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June, 2005: 1 7 12 19 26

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.

The average holding period in the tracked portfolios has been about 4 months vs. around twice that for the S&P 500 Index's hypothetical holding period since the beginning of the contest, so the index's apparent outperformance may be misleading.

For this week, the new selection will be added (at the market price early in tomorrow's stock trading session) to the Leapin' Lizards tracking portfolio. There are only two candidates that meet the LL buy criteria this time: CELL and TARG.

My choice among them is Brightpoint, Inc. (CELL) (recent price $19.25). CELL has a market-cap of $348.74 million, a P/E of 17.54, a price to sales ratio of only 0.19, a price to book value ratio of 2.31, positive free cash flow, no dividend, a return on equity of 13.81%, a current ratio of 1.36, and a debt to equity ratio of just 0.03. CELL is down 3.74% for the year so far, but up 55.75% relative to the S&P 500 Index over the past 52 weeks.

Meanwhile, in our total nest egg, things have improved, and the portfolio would be down just $1818 for the year to date, or .27%, but for a YTD excess of retirement expenses over income of $12,582. Net of those expenditures, the total portfolio's NAV is down 2.2% for 2005.

Our book value is on target, with total equities' price to book now standing at a comfortably low 1.36.

While only two new assets currently meet the Leapin' Lizards criteria, I continue to find other attractive stocks. Among them are: CREE; FWHT; MVSN; and RE.

6/7/05-Since the 10/4/04 inception of our Leapin' Lizards vs. Classic Value portfolios experiment, the Leapin' Lizards (LL) are now up 3.83%, Classic Value (CV) is up 6.19%, an initial buy-and-hold investment in the S&P 500 Index has appreciated 5.74% (all statistics as of the close of trading today), and a 50/50 combination of the LL and CV portfolios (which hypothetically provides both safety and good growth potential) would have gone up 5.01%. (The comparisons are based strictly on price appreciation, which excludes dividends, though commissions have been subtracted from the portfolio results & not from the S&P 500 Index record.)

The average holding period in the tracked portfolios has been about 4.1 months vs. around twice that for the S&P 500 Index's hypothetical holding period, since the beginning of the contest.

For this week, the new selection will be added (at the market price early in tomorrow's stock trading session) to the Classic Value tracking portfolio. The final candidates are: CVX; IPS; MHO; OUTL; and PROG.

My choice among them is Programmer's Paradise (PROG) (recent price $9.90). PROG has a market-cap of $39.51 million, a P/E of 6.80, a price to sales ratio of only 0.35, a price to book value ratio of 2.34, positive free cash flow, a 4.80% dividend (with a dividend payout ratio of 25.85%), a return on equity of 37.30%, a current ratio of 1.78, and a debt to equity ratio of 0.00. On more than one measure, PROG meets the statistical criteria for a Benjamin Graham value asset.

6/12/05-Since the 10/4/04 inception of our Leapin' Lizards vs. Classic Value portfolios experiment, the Leapin' Lizards (LL) are now up 3.62%, Classic Value (CV) is up 6.48%, an initial buy-and-hold investment in the S&P 500 Index has appreciated 5.83% (all statistics as of the close of trading today), and a 50/50 combination of the LL and CV portfolios (which hypothetically provides both safety and good growth potential) would have gone up 5.05%. (The comparisons are based strictly on price appreciation, which excludes dividends, though commissions have been subtracted from the portfolio results & not from the S&P 500 Index record.)

The average holding period in the tracked portfolios has been about 4.2 months vs. around twice that for the S&P 500 Index's hypothetical holding period, since the beginning of the contest. (On an annualized basis, CV would be up about 19.6% while the S&P 500 would be up roughly 8.4%.)

For this week, the new selection will be added (at the market price early in tomorrow's stock trading session) to the Leapin' Lizards tracking portfolio. Only one new candidate was found that meets the Leapin' Lizards criteria: SGR.

Accordingly, my choice this time is The Shaw Group, Inc. (SGR) (recent price $21.26). SGR has a market-cap of $1.65 billion, a P/E of 32.21, a price to sales ratio of only 0.40, a moderate price to book value ratio of 1.51, positive free cash flow, no dividend, a return on equity of 4.67%, a current ratio of 1.39, and a debt to equity ratio of 0.31. The asset has appreciated 19.10% thus far in 2005 and 67.71% relative to the S&P 500 Index over the last 52 weeks. Though SGR meets our minimum criteria for inclusion in the LL tracking portfolio, it does not offer much else of appeal. Thus, in our own nest egg we'll not be adding shares of this asset.

Despite the meager Leapin' Lizard offerings, I find several other securities attractive at current prices: BRK/A; BRK/B; DUCK; HD; and RE.

6/19/05-Since the 10/4/04 inception of our Leapin' Lizards vs. Classic Value portfolios experiment, the Leapin' Lizards (LL) are now up 7.25%, Classic Value (CV) is up 10.88%, an initial buy-and-hold investment in the S&P 500 Index would have appreciated 8.30% (all statistics as of the close of trading on 6/17/05), and a 50/50 combination of the LL and CV portfolios (which hypothetically provides both safety and good growth potential) would have gone up 9.07%. (The comparisons are based strictly on price appreciation, which excludes dividends, though commissions have been subtracted from the portfolio results & not from the S&P 500 Index record.)

The average holding period in the tracked portfolios has been roughly 131 days vs. around twice that for the S&P 500 Index's hypothetical holding period, since the beginning of the contest. (On an annualized basis, a 50/50 investment in the LL and CV portfolios would be up about 27.4% while the S&P 500 would be up roughly 11.7%.)

For this week, the new selection will be added (at the market price early in tomorrow's stock trading session) to the Classic Value tracking portfolio. The top candidates are: BNSO; MGP; MRI/A; OUTL; and WLC.

My choice this time is Outlook Group Corp. (OUTL) (recent price $8.35). OUTL has a market-cap of $28.26 million, a P/E of just 9.20, a price to sales ratio of only 0.39, a low price to book value ratio of 0.86, positive free cash flow, a 2.90% dividend (with a dividend payout ratio of 23.00%), a return on equity of 9.73%, an operating margin of 6.96%, a current ratio of 3.20, and a debt to equity ratio of merely 0.07. At its current price, OUTL appears to meet Benjamin Graham's value and safety criteria as a bargain asset.

6/26/05-Since the 10/4/04 inception of our Leapin' Lizards vs. Classic Value portfolios experiment, the Leapin' Lizards (LL) are now up 6.15%, Classic Value (CV) is up 7.77%, an initial buy-and-hold investment in the S&P 500 Index has appreciated 5.30% (all statistics as of the close of trading 6/24/05), and a 50/50 combination of the LL and CV portfolios (which hypothetically provides both safety and good growth potential) would have gone up 6.96%. (The comparisons are based strictly on price appreciation, which excludes dividends. Commissions have been subtracted from the portfolio results and not from the S&P 500 Index record.)

The average holding period in the tracked portfolios has been roughly 135 days vs. around twice that for the S&P 500 Index's hypothetical holding period, since the beginning of the contest. (The significance of the mean holding period difference is more apparent on a projected or annualized performance basis: a 50/50 investment in the LL and CV portfolios would be up at an annualized rate of 19.97%, while the S&P 500 would rise roughly 7.24%.)

For this week, the new selection will be added (at the market price early in tomorrow's stock trading session) to the Leapin' Lizards tracking portfolio. Once again, only one new security was found that meets our criteria for Leapin' Lizards: AFAM.

My selection, then, is: Almost Family, Inc. (AFAM) (recent price $13.45). AFAM has a market-cap of $31.19 million, a P/E of 27.45, a price to sales ratio of only 0.38, a price to book value ratio of 2.23, positive free cash flow, no dividend, a return on equity of 12.40%, a current ratio of 1.52, and a debt to equity ratio of 0.26. The asset has gone down 8.69% thus far in 2005 but is up 53.90% relative to the S&P 500 Index over the last 52 weeks.

As usual, in spite of the scarcity of qualifying Leapin' Lizards assets, I continue to find attractive stocks to buy, including: AEG; BRK/A; BRK/B; HD; NFB; and NUE. Over the next few years, I think it reasonable to expect that a portfolio of these assets, if an equal amount were invested in each, would have a superior total return to the same total investment in the S&P 500 Index. (However, I encourage the reader to do his or her own research, and/or to check with a financial consultant, before making any investments.)

Thus far this year, in our own nest egg, the net asset value, before necessary draw downs for an excess of expenses over income, is up (through 6/24/05) by 0.6%. However, after using $14,374 from the portfolio to cover those expenses, we are down 1.6% to date in 2005. In the same period, the S&P 500 Index is down about .7%, including dividends. Our book value tally remains on target, giving us a comfortably conservative total equity price to book value ratio of 1.4, roughly half that of the S&P 500 Index.

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