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March, 2007: 3 10 17 23 30 31

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: AE; AGYS; BRK/A (BRK/B); EME; INXI; PCCC; STRA; SYX; TESS; and VOL.

The focus for the current entry is on a new Leapin' Lizards (LL) selection, Agilysys, Inc. (AGYS) (recent price $20.91). AGYS' trailing price to earnings ratio is 16.97. The asset's market-capitalization size is micro-cap: $644.91 million. Agilysys, Inc., has a small (0.60%) dividend. The dividend payout ratio is 0.10. The price to sales ratio is just 0.37. AGYS' price to book value is below average at 1.54. There is positive free cash flow. Return on equity is 9.62%. Debt to equity is 0.00. The current ratio is 1.40. The stock price is up 44.71% in the past 52 weeks. The asset has low price to sales, low debt, and above average momentum in its favor.

Agilysys, Inc., will be added to our LL tracking portfolio at its market price as of early on Monday, 3/5/07.

3/10/07-Since the prior entry, our Leapin' Lizards (LL) pick, EME, has been held over a year, and so it will be sold at the early market price Monday morning, removed from the LL open positions portfolio, and its closed position info recorded based on the 3/9/06 to early 3/12/07 per share performance. Through the close of business 3/9/07, after subtracting a commission (while not counting any dividends), EME has been up 39.63% in the past 12(+) months.

My top-ten equities for mention today are: ACE; AFG; BER; PD; PTEN; ROCM; TDW; URGI; X; and XL.

The focus for the current entry is on a new Classic Value (CV) asset, Tidewater, Inc. (TDW) (recent price $53.79). TDW's trailing price to earnings ratio is 9.21. The asset's market-capitalization is mid-cap: $3.00 billion. Tidewater, Inc., has a small (1.10%) dividend, with a dividend payout ratio of 0.10. The PEG ratio is 0.24. The price to sales ratio is 2.77. TDW's price to book value is 1.67. There is positive free cash flow. Return on equity is 19.72%. The shareholder equity to total assets ratio is 0.70. Debt to equity is just 0.17. The current ratio is 4.81. TDW is up 8.36% in the past 52 weeks. This stock has low P/E and low debt in its favor. It meets Ben Graham value and safety criteria as a bargain stock.

Tidewater, Inc., will be added to our CV tracking portfolio (and our actual nest egg portfolio) at its market price as of early trading on Monday, 3/12/07.

3/17/07-Since the prior entry, there have been not been any open positions held for a year or more, so no sales are currently appropriate.

My top-ten equities for mention today are: ABM; AE; AGYS; BRK/A (BRK/B); INT; RAIL; SYX; TESS; WSTF; and ZONS.

The focus for the current entry is on a new Leapin' Lizards (LL) asset, Westaff, Inc. (WSTF) (recent price $5.72). WSTF's trailing price to earnings ratio is 24.24. The asset's market-capitalization size is nano-cap: $95.00 million. Westaff, Inc., has no dividend. The price to sales ratio is only 0.16. WSTF's price to book value is below average at 1.40. There is positive free cash flow. Return on equity is 6.11%. Debt to equity is low at 0.12. The current ratio is 1.88. The shareholder equity to total assets ratio is 0.49. WSTF is up 44.08% in price over the past 52 weeks. The stock has low price to sales, low debt, and moderate momentum in its favor. Based on its low debt and P/S ratio, there has also been speculation about its being a takeover candidate.

Westaff, Inc., will be added to our LL tracking portfolio at its market price as of early on Monday, 3/19/07.

3/23/07-Since the prior entry, our Classic Value (CV) pick, EMCI, has been held over a year, and so it will be sold at the early market price Monday morning, removed from the CV open positions portfolio, and its closed position info recorded, based on the 3/23/06 to early 3/26/07 per share performance. Through the close of trading on 3/23/07, after subtracting a commission (while not counting any dividends), EMCI has been down 3.07% in the past 12(+) months.

My top-ten equities for mention today are: ACE; AFG; ASPV; AVTR; EDUC; PRE; RNR; ROCM; TGIS; and URGI.

The focus for the current entry is on a new CV selection, PartnerRe Ltd. (PRE) (recent price $69.89). PRE's trailing price to earnings ratio is quite low at 5.65. The asset's market-capitalization size is mid-cap: $3.99 billion. PartnerRe Ltd. has a 2.50% dividend. The dividend payout ratio is 0.13. The price to sales ratio is low, at 0.94. PRE's price to book value is also well below average, at 1.05. There is positive free cash flow. Return on equity is 21.79%. Debt to equity is 0.23. The current ratio is 2.39. The stock has low price to earnings, low debt, and an above norm dividend in its favor. It meets Ben Graham value plus safety bargain stock criteria.

PartnerRe Ltd. will be added to our CV tracking portfolio (and our actual nest-egg portfolio) at its market price as of early on Monday, 3/26/07.

3/30/07-I'll be adding another entry over the weekend with the next stock pick and related information.

Here is the performance summary for the tracked portfolios, through the first quarter of 2007:

(The statistics combine open and closed portfolio position results and cover the period from 10/4/04 through the close of trading today, 3/30/07. Dividend income has not been included in the above portfolio performances. Commissions, though, have been subtracted from the tracked portfolio results, but not from the SPX gains.)

( *since inception, 10/4/04)
(**SPX is used as a proxy for the S&P 500 Index.)

Observations about the portfolios so far:

• The annualized total return figures, i.e. including dividends, would again also show the two main tracked portfolios to be fairly comparable in their results. The average dividend of the CV assets was about twice that of the LL assets. Including the yield (while still subtracting the commissions) provides an annualized total return, through the roughly 2.5 year period of the tracked portfolio competition, of about 19.3% for the Leapin' Lizards and 20.2% for the Classic Value stocks. Both sets of results are a little lower this time, thanks to the recent market correction.

• The 50/50 CV/LL Blend's annualized total return is thus estimated, given the figures through 3/07, at about 19.7%, still around twice that of a long-term hold investment in the S&P 500 Index (with dividends) begun on 10/4/04.

• The 50/50 CV/LL Blend's combined closed positions since inception now number 75. Reflecting more volatile markets lately, 26 of these turned out to be losing stocks in the periods they were held, while there were 49 winners. The win to loss ratio was thus down somewhat since the just prior quarterly analysis, from 2.10 then to 1.88 now. The losers are currently 34.67% of the closed positions total. In other words, slightly more than 1/3 of the suggested stocks held until merged, bought out, or kept for at least a year and a day (my usual sell point) lost the investor money, but nearly 2/3 of the stock purchases would have resulted in net gains.

• Since both the LL and the CV assets continue to be proving their worth, to lower overall portfolio risk while retaining good average total return potential, as yet I would recommend that investors who are following my Leapin' Lizards and Classic Value approach invest half their equity funds in the LL stocks and half in those chosen using CV criteria.

• Because there is always the possibility of unforeseen developments spooking the stock market and causing substantial losses in paper value to one's nest egg, I caution that it seems best to maintain a reserve of short-term, cash equivalent assets. The individual may vary the percentage of total financial assets set aside in this way. My own preference is to begin with 1/3 in such reserves and two-thirds in equities, then to rebalance if there is more than a 5% shift in the relative valuations due to market strength or weakness.

• With careful selection, it should now be possible to obtain a roughly 5% or better combined annual return on relatively safe assets to be held in the certificate of deposit, short-term bond, money market account, or other cash equivalent reserves overall asset category. If one's assets of this type average around 1/3 of the portfolio, if 2/3 are devoted to a 50/50 blend of CV and LL holdings, and if the portfolios' performances to date were to prove the norm, the resulting nest egg should be relatively secure, certainly safer than a 100% investment in the S&P 500 Index, for instance, and yet one's total return would be roughly 15% a year overall, significantly better than that of the major market averages.

• I caution, however, that with so far only about two and a half years' experience, there is as yet too little data to say with assurance that this will be the probable outcome. It is still true that the best we may definitely say is that the results continue to be encouraging.

3/31/07-Since the prior entry, our Leapin' Lizards (LL) pick, ZEUS, has been held for a year, and so it will be sold at the early market price Monday morning, removed from the LL open positions portfolio, and its closed position info recorded, based on the 3/31/06 to early 4/2/07 per share performance. Through the close of trading on 3/30/07, after subtracting a commission (while not counting any dividends), ZEUS has been up 0.57% in the past (nearly) 12 months.

Also since the prior entry, our Classic Value (CV) pick, CVX, has been held over a year, and so it too will be sold at the early market price Monday morning. It will be removed from the CV open positions portfolio, and its closed position info recorded, based on the 3/30/06 to early 4/2/07 per share performance. Through the close of trading on 3/30/07, after subtracting a commission (while not counting any dividends), CVX has been up 24.50% in the past 12(+) months.

My top-ten equities for mention today are: ABM; AGYS; BRK/A (BRK/B); RAIL; ROCM; TESS; WNR; WSTF; ZONS; and ZUMZ.

The focus this time is on a new Leapin' Lizards (LL) selection, ABM Industries, Inc. (ABM) (recent price $26.39). ABM's trailing price to earnings ratio is 13.36. The asset's market-capitalization size is small-cap: $1.29 billion. ABM Industries, Inc., has a 1.80% dividend and a dividend payout ratio of 0.22. The price to sales ratio is only 0.47. ABM's price to book value is 2.32. There is positive free cash flow. Return on equity is 19.00%. Debt to equity is 0.00. The current ratio is 2.15. The shareholder equity to total assets ratio is 0.53. ABM's share price is up 37.66% in the past 52 weeks. The stock has low price to sales, low debt, and moderate upward momentum in its favor.

ABM Industries, Inc., will be added to our LL tracking portfolio (as well as to our personal nest egg) at its market price early on Monday, 4/2/07.

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