DEFENSIVE

DAX

I thrown a low-ball bid for some DAX yesterday and did not get filled, which was fine as I was half-hearted anyway, not because I do not like the stock, I would rather not step in front of the earning report. It reported this morning and results are in line and guidance is lifted slightly (a penny). So I opened a small position. The stock is traded at approximately 20X of its 05E, and it is growing at approximately 35%, a reasonable multiple, in my view. I am having a hard time to find stocks and rather reluctant to add exposures in materials and energy (as a matter of fact, I have been reducing in the past week). The tone of the market is not encouraging to me, and the inverted yield curve concerns me a bit. With the lower yield of the long bond, I would like to add some financials, but I am procrastinating. DAX appears to be in a rather defensive sector, reasonable valuation, good earning results, and positive guidance. There are potential for some positive surprise if management executes. It appears just breaking its long trading range and my target of 7.5 seems achievable.


KFS

KFS reported strong result, initiated dividend. I have been pondering about insurance companies for a while in order to balance my material and energy exposures. KFS appears to be a good candidate. It is still reasonable comparatively. I guess I have to wait to see how much it will gap up tomorrow morning. If the gap is not too significant, I may nibble some.

LGI

LGI reported Q1/05 results. Top-line is bit of light, but EBITDA, OP, EBT and EPS are all pretty strong. While I do like this stock, for growth, profitability, clean balance sheet, it is another stock which have very little volume and it is very difficult to pick it up on a reasonable price. I would like to nibble it at about 7.0. I guess I just have to be patient.