The ValuEngine Weekly is an Investor Education

8/14/2019 The ValuEngine Weekly is an Investor Education

1/11

The ValuEngine Weekly is an Investor Education newsletter focused on the quantitative approach to investing and the toolsavailable from ValuEngine. In today's fast-moving and globalized financial markets, it is easy to get overloaded with information.

The winners will adopt an objective, scientific, independent and unemotional approach to investing. If you are not yet a member of

ValuEngine's stock analysis service, sign up now for a two-week free trial at ! www.valuengine.com

ATTENTION Advanced Investors and Finance Professionals:If you are reading this you should downloadValuEngine Institutional Softwareto see how VE's powerful quantitative tools

can increase your productivity and effectiveness.

If the tables in this email do not display properly, pleaseCLICK HEREto download the newsletter.

January 15, 2010MARKET OVERVIEW

Index started weekThursday

Close

4 day

change

4 day

change %ytd

DJIA 10620.31 10710.55 90.24 0.85% 2.68%

NASDAQ 2324.78 2316.74 -8.04 -0.35% 0.97%

RUSSELL 2000 628.11 646.43 18.32 2.92% -0.14%

S&P 500 1145.96 1148.46 2.5 0.22% 2.86%

Summary of VE Stock Universe

Stocks Undervalued 47.17%

Stocks Overvalued 52.83%

Stocks Undervalued by 20% 23.29%

Stocks Overvalued by 20% 27.43%

SECTOR OVERVIEWSector Change MTD YTD Valuation Last 12-

MReturnP/E Ratio

Basic Industries 0.25% 3.77% 3.77% 19.86% overvalued 99.97% 26.22

Capital Goods 0.53% 4.75% 4.75% 10.25% overvalued 50.11% 24.25

Consumer Durables 1.37% 3.63% 3.63% 18.07% overvalued 77.29% 24.88

Consumer Non-Durables 0.28% 1.26% 1.26% 5.81% overvalued 69.22% 19.8

Consumer Services 0.49% 2.35% 2.35% 3.26% overvalued 74.19% 23.92

Energy -0.64% 3.93% 3.93% 18.58% overvalued 68.14% 21.64

Finance 0.70% 2.59% 2.59% 2.61% overvalued 30.15% 18.62

Health Care 1.51% 2.67% 2.67% 3.19% undervalued 61.49% 20.94

Public Utilities -0.01% 0.22% 0.22% 4.54% overvalued 42.64% 17.32

Technology 0.68% 3.40% 3.40% 0.18% overvalued 78.26% 26.58

Transportation 0.37% 3.09% 3.09% 6.64% overvalued 43.31% 22.55
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2/11

Sector Talk--Finance Sector Stocks

The Wall Street Journal noted this week that things may not be looking so rosy forthe Financial Sector as big banks face major decreases in earnings due to an "earlyChristmas slowdown on the back of falling fixed-income revenues." Both JP Morgan andMorgan Stanley issued reports that indicated a revenue let down during the last quarter of2009. Analysts are predicting decreases of almost one-third for fixed-income divisions.

In addition to some poor earnings predictions, the big banksters also facedCongressional hearings into some rather touchy issues--such as why they were sellingproducts to investors that their own traders were shorting, how they managed to garner 100%payouts from AIG, why they withheld key info on bonuses and salaries from shareholders,etc. Banks also may be hit with new taxes on both bonuses AND operations--the so-called

"TBTF Tax"--as the Obama Administration seeks to garner some benefit from the massivegovernment efforts to backstop the financial sector last year via the "Financial CrisisResponsibility Fee."

Below, we present the key ValuEngine data points for major players from ourInstitutional software package (VEI). We used some basic liquidity criteria to filetr ourresults--share price > $3.00 and Volume > 100k/Day. Remember that our ratings systemplaces a premium on both market cap and LTM return so huge financial players have a leg upto high ratings due to their size and the fact that many of them bounced back so strongly fromthe market crash. Both long and short-term forecast calculations remain lackluster for themajority of the players in the news right now.

Top-Ten Finance Sector Stocks--Short-Term Forecast Returns

Ticker NameMkt

PriceValuation

(%)VE

RatingLast 12-MRetn(%)

Forecast1-MonthRetn(%)

Forecast1-Yr

Retn(%)

P/ERatio

Industry

WACWALTER INVESTMENT

MANAGEMENT COR14.63 -75 5 7600 3.57 174.63 8.37 INVESTMENTS

DLRDIGITAL REALTY TRUST

INC50.5 35.58 3 74.08 3.51 51.71 75.94 INVESTMENTS

GGALGRUPO FINANCIERO

GALICIA5.59 4.37 4 179.25 0.77 27.44 12.99

FINANCIALSERVICES

BZ BOISE INC 5.77 -10.14 5 1102.08 0.6 38.38 4.63 FINANCIALSERVICES

BPSGBROADPOINTGLEACHER

SECURITIES G4.66 -45.93 4 102.61 0.51 10.88 12.26 INVESTMENTS

CPTCAMDEN PROPERTY

TRUST40.75 13.04 3 65.65 0.32 20.86 76.89 INVESTMENTS

BBD BANCO BRADESCO 20.98 -1.83 5 140.32 0.14 10.84 16.52 BANKING
http://online.wsj.com/article/SB10001424052748704362004575000611044775350.html?mod=WSJ_Markets_MIDDLETopNewshttp://www.valuengine.com/pub/main?i=0http://www.valuengine.com/pub/main?i=0http://online.wsj.com/article/SB10001424052748704362004575000611044775350.html?mod=WSJ_Markets_MIDDLETopNewshttp://www.valuengine.com/pub/main?i=0http://www.valuengine.com/pub/main?i=0


3/11

Ticker Name MktPrice

Valuation(%)

VERating

Last 12-MRetn(%)


Forecast1-Yr

Retn(%)

P/ERatio

Industry

EJE-HOUSE CHINA

HOLDINGS LTD

16.97 6.87 4 179.11 0.13 16.37 13.97 INVESTMENTS

ITUBITAU UNIBANCO

HOLDING SA21.65 -6.86 5 112.46 0.12 8.76 19.45 BANKING

GGWPQGENERAL GROWTH

PROPERTIES10.8 -67.18 5 724.43 0 60.22 49.09 INVESTMENTS

Top-Ten Finance Sector Stocks--Long-Term Forecast Returns

Ticker NameMkt

PriceValuation

(%)VE

Rating

Last 12-M

Retn(%)


Forecast1-Yr

Retn(%)

P/ERatio

Industry

WACWALTER INVESTMENT

MANAGEMENT COR14.63 -75 5 7600 3.57 174.63 8.37 INVESTMENTS

GGWPQGENERAL GROWTH

PROPERTIES10.8 -67.18 5 724.43 0 60.22 49.09 INVESTMENTS

DLRDIGITAL REALTY TRUST

INC50.5 35.58 3 74.08 3.51 51.71 75.94 INVESTMENTS

BZ BOISE INC 5.77 -10.14 5 1102.08 0.6 38.38 4.63FINANCIALSERVICES

LSE CAPLEASE INC 4.54 -41.71 4 165.5 -0.43 28.26 N/A INVESTMENTS

GGALGRUPO FINANCIERO

GALICIA5.59 4.37 4 179.25 0.77 27.44 12.99

FINANCIALSERVICES

GNWGENWORTH FINANCIAL

INC13.61 73.97 4 481.62 -2.08 21.83 41.75

FINANCIAL

SERVICES

CPTCAMDEN PROPERTY

TRUST40.75 13.04 3 65.65 0.32 20.86 76.89 INVESTMENTS

MGIMONEYGRAM

INTERNATIONAL INC3.25 -46.79 4 187.61 -2.12 20.72 N/A

FINANCIALSERVICES

FPOFIRST POTOMACREATLY TRUST

14.12 -11.83 4 100.57 -0.38 20.51 60.09 INVESTMENTS

Top-Ten Finance Sector Stocks--Composite Score Rankings*


Valuation(%)

VERating

Last 12-MRetn(%)

CompRank


Forecast1-YrRetn(%)

P/ERatio

Industry

DB DEUTSCHE BANK 73.3 -28.75 5 152.93 898 -0.01 1.59 6.12 BANKING

WACWALTER

INVESTMENTMANAGEMENT COR

14.63 -75 5 7600 894 3.57 174.63 8.37 INVESTMENTS

XL XL CAPITAL LIMITED 17.46 -6.55 5 430.7 888 -0.61 14.83 6.51 INSURANCE


4/11


Valuation(%)

VERating

Last 12-M

Retn(%)

CompRank


Forecast1-Yr

Retn(%)

P/ERatio

Industry

AHT

ASHFORD

HOSPITALITY TRUST,INC. 5.99 -53.24 5 360.77 886 -0.01 15.4 5.55 INVESTMENTS

KFNKKR FINANCIALHOLDINGS LLC

6.45 -34.46 5 275 886 -0.98 12.79 8.72 INVESTMENTS

CSCREDIT SUISSE

GROUP53.37 -16.99 5 133.16 878 -0.24 0.08 7.65

FINANCIALSERVICES

PRUPRUDENTIAL

FINANCIAL INC54.08 -22.7 5 106.33 868 -0.52 0.67 9.64 INSURANCE

STDBANCO SANTANDER

SA17.04 -7.21 5 134.07 862 -0.08 4.93 10.99 BANKING

AEAADVANCE AMERICA

CASH ADVANCE CEN5.41 -39.88 5 223.95 858 -0.45 8.22 7.31

FINANCIALSERVICES

BZ BOISE INC 5.77 -10.14 5 1102.08 852 0.6 38.38 4.63FINANCIAL

SERVICES

Bottom-Ten Finance Sector Stocks--Composite Score Rankings

Ticker NameMkt

PriceValuation

(%)VE

Rating

Last12-MRetn(%)

CompRank

Forecast 1-

MonthRetn(%)

Forecast1-Yr

Retn(%)

P/ERatio

Industry

HNBCHARLEYSVILLE

NATIONAL CORPORATIO6.74 105.71 1 -46.59 156 -4.22 -32.03 N/A BANKING

FCFFIRST COMMONWEALTH

FINANCIAL CP4.83 300 1 -53.42 194 -7.09 -48.9 N/A BANKING

NPBC NATIONAL PENNBANCSHARES, INC

6.84 146.3 1 -37.53 220 -4.84 -33.71 N/A FINANCE ANDLOAN

SUSQSUSQUEHANNA

BANCSHARES INC7.33 300 1 -37.35 222 -7.36 -46.07 N/A BANKING

HBANHUNTINGTON


HURNHURON CONSULTING

GROUP INC25.65 53.22 1 -50.28 228 -3.3 -29.41 N/A

FINANCIALSERVICES

CSFLCENTERSTATE BANKS

INC11.44 88.34 1 -18.05 238 -3.4 -22.44 N/A BANKING

MIMARSHALL & ILSLEY

CORP6.96 51.58 1 -34.65 260 -3.72 -25.27 N/A BANKING

BPFH

BOSTON PRIVATE FINL

HOLDING 7 300 1 40.28 288 -6.57 -31.08 N/A

FINANCE AND

LOAN

WFDWESTFIELD FINANCIAL

INC8.22 57.63 1 -11.61 296 -2.37 -16.69 44.92

SAVINGS ANDLOANS

* Remember that rankings are determined by momentum (LTM), valuation, market cap, forecast, and P/ERatio so high figures overall may be enough to overcome weak performance in other categories--forexample, with good LTM, valuation, and size, a given equity may be predicted to out perform the overallmarket despite a negative short or long-term forecast.


5/11

Top-Ten Finance Sector Stocks--Most Overvalued

Ticker NameMkt

PriceValuation

(%)VE

Rating

Last12-MRetn(%)

CompRank


Forecast1-Yr

Retn(%)

P/ERatio

Industry

FCFFIRST COMMONWEALTH

FINANCIAL CP4.83 300 1 -53.42 194 -7.09 -48.9 N/A BANKING

SUSQSUSQUEHANNA


HBANHUNTINGTON


BPFHBOSTON PRIVATE FINL

HOLDING7 300 1 40.28 288 -6.57 -31.08 N/A

FINANCE ANDLOAN

MTG MGIC INVT CORP WIS 6.69 300 2135.5

6332 -9.01 -37.23 N/A INSURANCE

AFASTORIA FINANCIAL

CORPORATION13.13 228.4 2 -1.2 308 -5.09 -31.86 31.11

SAVINGS ANDLOANS

SHOSUNSTONE HOTEL

INVESTORS INC9.63 228.25 2 86.63 352 -5.56 -22.59 N/A INVESTMENTS

ACAS AMERICAN CAPITAL LTD 3.95 172.36 2 -16.84 376 -5.84 -44.2 6.33FINANCIALSERVICES

HIGHARTFORD FINANCIAL

SERVICES GP27.26 157.86 3

100.59

514 -3.75 -15.08 30.66 INSURANCE

NPBCNATIONAL PENN

BANCSHARES, INC6.84 146.3 1 -37.53 220 -4.84 -33.71 N/A

FINANCE ANDLOAN

What's Hot--The ValuEngine Forecast 22 MNS Newsletter

We now have a year's worth of history for our portfolio and the trailing 12-monthpercentage gain for the newsletter is a very healthy 25.31%. This is a great gain for amarket neutral strategy that has lower volatility and higher Sharpe and Sortino ratios than thebenchmark. In addition, our max drawdown was only 4.05% vs the S&P's 12.9%.

For the current month, our Forecast 22 Market Neutral Strategy Newsletter portfolioposted a gain of @1% and trailed the S&P benchmark by 269 bps. Our long side morethan doubled the S&P with gains of 7.43%!Our largest gain came via UAL. Since ourmodel picked UAL in November, the stock is up 85%! Other big winners were BRKS,TREX, NG, and HWD.


6/11

VE Forecast 22 MNS Newsletter Portfolio Long-Side Results

Ticker Company NameEntry Price

12-16-09Current

PriceChange %Change Sector

NG NOVAGOLD RESOURCES INC 5.36 6.49 1.13 21.08BASIC

INDUSTRIES

HWD HARRY WINSTON DIAMOND CORP 9.77 11.47 1.7 17.40BASIC

INDUSTRIES

TREX TREX COMPANY INC 16.06 19.88 3.82 23.79 CAPITAL GOODS

HRBN HARBIN ELECTRIC INC 21.68 21.86 0.18 0.83 CAPITAL GOODS

SUP SUPERIOR INDS INTL INC 15.90 15.77 -0.13 -0.82CONSUMERDURABLES

TTM TATA MOTORS LTD 15.15 17.53 2.38 15.71CONSUMER

DURABLES

MFW M & F WORLDWIDE CORP 38.90 40.31 1.41 3.62CONSUMER

NON_DURABLES

DLM DEL MONTE FOODS CO 11.34 11.70 0.36 3.17CONSUMER

NON_DURABLES

DDS DILLARD INC 18.34 17.27 -1.07 -5.83CONSUMERSERVICES

KFY KORN/FERRY INTERNATIONAL 16.95 15.88 -1.07 -6.31CONSUMERSERVICES

LDK LDK SOLAR CO LTD 9.12 7.58 -1.54 -16.89 ENERGY

OGZPY GAZPROM OAO 22.71 25.94 3.23 14.22 ENERGY

GGAL GRUPO FINANCIERO GALICIA 5.70 5.59 -0.11 -1.93 FINANCE

CLI MACK-CALI REALTY CORPORATION 34.39 35.38 0.99 2.88 FINANCE

RHHBY ROCHE HOLDING AG 40.85 44.88 4.03 9.87 HEALTH CARE

PDLI PDL BIOPHARMA INC 6.80 6.85 0.05 0.74 HEALTH CARE

BIPBROOKFIELD INFRASTRUCTURE

PARTNE15.46 16.95 1.49 9.64

PUBLICUTILITIES

HNPHUANENG POWER INTERNATIONAL

INC23.36 23.88 0.52 2.23

PUBLICUTILITIES

VRGY VERIGY LTD 11.63 12.72 1.09 9.37 TECHNOLOGY

BRKS BROOKS AUTOMATION INC 8.25 10.34 2.09 25.33 TECHNOLOGY

UAUA UAL CORPORATION 11.05 13.93 2.88 26.06 TRANSPORT

AMR AMR CORPORATION 7.59 8.29 0.7 9.22 TRANSPORTLONG PORTFOLIO 7.43

GSPC S&P500 1107.93 1148.46 40.53 3.66


7/11

For a market neutral strategy with significant volatility-reducing benefits, our newslettercontinues to perform remarkably well. In fact, this product has been so successful it was

recently selected by Forbes.com for inclusion into its stable of newsletterproducts. Forbes.com believes that the VE Forecast 22 MNS Portfolio offers a sophisticatednewsletter for investors seeking access to hedge fund-type strategies without heftyperformance fees and onerous qualified investor requirements.

Our average monthly return is @1.5%, our Sortino Ratio--"good" volatility--beats theS&P 500 by @50%, our max drawdown is 1/3 the S&P's, and our annual volatility is

@30% less than the S&P 500!

For more on the VE Forecast 22 Market Neutral Strategy Newsletter Portfolio, Click theLogo Below

Suttmeier Says--Commentary and Analysis from Chief Market Strategist Richard Suttmeier

If you have any comments or questions, send them to [email protected]

Major Indices

The Bull leads the Bear in the Dow title bout.The score standsat 8 to 1 favoring the Bull. My annual support is 10,379 with monthly andannual resistances at 10,997 and 11,235. A knock out bunch by the Bearrequires a weekly close below 10,379.
http://www.valuengine.com/nl/mainnl?nl=Chttp://www.valuengine.com/nl/mainnl?nl=Chttp://www.valuengine.com/nl/mainnl?nl=Chttp://www.valuengine.com/nl/mainnl?nl=Fhttp://www.valuengine.com/nl/mainnl?nl=C


8/11

Housing

2009 was a record year for foreclosures.This negative trend is expected to continuein 2010 following a record 2.8 million threatened with foreclosure in 2009. Foreclosures wereup 21% in 2009 versus 2008. One of the best measures of Main Street woes is the drag onhomeowners caused by foreclosures and high unemployment. As the economy supposedlyimproves 349,000 households received a foreclosure-related notice in December alone, up14% from November and 15% year over year. This is in spite of the "Home for the Holiday"pause. Banks actually repossessed 92,000 homes in December up 19% from November.

This process cascades throughout communities as an empty home is not paying property

taxes and causes appraised values to decline straining Main Street, USA. This process isexpected to worsen in 2010 with another 3 to 3.5 million homes facing some kind of phase offoreclosure during the year.

VE data for the Home Building Industry.Ticker Name

MktPrice

Valuation(%)

VERating

Last 12-M

Retn(%)


Forecast1-Yr

Retn(%)

P/ERatio

AXR AMREP CORPORATION 14.19 40.93 1 -51.39 -28.28 -87.89 N/A

BHS BROOKFIELD HOMESCORPORATION 7.76 N/A N/A 112.6 -7.35 -78.93 1.54

BZH BEAZER HOMES 5.11 -75 3 293.08 -1.95 -35.91 N/A

CHCICOMSTOCK HOMEBUILDING

COS INC0.84 N/A N/A 236 -6.5 -51.04 N/A

CVCO CAVCO INDUSTRIES INC 40 69.82 2 70.58 -2.82 -21.29 N/A

DHI D R HORTON INC 12.25 -18.97 3 89.34 -0.99 -16.8 N/A

DWAHY DAIWA HOUSE IND LTD 117.28 28.55 2 31.19 -1.91 -21.73 31.32

HXMDESARROLLADORA HOMEX

SAB DE CV36.41 -21.02 3 86.15 -2.59 -29.37 12.2

KBH KB HOME 15.68 -55.19 3 25.34 -2.42 -24 N/A

LEN LENNAR CORPORATION 16.35 -39.93 3 110.42 0.5 -14.85 N/A

MDC MDC HOLDINGS 34.71 -8.21 3 13.73 -0.81 -11.47 N/A

MHO M/I HOMES INC 12.09 -39.04 2 22.24 -0.88 -21.6 N/A

MTH MERITAGE HOMES CORP 20.94 -4.95 3 94.61 -0.43 -17.28 N/A

NVR NVR INC 722.1 63.1 3 63.54 -2.02 -15.14 23.86

OHB ORLEANS HOMEBUILDERS INC 1.73 N/A N/A 43.78 -2.87 -37.17 N/A

PGTI PGT INC 2.05 20.12 2 130.34 -3.43 -35.77 N/A


9/11


Valuation(%)

VERating

Last 12-M

Retn(%)


Forecast1-Yr

Retn(%)

P/ERatio

PHM PULTE HOMES INC 11.23 -18.83 3 9.35 -0.59 -16.08 N/A

RYL RYLAND GROUP INC 21.56 -8.63 2 29.72 -1.18 -19.01 N/A

SKHSY SEKISUI HOUSE LIMITED 9.77 57.55 2 21.37 -2.2 -20.24 93.79

SPF STANDARD PACIFIC CORP 4 -75 3 159.74 -1.49 -31.28 N/A

TOL TOLL BROTHERS INC 19.74 -12.91 3 5.73 -0.74 -10.11 N/ALabor

The number of employed persons is at the lowest point since 2003. The averageduration of unemployment has expanded to 29.1 weeks. The real unemployment rate is atleast 17.3%.Policy

President Obama wants a Financial Crisis Responsibility Fee. The presidentproclaims, We want our money back when it comes to the estimated $117 billion in TARPlosses. What he is really proposing is a Wall Street Greed Tax on the 50 largest domesticand foreign banks with US branches, insurance companies, and the broker / dealercommunity. The tax will total $90 billion over a ten year period.

The unintended consequences may involve FDIC insured financial institutions that haveassets around $50 billion--as these banks may opt to shrink their balance sheets to below that

threshold. In addition, the institutions paying the big bonuses will likely discourage risktrading, which is an important component of Wall Street risk taking--or what some would call"greed." This could reduce market liquidity.Small community banks will not be affected by the Wall Street Greed Tax even though

nearly 3000 thousand of them are overexposed to C&D and CRE loans, and with 55community banks reneging on making their TARP dividend payments. Most of the 167 banksthat have failed since the end of 2007 are community and regional banks. The Wall StreetGreed Tax represents 0.15 percent on the liabilities of the large financial institutions, thosewith $50 billion of assets, which is estimated at 50 companies.


10/11

--The ValuEngine Quarterly FDIC Report UPDATED

Our Chief Market Strategist Richard Suttmeier is an expert on the banking system, andhe has been closely following the banking and credit crisis for several years now. In fact, hepredicted the current difficulties YEARS before they began. Every quarter, he takes theFDIC's own Quarterly Banking profile, combines it with VE's powerful quant tools, addsadditional proprietary data from the FDIC on loan exposures, and collates the info into anexhaustive report on the state of the US banking system.

We have updated the FDIC Report to include the latest VE datapoints on all problembanks as well as Suttmeier's latest predictions for the US banking system and economy.

There are currently 759 publicly traded FDIC insured financial institutionsoverexposed to CD Loans or Nonfarm Non-Residential Real Estate loans as per the

FDIC's own guidelines.

As of January 8, 2010, there were 221 banks overexposed to C&D and/or CRE loans in theValuEngine database with full data coverage. Of these overexposed banks, 82 were rated 1-Engine Strong Sells, 73 were rated 2-Engine Sellsall of which are predicted to under

perform the markets as a whole, 63 were rated 3-Engine Holdswhich are predicted toroughly match the overall market, 3 were rated a 4-Engine Buy, and none held our highestrating of 5-Engine Strong Buywith the 4 and 5-Engine stocks predicted to out perform theoverall market.

This means thatthere are currently 155 banks rated Sell or Strong Sell that are alsooverexposed to C&D and/or CRE loans.

There are 198 overexposed institutions with only partial ValuEngine coverage and thus

those banks have no rating--these are included in the problem bank list.

There are 341additional institutions carrying C&D and/or CRE loans in excess of theFDIC guidelines that do not appear in the ValuEngine database. These are also listed in

the report following the VE List of Problem Banks.


11/11

For more on the ValuEngine Quarterly FDIC Report, Click the Image Below
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