Week 16 Results - up 0.58%

Week 16 YTD Since Inception

Dow -0.5% 3.22% 5.1%

S&P 0.1% 3.29% 5.7%

NASDAQ 0.2% 3.72% 5.4%

LiveRocket 0.58% 8.58% 19.5%

The key here was growth in our existing stocks and some new picks that are already moving up. These stocks moved up while the DOW dipped or was flat. Those are the stocks we like.

An interesting thing to note is that our basic stocks (ET, GHL, JLG, GRP, TIE) significantly outperformed the Dow.

It was a short week. Here’s a re-cap of our week’s performance.

FINANCIALS
Investors have an appetite for the market again and are driving business to brokerages. Again, I think this has a lot to do with a stable market seeming attractive as well as housing market woes – folks want to put their money somewhere as they dump housing.
ET – A nice 2% rise for the week. Almost at 52 week high AND on strong volume
GHL – A nice 3.5% rise since we bought this week. A 52 week high today.

COMMODITIES & EQUIPMENT
JLG – Up 1.5% for the week. But what a week. Dividend was increased, stock split announced, and earnings were fantastic. The stock hit a new 52 week and they raised guidance for 2006.
Sales up 40% (beating expectations by 9%)
Earnings up 300% (beating expectations by 9%)
Margins continue to rise sequentially (from 19.86% to 20.2%) and Y/Y (from 15.3%)

GRP – Up 2% for the week, but we lost 1% compared to our buy-in price. I continue to be amazed at the bargain here, but didn’t want to fight the market pullback. The stock has corrected ~15% in just 2 weeks and has bottomed out. Meanwhile, sales continue to surge. The market is crazy. This stock is following oil stocks almost exactly (plot against CHK for the past 5 days and you’ll see). I don’t like that – it should be less volatile than oil stocks.

TIE – A healthy 6%+ ride this week. An article pointing out titanium shortages helped.

HI TECH
STX – A 6%+ DROP. I don’t like the weakness and I don’t see what is causing it. There was a scheduled sale of 150,000 shares (which might have triggered some automatic dumping by institutions that dump when insiders sell). If it’s resting before the next quarter, it will bounce around $25. If it’s pulling back, $24 is our limit. Could be high tech sector rotation – the stock did climb ~25% in 7 weeks.

MRVL – Flat for the week but we are down 2% since buying yesterday. MRVL had a fantastic quarter, but it basically just met extremely high expectations (unlike BRCM which beat them handily). They also announced a stock split.
Sales up 44%
Earnings almost doubled Y/Y
Margins grew and will continue to grow nearly 3% to 55%.
Margins and tight demand are responsible for earnings outpacing sales.
Marvell expects more growth (possibly as high as 40%). While I was disappointed that they did not beat the earnings expectations more, I still think that this stock is incredibly undervalued.
The market is giving them a 45 P/E which is fair for a company growing ~40% per year going forward. It they hit Q1 target EPS of $0.44, the EPS will be $1.55, making them a $70 stock.
Accelerating earnings. From 14.8% sequential earnings growth in Q2 to 16.7% sequential earnings growth in Q4.

My primary concern is that they did not see as steep an earnings growth curve as Braodcom even though they are in hotter markets. The earnings were driven by stronger margins, which is great. But I would have expected much higher sales thanks to iPOD business.

TRID – Another new buy this week. Flat for the week but down 1.7% since we bought in. TRID will be affected by overall semiconductor sentiment and fears that it is overpriced. That’s fine – it depresses the stock for anyone looking to buy in. They have a 75 P/E today, and a 51 P/E if they hit expectations next quarter. As with other chip companies, they are being given a 40 forward P/E.
However, I could see a rapid ramping up of sales in the spring as companies begin to prepare for holiday TV buying and new models.

HEALTH
NTRI – Thank you for an excellent report. Up 10% for the week. I won’t repeat myself, but the results were amazing and reduced our paper loss to 10%. In 6 months the P/E will be ~30 at projected earnings.

STOP LOSS
ET - $23
GHL - $62
JLG - $52
STX - $24
GRP - $40
TIE - $39
TRID - none
MRVL - none
NTRI - none