TRIMMING

CMED

Sold half of my position at 33.5 this morning. I am still very much bullish on this name, but more than 30% return in a week is quite a run by any standard and discipline requires some trimming.

SFCC

It appears my idea is incorrect. My original thought was that if management comes out and strongly refutes the accusations, the stock should bounce back to lower 30s. It was wrong. Management came out this morning and swung. I thought management said all right things, and it even disclosed additional backlogs in the month of October (13 million, one of the key weaknesses of its Q3/05 report). Stock went down for another loonie anyway with rather strong volume. My instinct would be average down here, but prudence demands that I hold the line. The volume concerns me. Also I would have to add on margin, which is not very prudent. I noticed that most of averaging down decisions tend to be emotional (denying?) I would rather make less money than losing large amount of my capital. On the other hand, I do not believe I should be panic. The stock is traded at 10X of its 2006 EPS of 2.30. The management gives no indication that its business is adversely affected at this juncture. I remain convinced that it should recover to lower 30s level soon.