The ValuEngine Weekly

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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.

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January 22, 2010MARKET OVERVIEW

Index started weekThursday

Close

3 day

change

4 day

change %ytd

DJIA 10608.37 10389.88 -218.49 -2.06% -0.39%

NASDAQ 2291.02 2265.7 -25.32 -1.11% -1.25%

RUSSELL 2000 637.94 628.36 -9.58 -1.50% -2.93%

S&P 500 1136.03 1116.48 -19.55 -1.75% -0.01%

Summary of VE Stock Universe

Stocks Undervalued 53.59%

Stocks Overvalued 46.41%

Stocks Undervalued by 20% 26.65%

Stocks Overvalued by 20% 21.94%

SECTOR OVERVIEWSector Change MTD YTD Valuation Last 12-

MReturnP/E Ratio

Basic Industries -3.26% -1.58% -1.58% 11.05% overvalued 86.42% 25.83

Capital Goods -1.74% 1.43% 1.43% 3.91% overvalued 46.72% 22.97

Consumer Durables -1.52% 0.27% 0.27% 11.48% overvalued 75.07% 23.21

Consumer Non-Durables -1.14% -0.71% -0.71% 1.27% overvalued 66.86% 19.87

Consumer Services -1.23% 0.69% 0.69% 0.28% overvalued 70.83% 23.27

Energy -2.56% -0.14% -0.14% 12.80% overvalued 65.60% 21.03

Finance -0.26% 1.73% 1.73% 0.54% undervalued 30.64% 18.38

Health Care -1.86% -0.17% -0.17% 7.29% undervalued 57.44% 20.54

Public Utilities -1.52% -2.42% -2.42% 0.34% undervalued 37.33% 16.87

Technology -1.15% 1.07% 1.07% 3.90% undervalued 75.11% 25.95

Transportation -1.46% -0.12% -0.12% 0.79% overvalued 41.27% 21.77
http://www.valuengine.com/http://www.valuengine.com/pub/main?i=0http://www.valuengine.com/pub/main?i=0http://www.valuengine.com/pub/main?i=0http://www.valuengine.com/nl/WeeklyNewsletterhttp://www.valuengine.com/nl/WeeklyNewsletterhttp://www.valuengine.com/pub/main?i=0http://www.valuengine.com/nl/WeeklyNewsletterhttp://www.valuengine.com/


2/12

Sector Talk-- Health Care

Fallout from this week's special election in Massachusetts remains uncertain at thistime. Major health care providers saw some rallying in their share prices recently as theproposed reforms proved to be far weaker than some had hopes--and others had feared.Now, with passage of the modest reform package even doubt, some feel Health Care mayrally further.

Below, we present the key ValuEngine data points for the Health Care Sector from ourInstitutional software package (VEI). Remember that our ratings system has a bias towardlarger market caps so big companies have a leg up to high ratings due to their size. Thishelps to explain high ratings despite the lackluster forecast figures. We used some basicliquidity criteria to filter our results--share price > $3.00 and Volume > 100k/Day. As always,remember that in almost all years our ratings are predictive and 4 and 5-Engine stocks

outperform the broader markets.As you can see, short and long-term forecast lists are dominated by drug makers and

biotech firms. The composite score leaders include some of the major health care providers--which we categorize as "Services to Medical Profession." Medical Supply and Biotech firmsdominate our lowest composite score and most overvalued lists.

Top-Ten Health Care Sector Stocks--Short-Term Forecast Returns

Ticker NameMkt

PriceValuation

(%)VE

Rating

Last 12-

MRetn(%)

CompRank

Forecast 1-

MonthRetn(%)

Forecast 1-Yr Retn(%)

P/ERatio Industry

TRGT TARGACEPT INC 20.6 139.38 3 701.56 594 20.4 143.91 N/A DRUGS

SNTASYNTA PHARMACEUTICALS

CORP4.63 -31.02 3 -37.69 582 3.89 -8.29 2.03 DRUGS

BCRXBIOCRYST

PHARMACEUTICALS, INC.7.1 -9.89 3 239.71 668 1.97 9.19 N/A BIOTECH

IMMUIMMUNOMEDICSINCORPORATED

4.34 -7.23 4 212.23 782 1.51 4.53 9.77 BIOTECH

SNY SANOFI-AVENTIS 38.88 -3.3 4 31.71 766 1.15 2.81 7.07UNDESIGHEALTH

PDLI PDL BIOPHARMA INC 6.68 -61.23 4 12.65 728 1.13 -3.69 5.64 BIOTECH

BDSI BIODELIVERY SCIENCES INTL 3.9 -3.93 3 21.5 538 1.09 -10.16 3.55 BIOTECH

AOBAMERICAN ORIENTAL

BIOENGINEERING4.36 -75 3 -8.79 670 0.88 -4.55 7.68 BIOTECH

SKH SKILLED HEALTHCARE GROUP 6.83 -31.09 3 -23.43 576 0.7 -8.15 6.74 HOSPITALS

LLY ELI LILLY & CO 36.11 -26.51 4 -0.17 756 0.56 0.2 8.15 DRUGS
http://www.valuengine.com/pub/main?i=0http://www.valuengine.com/pub/main?i=0http://www.valuengine.com/pub/main?i=0http://www.valuengine.com/pub/main?i=0


3/12

Top-Ten Health Care Sector Stocks--Long-Term Forecast Returns

Ticker Name MktPrice Valuation(%) VERating

Last 12-

MRetn(%)

CompRank

Forecast 1-

MonthRetn(%)

Forecast 1-Yr Retn(%) P/ERatio Industry


BCRXBIOCRYST

PHARMACEUTICALS, INC.7.1 -9.89 3 239.71 668 1.97 9.19 N/A BIOTECH


4.34 -7.23 4 212.23 782 1.51 4.53 9.77 BIOTECH


GSK GLAXOSMITHKLINE PLC 41.53 -11.53 4 24.79 762 0.16 1.86 10.73 DRUGS

NVS NOVARTIS AG 53.48 3.8 4 21.93 688 -0.02 1.04 14.15 DRUGS

JNJ JOHNSON & JOHNSON 63.97 1.52 4 17.31 688 -0.13 0.87 13.96 DRUGS

GILD GILEAD SCIENCES INC 45.78 -19.71 4 -7.33 704 0.07 0.63 15.38 BIOTECH

LLY ELI LILLY & CO 36.11 -26.51 4 -0.17 756 0.56 0.2 8.15 DRUGS

MRK MERCK & CO INC 40.08 2.47 4 53.27 744 -0.35 -0.06 12.33 DRUGS

Top-Ten Health Care Sector Stocks--Composite Score Rankings*

Ticker NameMkt

PriceValuation

(%)VE

Rating

Last 12-M

Retn(%)

CompRank

Forecast 1-Month

Retn(%)


P/ERatio

Industry

CVH COVENTRY HEALTH CARE INC 24.61 -35.04 5 98.31 820 -0.11 -3.15 12.2SERVICESMEDICAL

PROF

WCGWELLCARE HEALTH PLANS

INC34.11 -28.52 5 193.29 816 -0.15 -4.05 11.5

SERVICESMEDICAL

PROF

PRSC PROVIDENCE SERVICE CORP 13.3 -59.17 5 626.78 800 0.08 -4.6 9.35HOME

HEALTHCARE

CI CIGNA CORPORATION 37.05 -2.45 5 150.17 796 -0.36 -3.48 9.46SERVICESMEDICAL

PROF


4.34 -7.23 4 212.23 782 1.51 4.53 9.77 BIOTECH


HITK HI-TECH PHARMACAL 23.94 -16.11 4 366.67 766 0.08 -3.24 11.53 DRUGS

BKDBROOKDALE SENIOR LIVING

INC17.81 -55.05 4 195.85 764 -0.37 -1.2 N/A

HOMEHEALTHCARE

GSK GLAXOSMITHKLINE PLC 41.53 -11.53 4 24.79 762 0.16 1.86 10.73 DRUGS

WLP WELLPOINT INC 65.5 1.22 4 73.6 760 -0.47 -2.41 11.06SERVICESMEDICAL

PROF


4/12

* 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 outperform the overall

market despite a negative short or long-term forecast.

Bottom-Ten Health Care Sector Stocks--Composite Score Rankings

Ticker NameMkt

PriceValuation

(%)VE

Rating

Last 12-M

Retn(%)

CompRank

Forecast 1-Month

Retn(%)


P/ERatio

Industry

BEAT CARDIONET INC 6.5 100.82 1 -70.45 206 -2.58 -18.8 N/AMEDICAL

SUPPLIES

PMTIPALOMAR MEDICALTECHNOLOGIES INC

9.4 99.73 1 -0.84 228 -3.98 -25.03 N/AMEDICAL

SUPPLIES

RXII RXI PHARMACEUTICALS CORP 5.49 58.11 1 30.71 268 -2.33 -15.35 N/A BIOTECH

BJGP BMP SUNSTONE CORP 5.24 123.4 1 29.7 292 -2.78 -19.98 N/AHOSPITALSUPPLIES

AIQALLIANCE HEALTHCARE

SERVICES INC5.25 58.07 1 -40.07 294 -2.34 -17.7 22.53

MEDICALSUPPLIES

PPHMPEREGRINE

PHARMACEUTICAL3.11 143.9 1 48.1 302 -3.53 -20.37 N/A BIOTECH

RGEN REPLIGEN CORPORATION 3.59 20.76 2 -7.47 304 -1.2 -10.94 N/A BIOTECH

SIGA SIGA TECHNOLOGIES INC 5.95 88.35 2 63.01 308 -6.67 -33.42 N/A BIOTECH

ALTH ALLOS THERAPEUTICS 7.77 52.35 2 0.39 324 -2.14 -12.64 N/A BIOTECH

ATHX ATHERSYS INC 3.02 72.84 2 364.62 334 -3.68 -19.24 N/A BIOTECH

Top-Ten Health Care Sector Stocks--Most Overvalued

Ticker Name

MktPrice

Valuation (%)

VE

Rating

Last12-MRetn(

%)

CompRank

Forecast

1-MonthRetn(%)

Forecast

1-YrRetn(%)

P/ERatio Industry

PPHMPEREGRINE

PHARMACEUTICAL3.11 143.9 1 48.1 302 -3.53 -20.37 N/A BIOTECH


OGXIONCOGENEX

PHARMACEUTICAL INC16.14 133.79 2 180.21 374 -1.68 -14.44 N/A BIOTECH

BJGP BMP SUNSTONE CORP 5.24 123.4 1 29.7 292 -2.78 -19.98 N/AHOSPITALSUPPLIES

VVUS VIVUS, INC. 9.15 112.14 2 106.08 428 -2.32 -13.52 N/AMEDICAL

SUPPLIES

BEAT CARDIONET INC 6.5 100.82 1 -70.45 206 -2.58 -18.8 N/AMEDICAL

SUPPLIES

MDVN MEDIVATION INC 35.54 99.87 3 100.56 450 -2.36 -12.96 N/A BIOTECH

PMTIPALOMAR MEDICALTECHNOLOGIES INC

9.4 99.73 1 -0.84 228 -3.98 -25.03 N/AMEDICAL

SUPPLIES

DCTH DELCATH SYSTEMS INC 5.19 97.97 2 230.57 384 -2.79 -15.96 N/A DRUGS

HGSIHUMAN GENOME SCIENCES

INCORPORAT27.92 90.6 3 1152.02 574 -2.76 -8.53 N/A BIOTECH


5/12

What's Hot--Catching up with TK Ng

New Technologies for the Modeling of Financial Markets

Former ValuEngine Analyst and Quant-Guru TK Ng posted the following on his blogRandom Thoughtsrecently. It has been edited and re-posted here.

A new generation of tools is starting to make an impact on the modeling and analysis offinancial markets. For the sake of simplification--and because of the limits in computerpower-- modeling of financial markets was hitherto being done with the tools of traditional

statistics. Now, the recognition that financial markets are non-linear complex adaptivesystems requires advances beyond simple statistics.

Are these tools ultimately useful for trading the markets? Yes. The shorter the timeframe of investment, the more useful they are. Will analysts, and the need for a financialbackground be redundant? No. We still need someone with an understanding of financialmarkets for choice of model variables, for pre-processing of the data, and for analysis againstthe macro investing environment. But an analyst with knowledge of and access to thesetechnologies will be a better analyst. He will be able to know what are the current factorsdriving the market, what are the factors driving a particular stock, and go on from there.

Here are some examples of new technologies of use for modeling financial markets--

with illustrations of the current applications of such technologies in everyday life.

De-Noising: The first step is to filter out from the data all that is considered irrelevant for thetask at hand. Moving Averages are an example of de-noising--they filter out informationabove a certain threshold. Previously, much of this de-noising was achieved withconventional tools from digital signal processing (DSP) such as Fourier Transforms. But now,Wavelets can do a much better job. Wavelets make digital image compression much moreefficient. Wavelets are also very good for the synthesis of musical instrument tones. Whilethey have not been able to fully replicate the sound of a Stradivarius or a 1959 Gibson LesPaul, they can produce reasonable facsimiles of vintage guitar amplifiers such as the FenderTwin Reverb and the Vox AC30

Sensitivity Analysis of Model Variables: Model variables need to be tested for sensitivity toperturbation. i.e. what happens to the other variables when one variable is subject to change.Traditional statistical tools cannot do a good job when it is realized that complex adaptivesystems exhibit 'emergent' properties viz 2+ 2 >4. Neural Nets-- with their synthetic synapsesand dendrites mimicking the human brain--can do a better job. The 'weights' in all synapseschange in a networked and non-linear way as some parameter is changed, and these weightsare measurable, thus making for a more accurate sensitivity analysis.
http://randomthoughtsofanagingbabyboomer.blogspot.com/2010/01/new-technologies-for-modeling-of.htmlhttp://randomthoughtsofanagingbabyboomer.blogspot.com/2010/01/new-technologies-for-modeling-of.htmlhttp://randomthoughtsofanagingbabyboomer.blogspot.com/2010/01/new-technologies-for-modeling-of.htmlhttp://www.amara.com/IEEEwave/IEEEwavelet.htmlhttp://randomthoughtsofanagingbabyboomer.blogspot.com/2010/01/new-technologies-for-modeling-of.htmlhttp://www.amara.com/IEEEwave/IEEEwavelet.html


6/12

Pattern Recognition: The human brain can holistically sum up all the features of a face to letyou recognize someone you know. The new generation of digital cameras can recognize a

face, a smile, or a blink. Military software can differentiate between an enemy and a friendlysubmarine. These pattern recognition tools contain classification and fuzzy logic algorithmsthat allow for the identification of 'subtle signals'. In a world where Black and White are justdifferent shades of Gray, such tools are better for detecting subtle patterns laced with noise.

Classification: A major part of modeling consists of the act of classification. We have seenfrom previous bulletins how Self-Organizing Maps (SOMs) can classify equities according totheir degree of similarity in a more natural way than the tools of traditional statistics--wherethe results depend on your choice of parameters for defining the boundaries of each cluster.SOMs have been used for the classification of wines, classification of credit card holders, andthe classification of shopping habits according to factors such as gender.

Forecasting: Decision-making often involves an imagination of future scenarios. It ishardwired into us to try and predict--even if we lack a firm empirical basis for our predictions.One possible way to overcome this is by a 'consensus' of models; i.e. your forecast is morelikely to be accurate if it is an average or median of the forecast of a group of experts. Swarmintelligence is one way to apply these theories to a forecast. Swarm intelligence is thecollective intelligence of autonomous, distributed, self-organizing systems--such as antcolonies, a flock of Birds, a school of Fish, human beings in a traffic jam, etc. ''Bots' can becreated-- each seeded with the objective of maximizing profit--and let loose to behave andinter-act with each other. The winning Bot--or the average result of the Bots-- can be used asa forecast.

Optimization: Optimization used to be about Linear Programming-- as in Operations

Research, or Gaussian steepest descent (going down the slope of steepest descent in amulti-dimensional model landscape). But the current use of Genetic Algorithms is a quantumleap for optimization. Multi-objective optimization is now much easier to do. Multi-optimizationis often seen in the optimization of transportation systems capacity such as railways andairlines where there has to be compromise between different objectives. Genetic Algorithmsbreaks the task down into the construction of strings of genes comprising model variables andparameters, giving them a purpose in their Life and a measure of fitness for survival. Thereare many algorithms for the weeding out of unfit individuals-- some of which harken back tothe discredited eugenics programs of the 20th century.

Evolutionary Algorithms: All complex adaptive systems are continuously evolving and--indeed--co-evolving. Co-evolution means taking into account the agent's effect on itsenvironment, the response of the environment, and the further response ad infinitum of allparties. In the past, trading systems were back-tested, which could provide insight but alsowas subject to a variety of flaws and fallacies--forward looking bias, survivorship bias, datasnooping, etc. Then there was testing using 'hold out' samples. Now, with evolutionaryalgorithms, we can have walk-forward testing, where each step of the time series evolvesbefore being tested.
http://en.wikipedia.org/wiki/Swarm_intelligencehttp://en.wikipedia.org/wiki/Swarm_intelligencehttp://en.wikipedia.org/wiki/Swarm_intelligencehttp://en.wikipedia.org/wiki/Swarm_intelligence


7/12

--The ValuEngine Forecast 22 MNS Newsletter

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 wasrecently selected by Forbes.com for inclusion into its stable of newsletter products.

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 the

Logo Below

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

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

Treasuries

The yield on the 10-Year is below my semiannual pivot at 3.675signaling risk aversion.

The daily chart for the 10-Year yield shows potential to the 50-dayand 200-day simple moving averages at 3.56 and 3.45. This yield began the year testingmonthly support at 3.868. Next week the Treasury yield curve faces $118 billion in supply,Tuesday, Wednesday and Thursday.
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8/12

Commoditiesand Forex

Gold is below its 21-day and 50-day simple moving averages at $1117 and $1135 with

the December 22nd low at $1075. The Gold Bubble has popped and a weekly close below myquarterly support at $1084.9 indicates risk to my annual support at $938.7.

Crude oil is below my annual support at $77.05, and a close today below the 200-week

simple moving average at $76.13 indicates risk to quarterly support at $67.22. This would bea sign of a weaker than expected global economy.

The euro is trending below my quarterly pivot at 1.4327, which indicates risk to the

200-week simple moving average at 1.3848.

Major Indices

The Ascending Wedge Support is Broken for the Dow, giving Round 12 to the Bear.

The Dow traded below 10,570 on Wednesday, which breaks the uptrend that goesback to the March 2009 low. I decided to track the first three weeks of the year as though itwas a "Title Bout" between the Bull and the Bear. The Bear thus won the twelfth round of thefight-- making the score card 9-to-3 in favor of the Bull.

The Dow Industrial Average opened today below my annual support at 10,379.

The bulls still say that the strategy is to buy weakness. I began the year indisagreement suggesting to investors on Main Street to sell strength. After Thursdaysdrubbing, the score became 9-to-4--still favoring a wobbly kneed Bull.

With todays open below 10,379, I declare a TKO with the Bear as the victor of the TitleBout. The daily chart for the Dow is now negative. My nearest support is the five-monthmodified moving average at 9,631. The downside risk continues given weekly closes belowmy annual pivot at 10,379. Keep in mind that my quarterly support is 6,705.


9/12

Courtesy Thomson Reuters

A close on Friday below my annual support at 10,375 confirms the Bears' knockout

victory.

Housing

The National Association of Home Builders Housing Market Index slumped to 15 inJanuary on continued concerns about the weak jobs market and the increasing number offoreclosure sales. Community banks are reluctant to lead to builders and developers asnearly 3000 banks are overexposed to C&D and CRE loans. Because of this homebuildershave thinned inventories and slowed new construction. Remember that a reading of 50 is

neutral for this index and at 15 its a sign of a housing depression.

The Federal Housing Administration is making it tougher for homeowners to get amortgage by raising fees and tightening lending standards. The FHA is losing money as theforeclosure rate rises. As a result its reserves have fallen below the minimum required byCongress. This should cause yet another drag on housing as they insure 30% of all new


10/12

loans, and the FHA is the largest backer of mortgages for first-time buyers. The FHA onlyrequires a 3.5% down payment, but now requires an up front mortgage insurance premium of2.25% from 1.75%, which can be a deal breaker. Borrowers with a credit score below 580must put 10% down. More than 18% of FHA borrowers are at least one payment behind or inforeclosure compared to 14% for all mortgage loans.

What was supposed to help 3 to 7 million homeowners, the presidents mortgagemodifications only received 900,000 requests for help so far and only 66,500 have receivedpermanent relief. The program totals $75 billion and does not even keep up with monthlydefaults and foreclosures. It appears that the paperwork avalanche is too much for both thebanks and the homeowner to handle.

Below, we provide our VE data points for the Home Building Industry.

Ticker NameMkt

PriceValuation

(%)VE

Rating

Last 12-M

Retn(%)

Forecast1-MonthRetn(%)

Forecast1-Yr

Retn(%)

P/ERatio

AXR AMREP CORPORATION 14.3 38.49 1 -51.74 -28.25 -87.9 N/A

BHSBROOKFIELD HOMES

CORPORATION6.92 N/A N/A 116.25 -7.71 -79.29 1.37

BZH BEAZER HOMES 4.38 -75 3 256.1 -2.88 -36.16 N/A

CHCICOMSTOCK HOMEBUILDING COS

INC0.94 N/A N/A 235.68 -5.95 -50.31 N/A

CVCO CAVCO INDUSTRIES INC 36.37 51.48 2 55.36 -2.42 -20.03 N/A

DHI D R HORTON INC 11.55 -25.43 3 85.69 -0.95 -15.9 N/A

DWAHY DAIWA HOUSE IND LTD 111.89 20.29 2 21.62 -1.82 -21.41 29.88

HXMDESARROLLADORA HOMEX SAB

DE CV33.6 -28.18 3 72.22 -2.34 -29.84 11.26

KBH KB HOME 14.96 -58.27 3 29.08 -1.91 -22.82 N/A

LEN LENNAR CORPORATION 15.31 -45 3 119.66 -0.04 -17.14 N/A

MDC MDC HOLDINGS 33.34 -14 3 14.93 -1.46 -13.83 N/A

MHO M/I HOMES INC 10.85 -46.44 2 19.63 -1.24 -22.31 N/A

MTH MERITAGE HOMES CORP 20.19 -10.5 3 104.15 -0.71 -18.38 N/A

NVR NVR INC 721.5 60.88 3 69.14 -2.23 -15.84 23.84

OHB ORLEANS HOMEBUILDERS INC 1.75 N/A N/A 57.66 -2.95 -37.98 N/A

PGTI PGT INC 2.2 25.65 2 122.22 -3.52 -34.98 N/A

PHM PULTE HOMES INC 10.52 -27.18 3 -0.75 -0.59 -15.34 N/A

RYL RYLAND GROUP INC 20.94 -13.99 2 28.7 -1.51 -19.69 N/A

SKHSY SEKISUI HOUSE LIMITED 9.91 -75 3 14.97 -21.47 -76.66 N/A

SPF STANDARD PACIFIC CORP 3.71 -75 3 159.44 -1.78 -32.28 N/A

TOL TOLL BROTHERS INC 18.66 -19.48 3 2.13 -0.9 -10.57 N/A


11/12

Consumer Confidence

The ABC News Consumer Comfort Index fell to -49 last week down 8 points since thebeginning of 2010. This index is approaching the Recession and record low reading of -54,set a year ago. 45% of Americans say their personal finances are positive, which is below50% for 75 of the past 78 weeks, another record by far. Only 33% say is a good time tospend, which is 14 points below average and only 9% rate the economy positively, 29 pointsbelow average.

--The ValuEngine Quarterly FDIC Report UPDATEDOur Chief Market Strategist Richard Suttmeier is an expert on the banking system, and

he 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, adds

additional 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 the

ValuEngine 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 underperform 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 that there 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 341 additional 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.


12/12

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