February 15th 2013 MFI Tranche

Only a couple of weeks until I create my 3rd tranche of MFI stocks.  I was whining the other day about the first two tranches, and I guess the MFI gods listened to me.  The Aug 15 tranche rocketed upwards today, helped by UIS (up 15%) and DLB.  It is now out-pacing the Russell 3000.  I will post details in my weekend update.

I was thinking about what my criteria for stocks should be in February.  My inspiration was hearing talk about the fact that housing prices seem to be starting to go up (finally). A commentator said that ironically one of the catalysts has been not that interest rates are low, but RATHER the higher probability that they will be going back up, sooner rather than later.

That is probably true.  If so, what would some repercussions be?  I think one answer lies with what is going on with DELL.  Here is a stable, if unexciting company, that has seen it's stock price languish as the go-go growth days are past. However, with debt so cheap right now (not just for housing); a company with a predictable cash flow that is cheap can be taken private and everyone can be a winner.

Back in 2006, we had a rash of merger mania... seemed like every Monday a new merger or private acquisition was announced.  I think we are ripe for that again.  So my theme for MFI stocks in February will be stocks with a predictable cash flow that are not TOO large (say under $10b) as after that getting deals done is tougher.

I ran the MFI screen to get some ideas.  Obviously I will need to do more research, but here is a list I will start from:

CA, CACI, CSGS, DNB, XLS, EXPR, LPS, NUS, MANT, SAI, VCI, STRZA and WDC.

Some interesting names there.

VIAB will report tomorrow.  It has already gone up 20% pour moi.

More this weekend!