A FEW SMALL CAPS

CWH

The conference call was long but pretty good. If I were to grade this quarter, here would be the score: revenue growth (A), margin (A), EBITDA growth (A), EPS (C), cash flow from operations (A), B/S (A), cash balance (A), new customer acquisitions (A), product diversification (poker, bingo) (A), new platform development (kios, mobile) (A), and overall, a solid “A�. However, I am in the market enough to know that the market will likely focus on the short term sequential decline of revenues and disappointing earning numbers, and indeed it did. The stock was sold off, but not too much though. I was thing of $5-$7 level at the opening, it actually opened at $8.5 and stabilized at $8.0. So, the damange is insignificant. I think the fundamentals of the company remain solid. However, given its poor EPS number in Q2/05, I have brought down the number to 0.35 and 0.45 for 05 and 06 respectively. The stock appears expensive here. Better to wait and see if it can resume earning growth in the next few quarters.

LGI

LGI moved for about 15% today, after announcing stock offers at $10.50. I did not think the news, while positive, could move the stock this much. I intend to peel some tomorrow if I could sell it at $12.5 level.