Monday, December 04, 2006

November Update

For the month of November, the portfolio was up 3.8% vs. S&P 500’s 1.9% increase.

A few more earnings trickled. Notably, Tyco (NYSE: TYC) came in with nice results and the breakup is on track for Q1 2007. Heinz's results were quite good and it appears Mr. Peltz's efforts are paying dividend. The company raised its guidance for fiscal 2007.

The steel sector got a nice boost due takeover speculation and M&A activity. – for now, one announced deal involved Russia’s Evraz buying Oregon Steel. Our steel holdings are trading at or near all-time highs.

Meanwhile, Comcast (Nasdaq: CMCSA) was busy signing a blockbuster distrobution deal with Disney, buying Disney's stake in the E! Network and last but not least, the company announced plans to raise cable rates. The kind of business we love.

The last day of the month also saw the upgrade of homebuilders by a Banc of America analyst who was gracious enough to slap a “neutral” rating on the sector, whatever that means. Shares of Pulte (NYSE: PHM) and Centex (NYSE: CTX) both got nice boosts as a result.

Finally, we were sad to see Google (Nasdaq: GOOG) leave our portfolio for now. But the price appreciation was much faster than we had anticipated last November when the shares traded at around $400 - they recently hit a high of $513. This opened up room for a new addition in USG Corporation (NYSE: USG) which we recently discussed in more detail on Margin of Safety. USG was itself subject of takeover rumors the same day as Banc of America upgrade of homebuilders.

Happy Holidays. See you in 2007.

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