(re) Fine Day

The theme was pretty obvious today.

FTO: +3.7%
FDG: +5.4%
TGB: +4.2%
WNR: +4.8%

Basic materials and refining led the way.

My BBSI ends its year tomorrow up about 25%. I will renew it for a 2nd glorious (I hope) year. So next week in my lists it will be in the closed category and then show up as a new stock with little gain (I expect).

I thought people might like an update of the Stock Contest. We're getting very close to getting a couple people back in the green. Yes it has been a trying quarter. Yours truly is in 14th place, ahead of the 25 over 50m I may add.

Current Rank ↓	Delete	Nickname	Net Worth	Today's Return	Total Return	Transactions last 40 days
1		jchilib	$149,380.60	+1.17%	-0.41%	0
2		Jeff	$149,201.04	+1.01%	-0.53%	0
3		fuzzywalnut	$148,369.81	+0.49%	-1.09%	0
4		Rutroh	$147,569.79	+0.82%	-1.62%	0
5		Viper global index	$147,022.66	+0.94%	-1.98%	0
6		kwr446	$146,948.32	+1.73%	-2.03%	0
7		Ankit	$146,235.18	+0.85%	-2.51%	0
8		traehnam	$145,288.26	+1.82%	-3.14%	0
9		Ronrego	$143,286.80	+0.30%	-4.48%	0
10		Wootleader	$143,124.29	+0.32%	-4.58%	0
11		AK	$142,845.74	+1.20%	-4.77%	0
12		Gunnski	$142,331.16	+0.18%	-5.11%	0
13		Risky	$141,231.05	+1.09%	-5.85%	0
14		marsh_gerda	$141,178.66	+0.80%	-5.88%	0
15		Mike	$140,317.01	+0.16%	-6.46%	0
16		Top 25 over 50m	$139,294.32	+1.19%	-7.14%	0
17		Magic formula, all 25 >$2B	$139,271.46	+0.30%	-7.15%	0
18		ZeroMotion	$139,140.44	+1.63%	-7.24%	0
19		pw17pw	$138,714.99	-0.51%	-7.52%	0
20		ATLsparty	$138,303.06	+0.94%	-7.80%	0
21		SP500	$138,232.64	+1.32%	-7.84%	0
22		lpj143	$137,841.00	+0.43%	-8.11%	0
23		AyRon	$137,659.52	+1.21%	-8.23%	0
24		kjstark	$137,494.21	+1.94%	-8.34%	0
25		valueorama	$137,393.94	+0.26%	-8.40%	0
26		jamiemb	$137,217.88	+0.40%	-8.52%	0
27		bhunji	$136,758.75	-0.26%	-8.83%	0
28		TedW	$136,208.80	+2.25%	-9.19%	0
29		rharmelink	$135,563.56	-0.15%	-9.62%	0
30		MagicFormulaInvestor	$134,737.95	+0.70%	-10.17%	0

Current Rank ↓	Delete	Nickname	Net Worth	Today's Return	Total Return	Transactions last 40 days
31		chimera	$134,379.81	+0.77%	-10.41%	0
32		maggiespharma	$133,999.32	+0.44%	-10.67%	0
33		Covered Call Investor	$133,656.79	-0.23%	-10.90%	0
34		jaywysocki	$133,648.45	+0.03%	-10.90%	0
35		DukeCrow	$133,541.84	-0.31%	-10.97%	0
36		roberts1001	$133,444.20	+1.76%	-11.04%	0
37		Jared	$133,110.08	-0.85%	-11.26%	0
38		wwe	$133,073.74	+0.89%	-11.28%	0
39		Srini M L	$132,847.72	+1.49%	-11.43%	0
40		djdk	$129,422.09	-0.14%	-13.72%	0
41		jachangmd	$127,814.49	+0.78%	-14.79%	0
42		VA	$127,420.57	-0.14%	-15.05%	0
43		HUP1PSH	$126,827.78	+1.43%	-15.45%	0
44		Chris_G	$124,473.94	+0.13%	-17.02%	0

Margin Debt

Last year in May Cramer mentioned that Margin Debt was at a record high and he speculated that was why the market dropped sharply in June 2006. I finally found a source that gives month-by-month margin debt for the NYSE. Back in May 2006 it was (let me see if I can get the zeros right): $230,540,000,000.

Now if you buy on margin and the market drops sharply, you can get a margin call as there are limits of the ratio of margin to your portfolio worth. A margin call can force you to sell stocks while the market is declining (generally not a good thing). So excessive use of margin can exacerbate a stock market correction. I do not use margin.

So what do you think the total margin debt was in July 2007? I wondered myself. Here is the chart for 2007 (I think it pretty much speaks for itself):

End of month	Margin debt	Free credit cash accounts	Credit balances in margin accounts
January	$285,610	$90,340	$156,190
February	$295,870	$96,550	$155,140
March	$293,160	$99,690	$161,890
April	$317,990	$104,360	$162,570
May	$353,030	$109,030	$176,200
June	$378,240	$119,300	$179,920
July	$381,370	$122,740	$205,830

It Ain't Necessarily So

It ain't necessarily so

It ain't necessarily so

The t'ings dat yo' li'ble

To read in de Bible,

It ain't necessarily so

I admit it. I have been mad at the Motley Fool since last year when they dissed DRYS. I sold DRYS at about $14 largely because of their write-up. Today DRYS is at $70. Even if you read it, remember, "it ain't necessarily so."

Yesterday, MF had another article that I took exception with (Frontier's Refined Buyback). In this article they came to the conclusion that Valero and Alon are better buys than FTO and WNR. This conculsion was largely driven by the revenue growth rates from analysts. I wondered about this as I recalled writing about WNR saying this next quarter was going to have much higher growth.

So I looked at the analysts and sure enough they are predicting 4% growth for WNR in 2008. BUT, it really isn't "they", but a single analyst who appear to me to be asleep at the switch. I dug into the facts and

1. WNR expects 42% more throughput in the 3rd quarter than the second quarter.
2. WNR said that the 2nd quarter was a record quarter because of higher prices and the inclusion of GI for one month.

So it seems to me that WNR will have GI revenues in 7 months of their figures in 2007 and 12 months in 2008. How can an analyst say revenues growth will only be 4% in 2008? My answer, "it ain't necessarily so." It does make me wonder how much these analysts make.

Ok, enough analyst and MF bashing. Here is my weekly chart. Remember the Magenta line shows my cumulative gain in one week increments. The blue line shows the gain of the Russell 3000 benchmark:



Then here is my list of current holgings and how they have fared. ASEI has really had a nice run. BBSI and VPHM are close to their 1 year anniversaries. You'll note I am about 20K behind the benchmark. That has been pared a lot the last two weeks as I did trail by about 35K while on vacation.

Current Portfolio
Stock	Purchase Date	Cost	Current	Gain
ASEI	10/5/2006	$45.85	$72.25	58.0%
TGB	4/16/2007	$2.64	$3.86	46.2%
FDG	3/8/2007	$25.45	$32.72	30.9%
BBSI	9/6/2006	$19.56	$24.38	26.1%
FTO	1/10/2007	$35.16	$41.03	16.8%
TCK	8/16/2007	$36.50	$42.63	16.8%
KSW	5/10/2007	$6.48	$7.50	15.8%
LRCX	7/3/2007	$47.51	$53.63	12.9%
VALU	5/29/2007	$44.01	$48.85	11.7%
THO	3/26/2007	$40.30	$43.99	9.3%
CHKE	7/17/2007	$36.70	$38.00	5.6%
DGX	3/17/2007	$52.11	$54.75	5.5%
VSNT	7/27/2007	$19.52	$20.05	2.7%
UNTD	5/1/2007	$14.51	$14.37	1.4%
JTX	4/9/2007	$28.70	$28.87	1.0%
KSWS	7/27/2007	$23.94	$24.12	0.8%
RAIL	2/16/2007	$45.54	$45.30	-0.3%
TGIS	11/30/2006	$9.18	$9.03	-0.5%
NXG	12/20/2006	$3.04	$3.00	-1.3%
WSTG	5/15/2007	$14.98	$14.37	-2.4%
WNR	7/27/2007	$53.64	$51.84	-3.4%
PNCL	2/9/2007	$17.07	$16.39	-4.0%
HGG	8/3/2007	$13.48	$12.80	-5.0%
AEO	7/10/2007	$28.42	$25.83	-8.8%
PACR	1/3/2007	$25.46	$21.62	-14.4%
CHCG.OB	6/5/2007	$5.93	$5.05	-14.8%
UG	6/13/2007	$12.09	$10.28	-14.9%
VPHM	9/11/2006	$12.11	$9.91	-18.1%
NOOF	4/27/2007	$8.59	$6.82	-19.2%
USHS	6/25/2007	$11.22	$7.95	-29.1%
IVAC	11/23/2006	$23.52	$16.34	-30.5%
EGY	12/13/2006	$6.42	$3.92	-38.9%
GVHR	4/3/2007	$19.17	$11.52	-39.0%
Gain/Loss Open Positions ($):				($3,068)
Gain/Loss Open Positions (%):				-0.5%
Gain/Loss Closed Positions ($):				$35,289
Gain/Loss Closed Positions (%):				7.3%
Total Gain/Loss ($):				$32,221
Benchmark Gain/Loss ($):				$52,543
Annual IRR:				6.4%
Total Gain/Loss (%):				5.6%

I think that is a wrap. Have a nice Labor Day weekend everyone!

Amazing

Amazing but true, my portfolio went up today, by the exact same amount it went down on Tuesday. Guess it is a "do over".

I was really disappointed with VSNT. After what I felt were good earnings, VSNT proceded to drop 5.1% on this green day. I am sure over the long haul it'll get where it should. AEO did the same thing the day after it's earnings and it has gained it all back plus same. I am just amazed sometimes how negative the market can be post-earnings and then within a week reverse itself. I mean they earned about 50% more than a year ago, gave good guidance and yet trade at about 10x ttm earnings. Weird.

ASEI has been on an absolute tear through all the muck. Since the end of July it has rocketed from $55.07 to $71.00. ASEI will have a shot at being my 2nd best MFI stock (based on $) to PNCL. But can't count my chickens, TGB was actually approaching PNCL a few weeks ago when it had doubled, but now has dropped substantially. I believe AVCI is actully my 2nd best stock, though I only held it 2 months.

Take care!

Down the Slippery Slope

I don't need to tell people that the markets tumbled pretty sharply today. At least my portfolio didn't "outperform" the indices this time. Did get some good news after the bell.

VSNT had solid earnings for the quarter (Versant Announces Quarterly Net Income of $1.9 Million). Revenues were up 36%, these guys are really clicking.

Not much else to say except that I expect the sun will still rise tomorrow.

Last Week Before Labor Day

Well, I expect all the big wigs will be coming back next week from their summer vacations. What will happen? Will everything get sold? Will they realize that many companies have been thrown out with the bathwater? Stay tuned.

I was surprised to see that S&P put LRCX on credit watch, one step away from junk status (S&P Puts Lam Ratings on Watch). I didn't understand it as they have virtually no debt. Does that mean they're not paying their bills? Is it related to the internal study on options being done by Lam? I took a look and they have fallen off all lists. It is because their 2nd quarter results have no detail as they undergo their review. They would most likely be high on the lists as they had a tremendous 2nd quarter from a sales standpoint. I still don't understand the credit rating. Not sure if it really impacts them, but if they want to borrow money (say to buy a competitor) it could be costly.

BBSI and VPHM come up one their one year anniversaries in early September. BBSI is up 30% for me and VPHM is down 17%. They're both on the top 25 list, so I expect I'll keep 'em both for another year. I should buy some more VPHM to bring it back to "par". I do know VPHM has been a wild ride. I bought 'em at $12.11. They got up to $18.39. Then dropped as low as $7.51. How do you spell relief? R-O-L-A-I-D-S.

Finally Cramer had opinions on quite a few MFI stocks. He actually profiled AEO and said to buy them (finally).

Cramer does like American Eagle Outfitters (AEO - Cramer's Take - Stockpickr - Rating).

When looking at retail stocks, Cramer keeps an eye out for insider buying and low evaluations. Cramer found both of those in American Eagle, which he said is "worth buying."

The company's total sales were up 17% to $703.2 million in the second quarter year over year, and it trades at 12 times next year's estimated earnings.

Cramer said that American Eagle is undervalued but not yet at its low point. Investors should wait until next week at the earliest to decide about buying in. The price Cramer has in mind is somewhere between $22 and $25.

He said "don't buy" PPD. Then he likes PCU and HLF. Of course Barron's thinks his picks are the equivalent of a monkey throwing darts, so don't get too excited either way.

Greetings from Las Vegas - Looking Up

End of summer vacation in Las Vegas. This past week was a nice bounce for my portfolio. AEO had good earnings earlier in the week and went down to $22.81 the first day. But people finally woke up to the fact that 19% earnings growth is pretty darned good and the stock has bounced back to $25.85.

Here is my weekly graph.


Then here are my current holdings:

Current Portfolio
Stock	Purchase Date	Cost	Current	Gain
TGB	4/16/2007	$2.64	$4.14	56.8%
ASEI	10/5/2006	$45.85	$67.31	47.2%
BBSI	9/6/2006	$19.56	$25.23	30.1%
FDG	3/8/2007	$25.45	$32.03	28.2%
TCK	8/16/2007	$36.50	$43.40	18.9%
LRCX	7/3/2007	$47.51	$54.55	14.8%
FTO	1/10/2007	$35.16	$39.31	11.9%
VALU	5/29/2007	$44.01	$48.94	11.9%
VSNT	7/27/2007	$19.52	$21.65	10.9%
THO	3/26/2007	$40.30	$43.69	8.6%
KSW	5/10/2007	$6.48	$7.02	8.4%
DGX	3/17/2007	$52.11	$55.28	6.5%
UNTD	5/1/2007	$14.51	$14.93	5.2%
KSWS	7/27/2007	$23.94	$24.77	3.5%
CHKE	7/17/2007	$36.70	$37.24	1.5%
JTX	4/9/2007	$28.70	$28.77	0.7%
NXG	12/20/2006	$3.04	$3.05	0.3%
RAIL	2/16/2007	$45.54	$45.24	-0.4%
HGG	8/3/2007	$13.48	$13.39	-0.7%
WNR	7/27/2007	$53.64	$52.70	-1.8%
WPCS	6/18/2007	$11.89	$11.39	-4.2%
WSTG	5/15/2007	$14.98	$13.87	-5.7%
TGIS	11/30/2006	$9.18	$8.51	-6.2%
PNCL	2/9/2007	$17.07	$15.91	-6.8%
CHCG.OB	6/5/2007	$5.93	$5.48	-7.5%
AEO	7/10/2007	$28.42	$25.85	-8.7%
UG	6/13/2007	$12.09	$10.06	-16.8%
VPHM	9/11/2006	$12.11	$10.03	-17.2%
PACR	1/3/2007	$28.26	$21.89	-21.5%
NOOF	4/27/2007	$8.59	$6.56	-22.2%
USHS	6/25/2007	$11.22	$7.88	-29.7%
IVAC	11/23/2006	$23.52	$15.12	-35.7%
GVHR	4/3/2007	$19.17	$11.90	-37.0%
EGY	12/13/2006	$6.42	$3.75	-41.6%
Grand Total	1/0/1900	$803.48	$830.84	1.8%
Gain/Loss Open Positions ($):				($4,621)
Gain/Loss Open Positions (%):				-0.8%
Gain/Loss Closed Positions ($):				$36,284
Gain/Loss Closed Positions (%):				7.8%
Total Gain/Loss ($):				$31,663
Benchmark Gain/Loss ($):				$55,038
Annual IRR:				6.5%
Total Gain/Loss (%):				5.5%

Greetings From Avon, Coloado

In Avon CO today. Breathtaking sunset tonight. Not a bad place to aspire to live. Now if I can just get my portfolio in gear.

Markets seemed a little more "normal" today. That was a relief for me. I did add some shares of CHCG to round out my position. $5.50 seems so cheap to me. I still do not understand the haircut from $7.35 to $5.45 post earnings.

Cramer actually highlighted one of my stocks today, UNTD (Cramer's 'Mad Money' Recap). The last time I recall him talking up an MFI stock (VGR), it shot up 10 to 15% the following week and has never given it back. It is weird, he said the stock is "too cheap to ignore" but then said to wait for it to fall to $14 before buying. Hmmm. OTOH, I see where Barron's says that Cramer's picks have fared no better than the general market. That doesn't surprise me.

Not much more to say tonight. Think I'll go check out the stars.

Starry, starry night.
Paint your palette blue and grey,
Look out on a summer's day,
With eyes that know the darkness in my soul.
Shadows on the hills,
Sketch the trees and the daffodils,
Catch the breeze and the winter chills,
In colors on the snowy linen land.

Whew

Not sure if it is over, but today was a relief. Yes my MFI was stomped again by the Russell 3000, but it felt good to be solidly in the black. And my overall portfolio was very good. Cramer mentioned that he thinks the market will go even higher as so many people were short before the Fed announcement that they will take some time to unwind their positions. I wonder if some people were totally whip-sawed by the whole thing.

I am a whole 0.8% up and am well behind the indices... however, I am still a believer in MFI. We'll see how things look a year from now, I have trailed the indices before. I guess I don't have much else to say. My commodity stocks took a huge hit this week as fears that global growth would slow. So for history, my graph and individual stock performance are listed below. I sincerely hope this is the low water mark for both.


Then here is my list of current holdings:

Current Portfolio
Stock	Purchase Date	Cost	Current	Gain
TGB	4/16/2007	$2.64	$3.86	46.2%
ASEI	10/5/2006	$45.85	$63.88	39.8%
BBSI	9/6/2006	$19.56	$24.70	27.4%
VALU	5/29/2007	$44.01	$51.16	16.9%
FDG	3/8/2007	$25.45	$28.62	14.8%
LRCX	7/3/2007	$47.51	$54.12	13.9%
THO	3/26/2007	$40.30	$43.70	8.6%
CHKE	7/17/2007	$36.70	$39.08	6.5%
TCK	8/16/2007	$36.50	$38.77	6.2%
KSW	5/10/2007	$6.48	$6.81	5.2%
DGX	3/17/2007	$52.11	$54.12	4.2%
FTO	1/10/2007	$35.16	$36.19	3.1%
KSWS	7/27/2007	$23.94	$24.64	2.9%
VSNT	7/27/2007	$19.52	$19.54	0.1%
HGG	8/3/2007	$13.48	$13.45	-0.2%
JTX	4/9/2007	$28.70	$28.16	-1.5%
RAIL	2/16/2007	$45.54	$43.86	-3.5%
UNTD	5/1/2007	$14.51	$13.66	-4.9%
WSTG	5/15/2007	$14.98	$13.88	-5.7%
WNR	7/27/2007	$53.64	$49.93	-6.9%
PNCL	2/9/2007	$17.07	$15.68	-8.1%
NXG	12/20/2006	$3.04	$2.72	-10.5%
TGIS	11/30/2006	$9.18	$8.01	-11.7%
CHCG.OB	6/5/2007	$6.10	$5.35	-12.3%
WPCS	6/18/2007	$11.89	$9.80	-17.6%
AEO	7/10/2007	$28.42	$22.23	-21.4%
UG	6/13/2007	$12.09	$9.30	-23.0%
VPHM	9/11/2006	$12.11	$8.96	-26.0%
PACR	1/3/2007	$28.26	$20.13	-27.7%
NOOF	4/27/2007	$8.59	$5.99	-28.8%
GVHR	4/3/2007	$19.17	$12.42	-34.3%
USHS	6/25/2007	$11.22	$7.35	-34.5%
HW	12/27/2006	$24.00	$15.14	-36.9%
IVAC	11/23/2006	$23.52	$14.68	-37.6%
EGY	12/13/2006	$6.42	$3.84	-40.2%
Gain/Loss Open Positions ($):				($37,722)
Gain/Loss Open Positions (%):				-6.2%
Gain/Loss Closed Positions ($):				$41,502
Gain/Loss Closed Positions (%):				9.2%
Total Gain/Loss ($):				$3,781
Benchmark Gain/Loss ($):				$39,336
Annual IRR:				0.8%
Total Gain/Loss (%):				0.7%

Cramer Review

I went back to see what Cramer has said over this correction.

July 20th - "Today We Sell". In hindsight, a brilliant call. He did temper it by saying we'd still be at 14.500 by year-end. But I know I wish I had sold July 20th.

July 23rd - Safety in SanDisk. Cramer makes the argument that tech will be immune from downturn. Down about 10%, I think tech has been hit harder than Cramer intimated.

July 24th - "Pepsi Refreshing in Downturn". Superb call. Up about 3%. A rock in turbulent seas.

July 25th - "PC Cruisers, HP and DELL" Again, pretty good advice as they have not been trashed like MFI stocks.

July 26th - "Shelter from the Storm" He comments we're no where near the bottom. He recommends selling CFC (hard for him to do as I think he knows the CEO well). He also says to sell if company is almost entirely domestic and to sell if company is dependen on borrowing money. Again, he was quite correct.

July 27th - "Antidotes to Sell Off" Cramer listed good stocks for these tough times: PEP, K, NCX, SGP, CELG and EMC. Again all-in-all good advice. Finally BA and LMT. BA is off about 10% and LMT is down about 5%.

July 30th - "Doomesday Scenario" He says diversified portfolio for Doomsday is K, KMB, CELG, MHS and SLB. Again, pretty solid advice.

July 31st - "Wild About Defense". Mentions ATK, which is up about 3% since then.

Hangover

It seemed this afternoon that the market in general turned the corner. I do wonder if today was the bottom? Time will tell. It was not a great day for me, largely due to a hangover from TGB and CHCG. They were both down over 10% post earnings on Wednesday and they were both down over 10% today. Actually at one point TGB was down over 20%. That means that TGB went from $5.59 on August 8th to a low of $3.15 today. Blimey. I can't explain the CHCG meltdown either.

Someone noted that LMS got a buyout offer today. I know credit is a bit scarce, but some of these stocks are incredibly cheap and anyone with a wad of cash has to be thinking about going shopping.

Good debate on K&C this evening. Should the govt be doing something to diffuse the current credit crisis? If they do so, are they in essence bailing out hedge funds and mortgage lenders who took too much risk? Certainly there is a precedent, when LTCM had it's liquidity crisis they were bailed out by the fed as they were in the process of going hat in hand to King Greenberg and King Buffett. In addition, many S&Ls were bailed out after they made rashes of bad loans in the late 1980s. I think if they get bailed out, the govt has to attach some strings regarding investing by hedge funds. They use so much leverage that they place our economy at risk when things get rough. And perhaps the mortgage companies need some rules as well, or at the very least they need to pay the govt back (with interest) after the crisis passes.At least that is how I see it.

I am hoping for a good up day tomorrow. My graph has gotten beyond ugly. OTOH, Chicago has been great and I am having a relaxing summer vacation. On Saturday, we start the 2nd week of our vacation in the Rockies. The wealth effect (or reverse wealth effect) has my wife a bit worried. But I think we can still have a nice vacation.

Trifecta - A Bad Thing

Wow, I have to admit that I am getting a little distressed. My MFI portfolio in total is now up a mere 0.4% since I started investing in it February 2006. One doesn't like to use the word "crash" lightly (and I was investing in 1987) but this has at the very least been a mini-crash for the MFI stock world. No sign of it turning either as there seems to be an out-and-out panic in the credit markets. The good news (for me) is I am young (ish), making a decent salary, don't use margin and have no need of this money for another 20 years. So for the time being, I continue to sit it out - yes a little distressed, but certainly far from panicked.

I labelled this blog "Trifecta" beause I had three stocks report earnings last night and this morning and they all got trashed by the market today.

TGB - down 12.4%
USHS - down 8.4%
CHCG - down 12.8%.

I can almost understand the TGB drop. I really had gone up too quickly. While their earnings were ok, they didn't seem blow out as suggested by the stock run up.

The USHS drop was be-fuddling. They had dropped 50% from early June after their last earnings report. I thought perhaps the drop was fear that they had a bunch of bad debt from financing people. But that wasn't the case. Their earnings were down a bit, but not sure it justified any more than the 50% drop. Yet another 8% drop today.

CHCG announced earnings this morning (China 3C Group Reports Results for Q2 FY '07). I can't imagine that people were looking for much as the stock hasn't exactly been a pocket rocket. I thought the numbers were great:

• revenue up 125% Y o Y
• net income up 140% Y o Y
• Re-affirmation of 2007 guidance (0.50 to 0.54)

For these numbers, down almost 13%! Seems like a good buying opportunity to me at $6.40, but there are many other good buys right now. Ah, for a million dollars to invest!

Good night everyone!

2007 Moves into the Red

Well, this 200+ down day has placed my entire portfolio for 2007 officially into the red. My MFI portfolio was already in the red, but now as a whole I am there. The talking heads (besides Kudlow, the great optimist) suggest it may continue. Fisher call the market "the great humiliator" and I think we're all seeing that first hand (you don't have to read the book).

Earnings Update

TGB - announced earnings this evening (Taseko Announces Third Quarter Results for Fiscal 2007). They looked ok to me, not sure why their revenues were down, but earnings were up. The stock did trade down AH, but what do they know?

USHS - announced earnings after the bell. The stock is down about 45% since the prior quarter's earnings, so expectations must have been pretty low (U.S. Home Systems Reports Second Quarter 2007 Financial Results). They were basically down about 5% from last year. Considering the housing slowdown, not exactly a disaster. I'd look for this stock to recover by next summer... and I can wait.

HGG - This is a stock I added a couple of weeks ago (hhgregg, Inc. Announces Operating Results for the Fiscal Quarter Ended June 30, 2007). I thought their numbers were terrific. Revenues up 25% and 10 cents per share vs a 5 cent loss from a year ago. HGG sells high end consumer products (think home theater) and provides much more service than a Best Buy, so the have differentiation.

UNTD - announced they are spinning off their Classmates.Com (Will the Classmates.com IPO make the grade?). Not sure what that means to stock holders, I guess we don't get any shares of the spin-off. They were one of my stocks in the green, so I guess investors were pleased.

Finally, I'll just mentioned I started a new book today, "The World is Flat". It discusses how the world is changing as many jobs can be located anywhere, which means people in the US are competin with the Chinese and Indians for jobs. And from what I have read so far, the Indians and Chinese seem a lot more motivated than us. Stay tuned.

Upcoming Week

Well, I just read Barron's cover to cover. Not ordinary reading for me, but this wasn't an ordinary week. Overall gist was that tough sledding ahead remains. The editorial made some sense. Many people are pulling for the Fed to lower rates soon. But the editorial commented that this problem was caused by cheap credit and will not be solved with cheap credit. The front page had some Greenspan bashing. Basically saying that perhaps his best timing of all was wehn to retire, suggesting he kne he was leaving BB with a mess.

There was a real good article on quant funds. It suggested that many had similar approaches, including buying low p/e stocks and shorting high p/e stocks. Sound familiar? I don't know if that was the only cause of our crunch as some value indices were going up last week while MFI was dropping, but it could very well be that some quant funds were focusing specifically on MFI stocks, and using leverage. When margin calls came, they had to liquidate some positions.

A positive comment was in 13d filings. It appears that an activist fund is taking a position in KSW. Might be interesting to watch.

I see Korean and Japan are up early tomorrow (today for us). That is good to see.

MFI Stocks End Week on Uptick

Chicago (JG) - MFI investors rejoiced to see their stocks generally go up Friday! While the day started off very bleak, with the DJ futures down about 160 points in early trading the Fed injected some liquidity into the banking system and the DJIA ended the day only down 30 points. Compared with recent declines, that felt like an up-move.

A tracking portfolio of 50 stocks set up by blogger Marsh_Gerda went up 2.5% led by stocks such as
AXCA + 22%
DLX +20%
USMO +14%
LRW +13%
KG +9%
GIB, KFY +8%
FTO, IVAC, JAKK +7%

In Marsh_Gerda's personal portfolio UNTD went up 15% along with the nice gains from FTO & IVAC. But he was hurt by bad news from VPHM (ViroPharma Whacked by Data) which dropped 15%. He commented, "when VPHM dropped 20+% earlier this week, I toyed with doubling down on it. Thankfully I did not. This drop shows the perils of these smaller MFI stocks that are dependent on just a few sources of income and why diversification is important."

EGY released their earnings on Friday morning (VAALCO Energy Announces 2nd Quarter 2007 Results). Marsh_Gerda was unimpressed. "Their YoY income continues to drop sharply. Unless EGY announces a new source of oil in the next 6 months, this is a dead stock. However, I am unsure how it could go much lower."


Marsh_Gerda also shared his chart of current holdings along with individual performance:

Current Portfolio
Stock	Purchase Date	Cost	Current	Gain
TGB	4/16/2007	$2.64	$4.79	81.4%
ASEI	10/5/2006	$45.85	$66.09	44.1%
BBSI	9/6/2006	$19.56	$25.94	33.7%
FDG	3/8/2007	$25.45	$30.09	20.6%
VALU	5/29/2007	$44.01	$51.45	17.6%
LRCX	7/3/2007	$47.51	$55.04	15.9%
CHCG.OB	6/5/2007	$6.10	$6.75	10.7%
THO	3/26/2007	$40.30	$44.07	9.5%
DGX	3/17/2007	$52.11	$55.96	7.8%
NXG	12/20/2006	$3.04	$3.23	6.3%
WNR	7/27/2007	$53.64	$55.67	3.8%
CHKE	7/17/2007	$36.70	$37.65	2.6%
FTO	1/10/2007	$35.16	$35.95	2.4%
VSNT	7/27/2007	$19.52	$19.77	1.3%
KSWS	7/27/2007	$23.94	$24.22	1.2%
KSW	5/10/2007	$6.48	$6.55	1.1%
JTX	4/9/2007	$28.70	$28.72	0.5%
WSTG	5/15/2007	$14.98	$14.75	0.2%
HGG	8/3/2007	$13.48	$13.41	-0.5%
RAIL	2/16/2007	$45.54	$45.17	-0.7%
WPCS	6/18/2007	$11.89	$10.96	-7.8%
TGIS	11/30/2006	$9.18	$8.31	-8.4%
PNCL	2/9/2007	$17.07	$15.51	-9.1%
UNTD	5/1/2007	$14.51	$12.67	-11.7%
AEO	7/10/2007	$28.42	$22.63	-20.0%
SHOO	1/17/2007	$32.36	$25.86	-20.1%
UG	6/13/2007	$12.09	$9.08	-24.9%
PACR	1/3/2007	$28.26	$20.28	-27.2%
VPHM	9/11/2006	$12.11	$8.70	-28.1%
NOOF	4/27/2007	$8.59	$6.01	-28.6%
GVHR	4/3/2007	$19.17	$12.85	-32.0%
EGY	12/13/2006	$6.42	$4.25	-33.8%
USHS	6/25/2007	$11.22	$7.14	-36.3%
HW	12/27/2006	$24.00	$15.18	-36.8%
IVAC	11/23/2006	$23.52	$14.17	-39.8%
Grand Total	1/0/1900	$823.51	$818.86	-105.3%
Gain/Loss Open Positions ($):				######
Gain/Loss Open Positions (%):				-4.0%
Gain/Loss Closed Positions ($):				$45,723
Gain/Loss Closed Positions (%):				10.4%
Total Gain/Loss ($):				$21,577
Benchmark Gain/Loss ($):				$44,399
Annual IRR:				4.6%
Total Gain/Loss (%):				3.8%