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February, 2009: 1 17

Disclaimer - IMPORTANT - Read this first!

Investor's Journal is a diary focused strictly on investments and personal finance issues, primarily from a contrarian and retiree point of view. Follow along with an average guy's failures and successes as he learns, by trial and error, the fine art of value investing.

My top-ten equities for mention today are: BRK/A (BRK/B); CIR; ESV; GIFI; ISIL; LUFK; MUR; SYNL; TDW; and TIE.

The focus this time is on a new Classic Value (CV) selection, Synalloy Corp. (SYNL) (recent price $5.48). SYNL's trailing price to earnings ratio is just 4.50. The forward P/E is estimated at 3.73. The PEG ratio is only 0.28. The asset's market-capitalization size is nano-cap: $34.23 million. Synalloy Corp. has a 4.60% dividend, with a dividend payout ratio of 0.20. The price to sales ratio is 0.18. SYNL's price to book value is very low, at 0.52. The shareholders equity to total assets ratio is 0.59. There is positive free cash flow, with a price to cash flow of only 3.30. Return on equity is 12.71%. Debt to equity is 0.21. The current ratio is 2.88. This stock has a healthy dividend and low P/E, P/CF, P/Bk, D/E and PEG ratios in its favor. It meets Benjamin Graham's bargain stock safety and value criteria.

Synalloy Corp. will be added to our CV tracking portfolio, as well as our own nest egg, at its early market price on Monday, 2/2/09.

2/17/09-Since the last entry, our Classic Value (CV) pick, TRCI, purchased on 2/11/08, has been held over a year. It will be sold later this morning at the early market price (Tuesday, 2/17/09). It will then be removed from the CV open positions portfolio, and its closed position info recorded, based on the 2/11/08 to 2/17/09 per share performance. Through the close of trading on 2/13/09, after subtracting a commission (while not counting any dividends), TRCI had been down 36.92% in the past 12(+) months. Grown! I am really getting tired of all these stocks that have gone south, but that's the nature of this investment beast. Every now and then everything seems to go to hell. Fortunately, a strategy of increasing one's book value regardless of what the market is doing compensates well for such outlier years.

My top-ten equities for mention today are: BRK/A (BRK/B); BJS; CDI; CIR; ESV; GIFI; HCC; MEI; SYNL; and TIE.

The focus this time is on a new Classic Value (CV) selection, CIRCOR International, Inc. (CIR) (recent price $22.34). CIR's trailing price to earnings ratio is just 6.20. The forward P/E is estimated at 7.76. The PEG ratio is 0.69. The asset's market-capitalization size is micro-cap: $377.43 million. CIRCOR International, Inc. has a 0.70% dividend, with a dividend payout ratio of 0.04. The price to sales ratio is 0.49. CIR's price to book value is low, at 0.80. The shareholders equity to total assets ratio is 0.63. There is positive free cash flow, with a price to cash flow of only 5.00. Return on equity is 13.91%. Debt to equity is 0.05. The current ratio is 2.00. This stock has low P/E, P/CF, P/Bk, and D/E ratios in its favor. It meets Benjamin Graham's bargain stock safety and value criteria.

CIRCOR International, Inc. will be added to our CV tracking portfolio, as well as our own nest egg, at its early market price later this morning (2/17/09).

Mainly to raise cash, in anticipation of a still more severe market swoon, a type of market timing I usually avoid like the proverbial plague but which last September and early October, as I was hearing reports of a potential collapse of our banking system, and then of the economy as a whole shortly after, I thought might be best after all, in the early weeks of the massive correction last fall I sold off most of my profitable holdings, including things like BRK/B, which I had held for years, plus a smattering of losers to offset the taxable gains from the first batch. In all, there were well over $300,000 sold, involving some 40+ assets.

BRK/B, for instance, was sold at $4500 and just over $4100, in two fairly large (for me) trades. It recently has been quoted below $2900, about two-thirds or less of its market value in the late summer and early fall of 2008. So I have been buying it back. I believe its intrinsic value is generally regarded as at least $4500 even in the current market, so at around $2880 lately, it seems to be a B. Graham bargain itself. Please do not take my word for it, but research it yourself. In my opinion, though, it is likely to turn out to be a big winner for long-term investors at this kind of price.

But all that selling made for more than the usual record keeping and entries into my Quicken software. About $240,000 of the sold assets were in taxable accounts. Over this past weekend, I finally finished all the Quicken entries for the sales plus the buys (having gotten behind somewhere along the line during the panic that had ensued in late October through the end of the year).

I compared the total short-term plus total long-term proceeds with the comparable totals from our three taxable account 1099 statements and prepared myself for the usual headache of trying to bring the two into line with numerous recalculations, considerations of the implications of corporate name changes, spin-offs, cash-in-lieu income, and all the rest of it that normally occurs in any 12-month period. But, as luck would have it, though my Quicken total figure was off from that of the brokerages, it was only askew by two cents. Try as I might, I did not locate the last couple pennies of difference.

Of course, I did not really worry about them for very long. As my wife, Frances, who is smarter than I, put it on hearing a cheer and coming to find out why I was celebrating, those were just the two cents I had spent in 2008 giving people the benefits of my unsolicited advice, my "two cents worth."

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