	26.9%	8.7%	18.2%
PVSW	8/14/09	5.00	5.15	-	100.79	0.51	3.0%	8.7%	-5.7%
CEU	8/21/09	5.10	5.88	-	102.96	0.51	15.3%	6.4%	8.9%
cytk	8/28/09	3.04	3.04	-	103.38	0.51	0.0%	6.0%	-6.0%
jcom	8/28/09	22.14	20.87	-	103.38	0.51	-5.7%	6.0%	-11.7%
AMED	9/4/09	35.00	57.07	-	102.06	0.51	63.1%	7.4%	55.7%
MIPS	9/18/09	3.72	3.88	-	106.72	0.51	4.3%	2.7%	1.6%
MHP	9/25/09	23.67	35.44	0.23	104.45	0.59	50.7%	5.0%	45.7%
AGX	10/16/09	12.50	14.50	-	108.89	0.59	16.0%	0.7%	15.3%
BBND	10/30/09	3.70	3.04	-	103.56	0.59	-17.8%	5.9%	-23.7%
FLR	10/30/09	44.42	45.96	-	103.56	0.59	3.5%	5.9%	-2.4%
RGR	10/30/09	10.62	10.70	-	103.56	0.59	0.8%	5.9%	-5.1%
RTN	10/30/09	45.28	52.96	0.31	103.56	0.59	17.6%	5.9%	11.8%
VRSK	10/30/09	27.43	28.41	-	103.56	0.59	3.6%	5.9%	-2.3%
immu	11/6/09	3.61	3.28	-	107.13	0.59	-9.1%	2.4%	-11.5%
cbst	11/6/09	17.60	20.61	-	107.13	0.59	17.1%	2.4%	14.7%
snta	11/6/09	3.20	4.34	-	107.13	0.59	35.6%	2.4%	33.3%
CNU	11/13/09	3.10	4.06	-	109.62	0.59	31.0%	0.0%	30.9%
IDCC	11/20/09	23.56	25.17	-	109.43	0.59	6.8%	0.2%	6.6%
PDLI	11/27/09	6.63	6.59	-	109.57	0.59	-0.6%	0.1%	-0.7%
ARO	12/4/09	28.95	33.99	-	111.01	0.59	17.4%	-1.2%	18.6%
CBPO	12/4/09	9.06	9.82	-	111.01	0.59	8.4%	-1.2%	9.6%
SHE	12/31/09	5.15	6.80	-	111.44	-	32.0%	-2.1%	34.2%
						Totals	22.2%	4.9%	17.3%
63.9% of stocks beat the S&P 500 Benchmark						Closed	11.8%	-10.8%	22.5%
S&P C			109.06			Open	32.3%	20.0%	12.3%

Where I am At After Almost 4 Years

I started my MFI portfolio 2/28/06, coming up on 4 years. Take a peek at my chart... sadly back underwater again.


Obviously a little tough skiing recently. At 1/8/10 I was actually up 5.4%, now I am down 3.8%. That is pushing 10% and I avoided a bit of additional pain by selling QXM around $3.70 a week ago and now they're down to $2.45 (whew).

I did buy a new stock yesterday, GXDX, which seems like a mini Quest Diagnostics (which I owned a couple years ago). They are a blowing and going company, it was surprising to see them on the list. You can see they had a temporary (I hope) fall from grace:

PRICES

Date	Open	High	Low	Close	Volume	Adj Close*
28-Jan-10	30.29	31.05	30.26	30.95	374,400	30.95
27-Jan-10	30.18	30.61	29.86	30.18	379,600	30.18
26-Jan-10	30.75	30.89	29.10	30.41	1,801,700	30.41
25-Jan-10	33.64	34.01	32.41	32.60	399,100	32.60
22-Jan-10	34.07	34.51	33.50	33.56	170,100	33.56
21-Jan-10	34.81	35.04	33.66	34.16	217,500	34.16
20-Jan-10	35.00	35.26	34.12	34.90	199,900	34.90
19-Jan-10	35.39	35.72	34.97	35.06	169,300	35.06

But look at their guidance:

Performance Outlook

Recognizing the strength of our collection efforts and financial results in the third quarter, Genoptix expects revenues for the full-year 2009 of approximately $180 million with full-year gross margins of approximately 60%.

Operating margins for 2009 are expected to be in the mid- to high-twentieth percentile, with net income of approximately $29 million, up from prior estimates of approximately $25 million. Diluted EPS for the full-year 2009 is now expected to be approximately $1.60, increasing from a prior range of $1.40 to $1.45, on about 18.0 million shares. This assumes a tax rate of approximately 44%, down from initial estimations of 45%.

Based on continued infrastructure expansion and implementation of its strategic plan, the Company projects capital expenditures of $8.5 million for the full-year 2009, which includes approximately $4.5 million in maintenance capital. A planned laboratory expansion beginning this quarter is now expected to cost approximately $9.5 million, with approximately $4 million to be spent in 2009 and the remainder in the first half of 2010.

For 2010, revenues are expected to grow to approximately $235 million. The Company intends to provide more detailed guidance in February when reporting results for the fourth quarter and full-year 2009.

I mean look at the growth, 180m to 235m. They have an impeccable balance sheet. Here are their stats a couple of days ago when they came on the list:

		gxdx
+	Operating Income After Depreciation	48.64
-	Minority Interest - Income Account	-
=	Income for Calculation	48.64
	Diluted Shares Outstanding	17.965
	Share Price	30.18
+	Market Cap Calc	542.18
+	Preferred Capital	-
+	Debt in Current Liabilities	-
+	Long-Term Debt	-
	Cash and Short-Term Investments	137.79
-	Excess Cash	137.79
=	Enterprise Value	404.40
+	Property Plant and Equipment - Net	12.76
+	Receivables	23.53
+	Inventories	-
+	Other Current Assests	7.49
+	Working Cash	-
-	Accounts Payable	9.51
-	Current Liabilities - Other	8.98
=	Invested Capital	25.29
	Earnings Yield	12%
	ROIC	192%

State of the Union

I rarely get on a soapbox here, but I was watching a bit of the Geithner show today and it just stunned me how Congress doesn't get it. It is almost scary. And with Obama giving his State of the Union address, I felt it was as good a time as any to toss in my two cents. So much so, that I actually just sent an email to all my elected officials.

The whole meltdown of last year has become a giant finger-pointing exercise and now people like Obama are trying to make political hay of Financial Institutions. Not two days after Brown won MA, and Obama is up there with Volcker with his bold bank tax, which screws the banks that were doing the right thing. In fact, in many cases it wasn't non investment banks screwing up, it was AIG, Lehman, Morgan Stanley, Goldman Sachs, Bear Stearns, Freddie and Fannie Mae.

What really needs to happen is that we let free markets work. Insolvencies can happen and not bring markets to their knees so long as they are done in an organized fashion (think Washington Mutual or Merrill Lynch). The bailouts actually helped other Financial Institutions. I am sure that the day before Bear Stearns had to shut their doors, you could have bought their bonds for 20 cents on the dollar... guess what? They got 100 cents! Now if you buy bonds in a risky company, why should you get 100 cents on the dollar backed by taxpayers? Stunning. Same can be said for Citi, Wells Fargo etc... the bondholders were unscathed. They should have been forced to make concessions BEFORE the Fed and the Treasury stepped in. That only makes sense, but you never hear anything about that. Don't you think if Warren Buffett bailed out a company he'd force concessions from everyone? Bondholders, Stockholders may be even creditors and Unions? Think about what he got when he put 5 or 10b in GE and GS. Not only did he get a high interest rate (about 10%) but he got options to buy their stock in the next 10 years at a low price. Why shouldn't our govt demand onerous terms like that as well? And as voters, if our govt hands over our tax dollars that easily, do we have the right people in office?

Ok, I have vented and feel better. Here is a great link to read: A Blueprint for Financial Reform

Then, I was also a bit angry at JTX today, which is now down about 40% for me. They seem to keep getting hit for the same thing (Jackson Hewitt plunge on lack of funds for loans). I have to think that under $3, if you believe they will survive, they are a steal. And finally CBPO shot up 15% today, recovering a chunk of the previous days 25% drop. I did add shares (not in my MFI portfolio) at the start of the day as they seemed way oversold.

Rumor Mill CBPO

Wow, CBPO got taken to the cleaners today... by a rumor. Checkout the chart for the day:

Basic Chart	Get Basic Chart(s) for:

China Biologic Products, Inc. (NGM)

Range: 1d 5d 3m 6m 1y 2y Type: Bar | Line | Candle Scale: Linear | Log Size: M | L Compare: CBPO vs S&P Nasdaq Dow Want more control over the chart? Try our Interactive Chart. Splits:none

Last Trade: 8.71 Trade Time: 4:00PM ET Change: 3.05 (25.94%) Prev Close: 11.76 Open: 11.56 Bid: 8.61 x 500 Ask: 8.85 x 100 1y Target Est: 17.50

Day's Range: 8.44 - 11.70 52wk Range: 1.67 - 13.70 Volume: 1,004,190 Avg Vol (3m): 106,718 Market Cap: N/A P/E (ttm): N/A EPS (ttm): N/A Div & Yield: N/A (N/A)

10x normal volume and an incredible 25% plunge. What caused it? A blog. China Biologic: There Will Be Blood

The author, who openly admitted he is short CBPO, essentially says that the people who seeded the company are felons and insinuated not all is as it seems with the company. I have seen this play out several times with these Chinese companies, LIWA and CSKI also had "scare" short articles. They have not yet born out to be correct and I'd suggest there is no reason to believe there is truth behind this one as well. It is troubling that people try to start these stampedes, I suspect it may be illegal, though if there are some facts behind the post it may be impossible to press charges. Good chance for the brave to buy CBPO. Here are my stats for them (if you believe the Compustat filings):

		cbpo
+	Operating Income After Depreciation	45.31
-	Minority Interest - Income Account	11.72
=	Income for Calculation	33.59
	Diluted Shares Outstanding	21.633
	Share Price	8.71
+	Market Cap Calc	188.42
+	Preferred Capital	-
+	Debt in Current Liabilities	18.58
+	Long-Term Debt	0.05
	Cash and Short-Term Investments	50.35
-	Excess Cash	50.35
=	Enterprise Value	156.70
+	Property Plant and Equipment - Net	27.85
+	Receivables	2.44
+	Inventories	33.22
+	Other Current Assests	1.58
+	Working Cash	-
-	Accounts Payable	3.61
-	Current Liabilities - Other	33.56
=	Invested Capital	27.93
	Earnings Yield	21%
	ROIC	120%

Chinese Stocks Crunched

I thought I would use my new Cruncher spreadsheet to rank Chinese Stocks. Many of them for various reasons don't make the MFI screen. Some interesting choices here:

Row Labels	EY	ROC	Total	Mkt Cap
CMM	59%	147%	21	83
SNDA	15%	403%	30	3,439
CHOP	21%	116%	32	265
ltus	24%	99%	35	83
UTA	18%	111%	35	158
LTON	651%	62%	36	71
CCME	13%	321%	37	341
STV	16%	132%	39	373
CEU	13%	207%	40	158
QXM	3795%	54%	40	152
GA	12%	470%	42	1,743
CSKI	18%	81%	42	314
chcg	676%	50%	44	26
SOHU	11%	237%	49	2,189
CPC	29%	48%	52	241
CYOU	10%	1430%	53	1,749
GAME	10%	1129%	56	2,682
CBEH	15%	60%	57	260
SHE	10%	199%	58	225
ZSTN	14%	56%	62	90
LIWA	12%	67%	63	210
CHBT	12%	71%	63	268
AOB	17%	46%	66	380
YONG	12%	67%	67	256
FUQI	18%	37%	69	467
SIHI	16%	43%	72	94
CMFO	12%	51%	73	143
NTES	8%	357%	74	4,369
SKBI	21%	35%	74	39
YUII	10%	63%	78	172
QKLS	9%	105%	78	191
NEP	15%	36%	78	210
GFRE	12%	47%	81	352
TPI	11%	53%	83	107
ONP	14%	35%	85	121
PWRD	8%	106%	88	1,971
CPHI	15%	34%	90	156
CMED	7%	178%	90	362
CISG	7%	192%	95	871
CNTF	49%	19%	99	148
SDTH	14%	29%	100	298
ALN	19%	20%	102	81
GRO	350%	16%	102	159
CFSG	9%	47%	103	364
CHNG	17%	21%	104	170
AUTC	7%	74%	106	307
PUDA	16%	20%	109	96
SPU	10%	35%	109	129
LFC	4%	163%	110	126,607
YZC	9%	37%	111	10,279
CPBY	11%	31%	112	272
ASIA	3%	1022%	113	1,159
JST	10%	31%	115	311
NTE	30%	8%	121	224
VISN	6%	55%	122	689
SINA	3%	137%	122	2,283
CRIC	4%	136%	122	1,221
HRBN	10%	27%	123	500
KONG	4%	104%	124	430
NIV	11%	21%	124	142
TBV	13%	16%	125	212
CTFO	7%	36%	128	181
XING	343%	2%	128	149
SSRX	8%	35%	129	251
DGW	5%	55%	130	641
TSTC	8%	33%	132	176
BIDU	2%	153%	132	14,529
CAGC	9%	28%	133	218
CTRP	2%	130%	134	4,537
CGA	7%	43%	134	320
HEAT	6%	47%	135	338
RINO	7%	36%	135	595
TRIT	6%	48%	135	81
CNGL	8%	28%	137	145
HPJ	6%	38%	138	97
FSIN	12%	15%	139	257
CSR	11%	16%	139	413
YTEC	9%	21%	143	130
WUHN	12%	11%	143	82
HOGS	10%	19%	144	412
EDU	3%	63%	145	2,891
FEED	8%	22%	146	201
SVA	7%	34%	146	314
NPD	3%	54%	149	700
CRTP	8%	20%	149	100
APWR	7%	28%	149	430
JOBS	4%	45%	149	452
EJ	7%	30%	150	1,295
CWS	7%	24%	155	126
MR	3%	47%	156	4,087
WATG	8%	20%	158	293
NED	10%	9%	160	169
WH	10%	9%	162	317
ADY	8%	17%	163	490
PTR	9%	14%	163	209,266
CXDC	5%	30%	165	323
DEER	3%	35%	169	266
CO	3%	34%	171	430
WWIN	7%	14%	173	158
SUTR	9%	7%	173	117
NKBP	5%	24%	173	157
CCM	4%	27%	178	498
SCR	6%	19%	179	482
COGO	7%	13%	180	246
CALI	7%	16%	181	88
WX	4%	21%	186	1,130
GSH	7%	7%	188	2,957
VIT	3%	27%	188	775
TSL	6%	14%	190	1,360
SORL	6%	12%	194	210
CAAS	4%	17%	199	575
DL	1%	24%	201	214
CEDU	4%	11%	204	138
CHLN	5%	8%	207	134
GRRF	4%	5%	214	85
CIIC	4%	5%	219	163
SEED	2%	11%	223	249
HMIN	2%	9%	227	1,358
YGE	2%	4%	234	1,941
KNDI	1%	5%	238	102
STP	1%	3%	241	2,371
CVVT	1%	4%	243	321
SVN	1%	3%	244	597
HNP	1%	1%	245	6,778
GSI	0%	1%	250	191
LONG	0%	-1%	255	271
TCM	-1%	-1%	257	119
ATAI	0%	-2%	257	87
XSEL	-1%	-5%	260	57
CBAK	-2%	-3%	261	154
ACH	-3%	-5%	265	14,796
HOLI	-2%	-12%	268	575
ZNH	-6%	-5%	271	2,270
JASO	-5%	-10%	271	779
AMCN	-4%	-12%	273	560
SOLF	-11%	-12%	276	383
CEA	-13%	-14%	279	1,767
JRJC	-3%	-28%	280	164
XIN	-16%	-18%	282	331
GU	-55%	-9%	283	108
LDK	-18%	-19%	284	711
FMCN	-5%	-50%	285	2,074
SMI	-20%	-19%	286	1,888
CSUN	-21%	-24%	289	180
SOL	-27%	-28%	291	326
SPRD	-14%	-149%	292	310
CAEI	-32%	-41%	294	58
ATV	-511%	-24%	295	151
SHI	-36%	-57%	297	2,700
VIMC	-63%	-167%	302	178
ACTS	-586%	-88%	303	183
HRAY	-67%	-2214%	305	81
NCTY	-2306%	-306%	307	188