8/28/07

Economics

Politics

Domestic

International War Against Radical Islam

The Market

Technical

Fundamental

As you know, part of our current strategy is to use upside volatility to eliminate companies that have fallen outside of our Quality Discipline. We completed another of our periodic reviews Monday evening and as a result this morning at the open the Aggressive Growth Portfolio is Selling its position in Matthews Corp (MATW-$42).

In addition, Polaris Industries (PII-$49) is being Removed from the Dividend Growth Buy List. We noted several months ago in a comment on PII that in financing a stock buy back and raising its dividend, it had assumed a level of debt which made us uncomfortable; the offset being the company’s strong cash flow which was being used to pay off that debt. However, this was all before the current credit crisis. While we don’t think that PII will have problems financing its debt, the high level of that debt becomes more problematic. As you know, in cases like this we always choose discretion over valor--hence our decision to Remove PII from the Dividend Growth Buy List. For the moment, the Dividend Growth Portfolio will continue to Hold Polaris.

EPS: 2006 $2.02, 2007 $2.30, 2008 $2.70; DVD: $.22 YLD 0.5%

http://finance.yahoo.com/q?s=MATW

EPS: 2006 $2.76, 2007 $3.05, 2008 $3.35; DVD: $1.35 YLD 2.8%

http://finance.yahoo.com/q?s=PII

News on Stocks in Our Portfolios

More Cash in Investors’ Hands

Medco is buying PolyMedica for $1.5 billion in cash—while the credit crisis may be slowing the private equity takeovers, corporate acquisitions for cash continue, suggesting that business managers still believe that US companies are a bargain.