"There are two times in a man's life when he should not speculate
- when he can't afford it and when he can."  - Mark Twain


New @ StingyInvestor


MoneySense Top 200 Summer Update
http://list.canadianbusiness.com/rankings/top200/2008/Default.aspx?sp2=1&d1=a&sc1=0
"For most of us, picking stocks is as tricky as ordering a
seven-course dinner at a swanky new restaurant. Lots of items on the
menu sound appetizing, but that's where our knowledge ends.
Rather than simply point and hope, smart diners look for an expert
opinion on the restaurant's offerings. To provide smart investors
with a similar scouting report, we're pleased to present you
with our candid take on all of Canada's largest stocks. We've
worked hard to produce a rating system that's easy to use, logical,
and appealing to all types of investors. We think the Top 200
provides you with a more objective look at large Canadian stocks
than you're likely to find from any other single source. If you're
looking for a sensible take on any large Canadian stock, you'll
find the Top 200 to be an invaluable way to generate promising
investment ideas."


Stingy Links
http://www.stingyinvestor.com/SI/articles/articlearchive.shtml

Dividends start to crumble
http://www.washingtonpost.com/wp-dyn/content/article/2008/07/04/AR2008070400085.html
"If you look at dividend payouts in the past 12 months, there has
been a 9.73 percent increase overall, Silverblatt said. Still,
that's less than the rate the payouts rose from 2004 to 2007.
Each of those years, dividend increases exceeded 11 percent, he
said. Many companies are now decreasing the rate at which they
increase their dividends." [How to turn 9.73 percent growth into an
alarming headline.]

Market turmoil? It doesn't rattle Warren
https://secure.globeadvisor.com/servlet/ArticleNews/story/RTGAM/20080704/wstmain0705
"This week's market turmoil might make you feel nauseous but it
makes Warren Buffett giddy - or more so at least. Back in
February, while on a visit to Toronto, Mr. Buffett told an audience
that he was '370 points giddier,' referring to a drop in the Dow
Jones industrial average. He added that he wasn't quite elated
yet. 'Things are not ridiculously cheap.' The index is 1,000 points
lower today from back then, so presumably Mr. Buffett is closer
to giddiness than he was six months ago. Wouldn't it be nice to
enjoy markets that roil and plunge like he does? If you
invested like Mr. Buffett, you would."

Bear market freak out
http://money.cnn.com/2008/06/30/pf/ask_the_mole.moneymag/index.htm?postversion=2008070109
"When it comes to investing, human nature is not our friend, and
will consistently lead us to do the wrong thing at the wrong
time. The chart to the right shows how investor funds have flowed
into stock mutual funds so far this decade. Notice how we poured
money into the stock market after the great years and panicked
and sold after declines. A clear pattern of buying high and
selling low, something I'm pretty sure investors didn't consciously
set out to do."

Mutual fund flows and investor returns
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=957728
"We examine the timing ability of mutual fund investors using
cash flow data at the individual fund level. Over 1991-2004 equity
fund investor timing decisions reduce fund investor average
returns by 1.56% annually. Underperformance due to poor timing is
greater in load funds and funds with relatively large
risk-adjusted returns. In particular, the magnitude of investor
underperformance due to poor timing largely offsets the risk-adjusted alpha
gains offered by good-performing funds. Investors in both
actively managed funds and index funds exhibit poor investment timing.
We demonstrate that our empirical results are consistent with
investor return-chasing behavior."

Superstar CEOs
http://www.econ.berkeley.edu/%7Eulrike/Papers/SuperstarCEOs_15jun2008.pdf
"Compensation, status, and press coverage of managers in the U.S.
follow a highly skewed distribution: a small number of
.superstars. enjoy the bulk of the rewards. We evaluate the impact of
CEOs achieving superstar status on the performance of their firms,
using prestigious business awards to measure shocks to CEO
status. We find that award-winning CEOs subsequently underperform,
both relative to their prior performance and relative to a
matched sample of non-winning CEOs. At the same time, they extract
more compensation following the award, both in absolute amounts and
relative to other top executives in their firms. They also
spend more time on public and private activities outside their
companies, such as assuming board seats or writing books. The
incidence of earnings management increases after winning awards. The
effects are strongest in firms with weak governance, even though
the frequency of obtaining superstar status is independent of
corporate governance. Our results suggest that the ex-post
consequences of media-induced superstar status for shareholders are
negative."

British house prices fall
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/01/bcnnation201.xml
"House prices in Britain have fallen at their fastest annual rate
for 16 years, new figures show. Average property values in June
stood 6.3pc cent lower than a year before - the biggest such
drop since the 1990s crash, the Nationwide building society said."

My $650,100 lunch with Warren Buffett
http://www.time.com/time/business/article/0,8599,1819293,00.html
"What would you pay to have lunch with the richest man in the
world? For me and Mohnish Pabrai - a friend who, like me, runs a
U.S.-based investment fund - the answer is $650,100. That's how
much we forked over for the privilege of dining with Warren
Buffett on June 25."

The new economics and the pursuit of happiness
http://www.tnr.com/story_print.html?id=3bc0e959-3b4e-440d-9b99-69078429b82c
"The revolution begun by Kahneman and Tversky is now some three
decades old, and it is generating excitement well beyond the
borders of academe--and so this is a good time to examine whether it
has lived up to its promise. Bruno S. Frey's Happiness and Dan
Ariely's Predictably Irrational together offer a fine occasion
to begin such a reckoning. Not all the revolutionaries in
economics are discussed by Frey; the media star Levitt does not even
make an appearance. Ariely, who teaches at MIT, helps to fill in
the picture. Like Levitt, he has climbed the best-seller list
with some of the most counterintuitive findings of behavioral
economics. One is dry and humorless, the other is sprightly and
inviting, but between them these books offer an overview of what this
new economics is all about, and enable us to evaluate whether
it is as innovative as its adherents claim."

The Robot stalls
http://www.thestar.com/Business/Investing/article/452201
"Each stock we chose early in January had a market value of at
least $500 million. They all had announced more than a penny of
profit per share in the latest 12-month period. They had more
shareholder equity than debt, and a low share price relative to
earnings. We chose the cheapest stocks without having more than one
in a particular industry sector."

Seth Klarman interview
http://www.iimagazine.com/Article.aspx?ArticleID=1962261
"Seth Klarman is nobody.s idea of a fast-buck, quick-change
investor. Since helping to found Boston-based Baupost Group in 1982
with $27 million pooled from four families, he has emulated
prototypical value-investment role models like Warren Buffett and the
late Benjamin Graham. He buys underpriced equities and
securities of bankrupt or distressed companies and usually steers clear
of leverage and shorting, though last year he made very
profitable investments in credit protection and recorded his best-ever
annual return (52 percent)."

What we value
http://www.kiplinger.com/magazine/archives/2008/07/discovering_value.html
"A final reason for the dearth of value investors is the human
desire to be part of the crowd. If you didn't own Internet stocks
during the late 1990s, not only did you suffer lousy returns,
but you also felt excluded. As Montier points out, "Contrarian
strategies are the investment equivalent of seeking out social
pain." That's not easy to do."

Roses among the wallflowers
http://www.nytimes.com/2008/06/29/business/yourmoney/29stra.html
"Consider two hypothetical portfolios the researchers put
together. The first owned just those stocks that traded each market day
of the previous year, while the second held those stocks that
had at least one no-trade day. From the beginning of 1962 through
2003, according to the researchers. calculations, the second
portfolio outperformed the first by an annualized average of eight
percentage points. That's a big gap. By contrast, the average
small-cap stock outperformed the average large-cap issue during
that period by only 2.9 percentage points, annualized, according
to the researchers. And the typical value stock beat the average
growth stock by 5.5 points a year."

Information diffusion based explanations
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=983093
"In this paper we develop information based factors which
outperform other popular factors used in the multifactor pricing
literature such as the Fama and French size and book-to-market
factors. The first factor is based on the age of an asset, measured by
the number of months since the asset's IPO, while the second
factor is based on the percentage of trading days an asset does not
trade in a given year. Both factors attempt to capture the
quality and speed of information diffusion on the market. Our
information factors perform particularly well on momentum portfolios,
which, Hong et al (2000) have shown to result from
gradual-information diffusion. This gradual information diffusion explanation
is consistent with the information argument underlying our
factors, namely that, assets plagued with information problems can
be miss-priced for sustained periods of time. Furthermore, our
multifactor model successfully prices most industry portfolios and
performs as well as the Fama and French model when pricing the
25 size/book-to-market sorted portfolios."


S&P/TSX60 Value Screens
http://www.stingyinvestor.com/SI/strategy.shtml 

High Dividend Yield Stocks                 P/E P/B P/S P/C P/D Yield*
========================================== === === === === === ======
Biovail (BVF)                               5   5   4   5   5    5
Bank of Montreal (BMO)                      4   5   5   1   5    5
CIBC (CM)                                   0   4   5   5   5    5
National Bank of Canada (NA)                3   4   5   5   5    5
Royal Bank (RY)                             4   3   4   5   5    5
Telus (T)                                   4   4   4   5   5    5
Bank of Nova Scotia (BNS)                   3   3   3   1   5    5
TransCanada (TRP)                           3   4   3   4   5    5
Shaw Comm Cl.B (SJR.B)                      3   1   1   3   5    5
Toronto Dominion Bank (TD)                  4   4   3   2   4    4
More Info: http://www.stingyinvestor.com/SI/strategy/dogs.shtml 

Value Ratio Stocks                         P/E P/B P/S P/C P/D  VR
========================================== === === === === === =====
Biovail (BVF)                               5   5   4   5   5   0.6
Bank of Montreal (BMO)                      4   5   5   1   5   1.7
Thomson (TOC)                               5   4   2   2   4   1.9
BCE (BCE)                                   5   3   3   4   4   2.3
Telus (T)                                   4   4   4   5   5   2.4
Royal Bank (RY)                             4   3   4   5   5   2.6
Bank of Nova Scotia (BNS)                   3   3   3   1   5   2.9
Toronto Dominion Bank (TD)                  4   4   3   2   4   3.0
Nova (NCX)                                  5   4   5   4   3   3.1
Sun Life (SLF)                              4   5   4   1   4   3.1
More Info: http://www.stingyinvestor.com/SI/strategy/valueratio.shtml 

Graham Stocks                              P/E P/B P/D   G$   dG$(%)
========================================== === === === ====== ======
ACE Aviation (ACE.B)                        5   5   0   85.09 451.49
Magna Cl.A (MG.A)                           5   5   3   99.90  74.90
Nova (NCX)                                  5   4   3   35.97  54.00
Thomson (TOC)                               5   4   4   55.77  48.79
Biovail (BVF)                               5   5   5   14.13  41.46
Canadian Tire (CTC.A)                       5   5   3   67.04  26.97
Inmet Mining (IMN)                          5   4   1   75.50  18.85
Sun Life (SLF)                              4   5   4   49.74  17.67
Bank of Montreal (BMO)                      4   5   5   49.90  15.52
Weston George (WN)                          4   4   4   52.98  12.48
Petro Canada (PCA)                          5   3   2   60.40  10.52
Canadian Pacific Rail (CP)                  4   4   3   68.75   9.05
MDS Inc. (MDS)                              2   5   0   15.99   5.20
Telus (T)                                   4   4   5   44.39   4.67
BCE (BCE)                                   5   3   4   40.01   0.94
More Info: http://www.stingyinvestor.com/SI/strategy/graham.shtml 

*Notes: http://www.stingyinvestor.com/SI/strategy/notes.shtml 

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Books for Stingy Investors

The Intelligent Investor
by Benjamin Graham & Jason Zweig

Follow Warren Buffett's advice and read "by far the best book on
investing ever written". The latest edition provides the full
text of Graham's original work and supplemental chapters with more
modern commentary from Money Magazine editor Jason Zweig. I
like to read this book every few years and would probably benefit
by reading it even more frequently.
Amazon Link: http://www.amazon.ca/exec/obidos/ASIN/0060555661/


Stock Research From Dan Hallett & Associates

The Rothery Report
http://www.rotheryreport.com/ 

The Rothery Report provides research on select deep-value stocks in
North America. Discover overlooked and undervalued stocks in quarterly
investment reports which provide detailed analysis of Canadian and
U.S. stocks.  Weekly email news and additional updates keep
subscribers informed about new opportunities and developments.

Rothery Report Performance (03/31/2001 to 03/31/2008)
  Average Capital Gain    Average Holding Period
          40.9%                   2.4 Years

Learn More
http://www.rotheryreport.com/store/store.shtml

Subscribe Today
http://www.rotheryreport.com/store/order.shtml 



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ISSN 1499-2795 Copyright Dan Hallett and Associates Inc., 2008.
All rights reserved. The securities mentioned in this report are not
appropriate for all investors. Consult your professional investment
advisor before making any investment decision.  While all reasonable
effort is made to ensure the accuracy of information and data
contained herein, accuracy can not be guaranteed. Past performance is
not a good predictor of future performance.  Results are not
guaranteed and we assume no liability whatsoever for any material
losses that may occur.  No compensation for suggesting particular
securities or financial advisors is solicited or accepted.  The
information in this newsletter, and in its related website, is not
intended to be, nor does it constitute, financial advice or
recommendations.  Investing in stocks can be risky and may result in
substantial losses.  A Dan Hallett and Associates Inc.(DH&A)
publication.  DH&A is registered as Investment Counsel in the province
of Ontario. DH&A, or related-parties may have an interest in the
securities mentioned.