2006 Minutes of our Meetings
Crow River Investment Club
Minutes January 10, 2006
1. The meeting was called to order by Lynn at 6:32 P.M. Present with payment were: Carole Ripplinger, Marion Marshall, Sheryl Sostarich, Craig Block, Lynn Ostrem, and Steven Schwartz.
Mike Trisler w/notice and payment will be mailed.
Guests: Kim and Diane Windingland and son Shawn.
Call for checks: all payments received, except as noted above.
Special Orders:
2. Secretary’s report was approved.
3. Treasurer’s/Club Agent report:
Correction to Octobers minutes Treasurer's report: The 11 shares purchased of Commerce Bank came to $389.86. And the dividend for MDT of $2.12 was reported in error.
Correcting the ending balance to $332.64.
Bank
Beginning Balance $368.03
dues collected $250.00
transfer/from broker $200.00
Ending Balance 418.03
Broker
Beginning Balance $475.22
Pur 7 shares Biomet (272.81)
Pur 6 shares WalMart (301.37)
transfer from bank 200.00
Div FDS 2.20
Ending Balance $103.17
4. Portfolio Manager to Call for Quarterly Stock reports and stock business:
Quarterly reports were presented on Biomet, with a recommended Buy. Members thought the SSG needs to be reviewed and revised.
BBBY, recommended HOLD, but a reviewed and revised SSG was needed the see if was a stock was performing well enough to remain in our portfolio.
FDS was a recommended BUY.
The previous month presentation on Brown & Brown was voted to be put on the watch list.
Lynn's stock presentation was Portfolio Recovery Associates PRAA. Handouts were presented to review before next meeting.
5. A motion to buy/sell stocks: A motion was made and seconded, to purchase $300.00 each of Biomet and Walmart.
6. Non-Stock Related Business: 2005 Audit committee, Lynn, Craig and Mike. Audit date to be selected.
Sign up sheet has passed around for 2006 meeting locations and stock reports. A complied copy will be presented at February meeting.
The 2006 Quarterly stock holding report was handed out.
Next month is our Annual Meeting. Sheryl is the Nomination Committee Chair. She'll be contacting members during the month for Officer Positions to be voted on at the February meeting.
The annual meeting worksheet was presented. Please address the "Issues for the Floor", "Goals for 2006" and submit "Social Events for 2006"
Meeting dated changed from February 14 to 16th.
7. Education: Audio & Power Point presentation titled "SSG Valuation" from the 2005 BINC Convention was presented.
Assignments for all:
Review Lynn's presentation on PRAA. Be ready with any questions.
For individuals:
February meeting, end of quarter stock watcher reports:
Lynn -ACS
Steven CHRW
Sheryl-CBH
Lynn: to make up stock report and location schedule.
K-1's to be ready and handed out at February meeting.
Fill out your Annual Meeting Worksheets
Craig: Purchase $300.00 each of Commerce Bank and Walmart
Next meeting February 16th , 2006. Note one time change to Thursday.
Lynn’s House, promptly at 6:30 P M.
Refer to web page for directions, if needed.
Adjourn: 8:28
Respectfully submitted,
Carole Ripplinger
Crow River Investment Club
Minutes February 16, 2006
1. The meeting was called to order by Lynn at 6:32 P.M. Present with payment were: Carole Ripplinger, Marion Marshall, Sheryl Sostarich, Craig Block, Lynn Ostrem, and Steven Schwartz. Mike Trisler no/notice and payment will be mailed.
Guests: Kim and Diane Windingland and son Shawn.
Call for checks: all payments received, except as noted above.
Special Orders: Kim and Diane Windingland both have submitted applications for membership.
2. Secretary’s report was amended to reflect that the stocks purchased last month were, Commerce Bank and Walmart..
3. Treasurer’s/Club Agent report:
Bank
Beginning Balance $418.03
dues collected $220.00
transfer/from broker $550.00
Ending Balance 88.03
Broker
Beginning Balance 103.17
Pur 9 shares Commerce (301.16)
Pur 6 shares WalMart (279.23)
transfer from bank 550.00
Div CHRW 1.56
Div Walmart 3.00
Div Commerce 3.96
Ending Balance $88.03
4. Portfolio Manager to Call for Quarterly Stock reports and stock business:
Quarterly reports were presented on ACS, with a recommended Hold and Watch. CHRW, recommended HOLD. CHB was reviewed and recommend HOLD.
FDS was a recommended BUY.
No stock presentation this month.
5. A motion to buy/sell stocks: A motion was made and seconded, to purchase $300.00 of Stericycle and to sell all shares of ACS. Also voted: add PRAA to the watch list.
6. Non-Stock Related Business: Annual Meeting: new officers are: Lynn Ostrem, President: Mike Trisler, Vice President / Education Chair: Sheryl Sostarich, Secretary/ Master List: Treasurer, Craig Block: Portfolio Manager, Carole Ripplinger.
Craig reviewed the partnership agreement and will itemized corrections/verbage that might need to be updated. Steven reviewed the web site and will submit a list of items that should be updated.
Goals for 2006: Increase membership to 10: Study and practice a "weed and feed" methodology on portfolio and watch list: More diversification.
Social events for 2006: June BBQ at David and Carole's house in June. Look at your calendar and advise any conflicts during June, so we may select a firm date. Last weekend in October dinner for club member, spouse or guest dinner location to be selected. An appetizer party for the December meeting at the Northland Inn, with spouses or guests.
NAIC Investor's Fair is coming in April.
7. Education: none.
8. Sheryl, as Master List manager submitted the following stocks as possible future presentations: X-Ray Dentsply, EW Edwards Lifesciences, ELK Elkcorp, and FRK Florida Rock Industries.
Assignments for all:
Look at your June calendar for open dates for the BBQ.
Prepare any questions for the two new applicants. Vote will be done via email after March meeting.
For individuals:
March meeting, end of quarter stock watcher reports:
Carole: Lowes
Mike: Walmart
Lynn: will send via email copies of Kim and Diane's applications for membership to review, for prospective questions.
Lynn and Sheryl will present stock presentations.
Craig: submit itemized list of Partnership Agreement changes
Steven: submit list of web site changes.
Craig: Purchase $300.00 each of Stericycle and sell ACS
Next meeting March 14th, 2006.
Lynn’s House, promptly at 6:30 P M.
Refer to web page for directions, if needed.
Adjourn: 8:31
Respectfully submitted,
Carole Ripplinger
The meeting of the Crow River Investment Club was called to order at 6:35 pm on March14, 2006 by Lynn Ostrem. The following guests were present: Kim and Diane Windingland and son Shawn. Those present, other than guests, are named below. Unless noted, payment was received from all members.
|
Lynn Ostrem |
Marion Marshall |
|
Carole Ripplinger |
Sheryl Sostarich |
|
Mike Trisler |
Craig Block |
|
Steven Schwartz (late) |
|
The minutes were to be amended to reflect the correct Ending Balance on the Treasurer’s Report.
Craig made a dues deposit totaling $280 (including January dues for Mike) and wrote a $10.65 check to Lynn for income tax returns, leaving an ending bank balance of $357.83.
Craig bought 5 shares of Stericycle for $310.25; received proceeds of $1,488.20 from the sale of 24 shares of ACS and cash dividends of $2.04, leaving an ending brokerage account balance of $1,261.29.
Stock presentations were made by Sheryl Sostarich for Brown & Brown (BRO) and by Lynn Ostrem for Coach (COH). These were the same reports presented to the Central Iowa Chapter at its Education Fair on March 11, 2006. A full copy of the stock reports are posted to www.bivio.com/crowriver
Quarterly stock reports given for Lowes, which continues to be an outstanding performer and Wal-Mart, which is a love/hate stock depending on the analyst report you read. Members were encouraged to read the Bull vs. Bear argument for WMT in the March 15, 2006 issue of Morningstar.
FactSet Research continues to be a good performer. We should consider lowering our judgments slightly.
Biomet is not meeting our sales or earnings projections and we should consider lowering our judgments. Pricing pressures on the orthopedic manufacturers are hurting stock prices. The company advises that 2007 margins should improve. The turnaround is taking longer than expected.
Though we have owned C.H. Robinson less than one year, we voted to sell C.H. Robinson as the upside/downside ratio is below 1:1. Moreover, the projected annual return is less than the 13-week T-bill rate.
Each stock watcher is to review the SSG for his or her stock(s) and discuss proposed changes in judgments with Lynn. Lynn would like to begin a discussion of our portfolio stocks on the message board.
A motion was made and seconded to buy $500.00 Biomet; $300.00 each Lowes and Bed Bath & Beyond (that’s BBBY Craig) and liquidate our position in C.H. Robinson.
Lynn met with Kim and Diane Windingland for a pre-orientation meeting. Both have since joined BetterInvesting. Their applications were sent to the current club members for review. We asked Kim and Diane about unanswered questions on their applications. Though one or both might miss a meeting for work or parenting, neither would be gone at the same time.
Assignments due interim the next meeting:
1. Current club members were asked to cast new member email ballots for Kim and Diane Windingland by Friday, March 17 at 5:00 pm.
2. Email Lynn with dates you are open for a June BBQ.
3. All members and guests were encouraged to register for one or both days of the 2006 Investors Fair. Lynn will mail the Investors Fair Schedule to our guests.
4. Each stock watcher is to review the SSG for his or her stock(s) and discuss proposed changes in judgments with Lynn.
Assignments for the April meeting:
1. Craig will prepare the April stock report.
2. Quarterly stock reports due for Biomet /Bed Bath & Beyond (Marion); FactSet (Craig)
3. Craig will execute stock trades to buy $500 Biomet, $300 each Lowes and Bed Bath & Beyond and liquidate our position in C.H. Robinson.
4. We will view the BINC 2005 Audio & Power Point presentation Improving Judgment Using the SSG by Mary Enright (37 min) during the education segment.
The meeting was adjourned at 8:35 pm.
Sheryl A Sostarich
Secretary
The next meeting will be at Lynn’s on April 11, 2006. Bring your appetite for cake.
Lynn Ostrem called the meeting of the Crow River Investment Club to order at 6:30 pm on April 11, 2006. Lynn welcomed our guest, Joshua Smyser, a recent graduate in Finance and auditor for Price Waterhouse Coopers. Kim and Diane Windingland were officially welcomed as new members of the club.
|
Lynn Ostrem |
Present w/pay |
Marion Marshall |
Present w/pay |
|
Carole Ripplinger |
Present w/pay |
Sheryl Sostarich |
Present w/pay |
|
Mike Trisler |
Present w/pay |
Craig Block |
Present w/pay |
|
Steven Schwartz |
Present w/pay |
Kim Windingland |
Present w/pay |
|
Diane Windingland |
Present w/pay |
|
|
The minutes of the March 14, 2006 were approved as posted.
Craig made a dues deposit totaling $250 and wrote a $24.04 check to Carole for party supplies, leaving an ending bank balance of $583.34.
Craig bought 8 shares of Bed Bath & Beyond for $300.87, bought 13 shares of Biomet for $477.94, bought 4 shares of Lowe’s for $273.35, received proceeds of $549.11 from the sale of 12 shares of C.H. Robinson, cash dividends of $2.20 and interest income of $1.12, leaving an ending brokerage account balance of $761.56.
Craig Block gave a new stock presentation for Wrigley Company (WWY). Wrigley Company was the featured stock in the April edition of Manifest Investing.
Quarterly stock reports given for Biomet, Bed Bath & Beyond, and FactSet Research. Walgreen, however, took center stage, dipping into the BUY ZONE for the first time in a couple of years. Members were encouraged to read the continuous classroom study for Walgreen on Manifest.
Walgreen is a core holding in many stock portfolios due to its high quality/low volatility characteristics. Several popular drugs are coming off patent and generic drug sales are what boost Walgreen’s operating margins. Walgreen will have near term challenges with the changes in Medicaid drug coverage, which it will combat with its Health Initiatives program. Argus rates the stock a buy with a price target of $52.
Bed Bath & Beyond reported a 9% rise in quarterly earnings, beating expectations and igniting a flurry of stock buying. Though faced with price competition from Target and Wal-Mart, Bed Bath & Beyond has flourished with higher-quality merchandise like cutlery and linens, which appealed to high-income customers. Same store sales were nearly double the consensus estimate, rising 6.3%.
Each stock watcher is to review the SSG for his or her stock(s) and recommend updates to the SSG. Many of our portfolio stocks need updating due to slowing growth and the general downtrend in P/E ratios.
A motion was made and seconded to take new positions of $500.00 each in Walgreen; Coach and Cheesecake Factory. Hmm, we ate cake and we bought CAKE.
We viewed a BINC 2005 presentation by Mary Enright. It did emphasize the value of the Preferred Procedure in adding judgment to your SSGs.
The following members were appointed as Stock Watchers: Lynn–Walgreen (WAG), Kim–Coach (COH), and Diane–Cheesecake Factory (CAKE).
Assignments due interim the next meeting:
1. Email Lynn with dates you are open for a July or August BBQ. June posed too many conflicts.
2. All members and guests were encouraged to attend the 2006 Investors Fair.
3. Lynn will organize a special meeting to develop a checklist for Stock Reports; decide what to do with the Watchlist & Prospect list. All members are encouraged to attend.
4. Each stock watcher is to review and come with suggestions for updating the SSG for his or her stock(s). Anyone needing help with the assignment should contact Lynn.
Assignments for the May meeting:
1. Mike will prepare the May stock report, which might be Abercrombie & Fitch.
2. Quarterly stock reports due for Commerce Bancorp (Sheryl) and Stericycle (Steven)
3. Craig will execute stock trades to buy $500 each Walgreen, Coach and Cheesecake Factory.
4. Lynn and Mike will lead a workshop to review the SSGs for all the stocks in our club portfolio.
5. Sheryl will update the Stock Diversification Table.
The meeting was adjourned at 8:30 pm.
Sheryl A Sostarich, Secretary
The next meeting will be at Carole’s office in Elk River on May 9, 2006.
Lynn Ostrem called the meeting of the Crow River Investment Club to order at 6:35 pm on May 9, 2006. Joshua Smyser, attended his second regular meeting as a guest.
|
Lynn Ostrem |
Present w/pay |
Marion Marshall |
Present w/pay |
|
Carole Ripplinger |
Present w/pay |
Sheryl Sostarich |
Present w/pay |
|
Mike Trisler |
Present w/pay |
Craig Block |
Present w/pay |
|
Steven Schwartz |
Present w/pay |
Kim Windingland |
Absent w/pay |
|
Diane Windingland |
Present w/pay |
|
|
The minutes of the April 11, 2006 meeting were approved as posted.
Craig made a dues deposit including new member fees totaling $420 and transferred $800 to the brokerage account, leaving an ending bank balance of $203.34.
Craig bought 11 shares of Walgreen for $482.26, bought 14 shares of Coach for $480.99, and bought 14 shares of Cheescake Factory for $483.79. We received cash dividends of $11.96 and interest income of $1.37, leaving an ending brokerage account balance of $127.85.
Mike Trisler gave a new stock presentation for Abercrombie & Fitch (ANF), a specialty apparel retailer. The company has maintained consistently high margins compared to its peers. High inventory levels continue to be a concern. We will decide at our June meeting whether or not to take a position in the stock.
We discussed the previously presented Wrigley Company. Although Wrigley is a high quality company, it is not growing at a rate that will help us improve our overall portfolio performance. A copy of Craig’s stock report will be posted on our club website.
Traffic was down at Cheesecake Factory stores, which resulted in flat earnings for the quarter. The company believes it can sustain 20% earnings growth over the long term through store expansion; the near term earnings weakness is believed to be temporary. At an upside/downside ratio of 2.4 to 1 we should buy below $21.00 per share. Diane recommends a hold.
Commerce Bancorp continues to face a challenging business environment because of the flat yield curve. Net interest margin for the first quarter increased slightly to 3.53% compared to 3.52% in the fourth quarter 2005 but was down one-half a percentage point from the 4.04% margin in the first quarter of 2005.The stock spiked on the news that Capital One Financial would acquire North Fork Bancorp. Deposit growth continues to be very robust at 28% for the first quarter. At an upside/downside ratio of 1.3 to 1 we should buy below $32.00 per share. Sheryl recommends a hold.
Coach continues to blow past analysts’ estimates. Earnings increased 34% while sales rose 20%. Operating margins rose to 33.2%, a 140 basis point improvement over the prior year quarter. Sales were particularly robust in Japan, rising 23%. The company has $800 million in cash and no debt. At an upside/downside ratio of 3.9 to 1 we should buy below $33.00 per share. Lynn recommends a buy.
Stericycle’s revenues rose 27% in the first quarter 2006. Acquisitions less than one year old contributed $25 million in revenues for the quarter. Debt from acquisitions rose to 47.3% of capitalization versus 40.9% of capitalization at December 31, 2005. Stericycle remains the largest company in its industry. At an upside/downside ratio of 1.8 to 1 we should buy below $60.00. Steven recommends a hold.
A motion was made and seconded to buy $300 of Coach.
In lieu of a formal education segment, Lynn led a session in updating the SSGs for our portfolio stocks. Overall, growth is slowing and P/E ratios are in a general downtrend.
Assignments due interim the next meeting:
1. Craig is to check with Amy and confirm he could attend the BBQ on July 15, 2006.
2. Joshua Smyser will meet with Lynn for a new member orientation.
3. Lynn will develop a checklist for Stock Reporting and members will be asked to comment on the new guidelines.
Assignments for the June meeting:
1. Carole will prepare the June stock report.
2. Quarterly stock reports due for Lowes (Carole) and Wal-Mart (Mike)
3. Craig will execute a stock trade to buy $300 of Coach.
4. All members should review the new member application for Joshua Smyser in preparation for his final interview.
The meeting was adjourned at 8:35 pm.
Sheryl A Sostarich, Secretary
The next meeting will be at Lynn’s in St. Michael on June 13, 2006.
Lynn Ostrem called the meeting of the Crow River Investment Club to order at 6:35 pm on June 13, 2006. Joshua Smyser attended his third regular meeting as a guest.
|
Lynn Ostrem |
Present w/pay |
Marion Marshall |
Present w/pay |
|
Carole Ripplinger |
Present w/pay |
Sheryl Sostarich |
Present w/pay |
|
Mike Trisler |
Present w/pay |
Craig Block |
Present w/pay |
|
Steven Schwartz |
Absent w/o pay |
Kim Windingland |
Present w/pay |
|
Diane Windingland |
Present w/pay |
|
|
The minutes of the May 9, 2006 meeting were approved as posted.
Craig made a dues deposit totaling $310 and transferred $450 to the brokerage account, leaving an ending bank balance of $63.34.
Craig bought 9 shares of Coach for $282.53. We received cash dividends of $2.28, leaving an ending brokerage account balance of $297.60.
Carole gave a new stock presentation for Knight Transportation (KNX), a truckload carrier focusing on short to medium haul. Knight is ranked in the S&P Small Cap 600 Index. In addition to dry van service, the company operates reefer and brokerage divisions. The company has virtually no debt and $21.1 million in cash. Operating cash flow of $129 million should be sufficient to grow the business and invest in new equipment. At an upside/downside ratio of 4 to 1 we should buy below $21.00 per share. Carole recommends a buy.
We discussed the previously presented Abercrombie & Fitch (NYSE: ANF). Although Abercrombie & Fitch is a high quality company with a growth rate that could improve our portfolio performance, we are too overly weighted in retail stocks to open a position at this time. Mike’s stock report is posted on the club website.
Brown & Brown posted strong results in what continues to be a challenging environment for insurance brokers. For the quarter ended March 30, 2006 Brown & Brown reported sales growth of 13.6% and earnings per share growth of 16%. Insurance carriers are writing very few property accounts in hurricane zones, which is forcing many clients to purchase coverage with non-admitted carriers. Brown & Brown is writing more brokered business, which generates higher commissions. Using the forecast growth rate of 15%, Sheryl recommends we buy below $27.00 per share. Sheryl will keep Brown & Brown on her Watchlist.
This summer’s social event will be a BBQ held on July 15, 2006 beginning at 4:00 PM at Carole’s. The theme will be Mexican. Bring your appetite and sombrero.
Josh Smyser met with Lynn for a new member orientation meeting on May 17, 2006. Josh is a college graduate in finance employed by Price Waterhouse Coopers. In the event that the club buys stock in a company that Josh audits, Josh would ask to be reassigned to another work team. January, February and March are extremely hectic months when employees are expected to work 70-hour weeks. Josh may miss up to three meetings per year.
Members are requested to cast their email vote on or before Friday, June 16, 2006 at 5:00 PM. Lynn will track you down if you fail to vote.
Lowe’s had another phenomenal quarter. Earnings increased 44% while sales rose 20%. Same store sales grew 5.7% during the quarter. Most economists expect employment and income growth to stay strong in 2006, which bodes well for Lowe’s. Lowe’s will open 24 new stores in the second quarter and relocate four existing stores during the year. The company will spend about $800 million to improve its existing stores. As part of this initiative, self-checkout terminals will be added to 300 additional stores for a total of 450 stores. Lowe’s approved a 2-for-1 stock split and increased its quarterly dividend by 67 percent to 10 cents per share. [Due to the fact that Lowe’s us the largest holding in our portfolio] Carole recommends a hold.
Wal-Mart is trying hard to boost its share price (which has been stuck in a rut for seven years) with several key initiatives. Wal-Mart has been adding fashionable clothing, high-end electronics and organic food with hopes of appealing to a broader customer base. Wal-Mart had a strong showing in the quarter ended April 30, 2006, beating estimates with a 6.3% increase in quarterly profit. Same store sales rose 3.8% in the quarter while international sales rose 23%. Inventory was reduced by 2 percent in the quarter and the company met its goal of growing inventory at half the rate of sales. Wal-Mart expects same store sales to grow between 2 and 4 percent in the second quarter. The company continues to remodel existing stores to the superstore concept and retail selling space has tripled. Mike recommends a buy.
The club voted to liquidate Stericycle on the basis of valuation. The stock has a projected annual return (PAR of 6.5%) similar to the yield on the 13-week Treasury bill and affords very little upside.
A motion was made and seconded to sell 5 shares of Stericycle, buy $300 of Walgreen’s and buy $300 of Knight Transportation.
In lieu of a formal education segment, Lynn led a discussion of changes and improvements to our stock presentation system. The discussion was based on proposals made at a special meeting on April 27, 2006 at Starbuck’s. The results of the voting will appear as an addendum to these minutes.
Assignments due interim the next meeting:
Members are to cast their new member email vote by Friday, June 16, 2006 at 5 PM.
Assignments for the July meeting:
1. Sheryl will prepare the July stock report for Hydril (Nasdaq: HYDL).
2. Sheryl will update the Portfolio Diversification Table.
3. Quarterly stock reports due for Bed Bath & Beyond and Biomet (Marion), FactSet Research (Craig) and Walgreen’s (Lynn).
4. Craig will execute stock trades to sell 5 shares of Stericycle, buy $300 of Walgreen’s and buy $300 of Knight Transportation.
The meeting was adjourned at 8:40 pm.
Sheryl A Sostarich, Secretary
The next meeting will be at Lynn’s in St. Michael on July 11, 2006.
Addendum to the Crow River Investment Club Minutes – June 13, 2006 Meeting
The following recommendations were all approved.
Recommendation #1: Continue to provide a blank presentation schedule at our Annual Meeting and let members choose which months they would like to offer a stock presentation.
Recommendation #2: On a 6 month trial basis, use the Best of Breed stock screen on Manifest Investing as our primary source of new stock presentation ideas.
Ø (2a): Last month, it was proposed that we use Financial Strength of 80+, Quality Rating of 65+, Sales Growth of 10%+, and PAR of 14%+ for our screen. (The only difference between this and the Sweet Sixteen is the latter looks for Sales of 8%+ and PAR is 5-10% over MIPAR.)
Ø (2b): It was proposed that a member could offer up a stock from an outside source, provided it met our screening criteria.
Recommendation #3: It is proposed that we collectively choose the next month’s stock, by consensus, with an emphasis placed on improving our portfolio.
Recommendation #4: In order to make sure we cover the information most important to the group, it is proposed that we create and approve a minimum amount of information that we would like presented on each new company. Guidelines have already been presented. This recommendation is not to approve those specific guidelines. It is to approve the concept of guidelines, only.
Recommendation #5: If Recommendation #3 is accepted, it is proposed that we do away with the “previously presented” segment of the meeting and discuss all new stock presentations at the time they are presented.
Ø (5a): If guidelines are used, then we would not require the stock presentation materials to be posted prior to the meeting.
Recommendation #6: It is proposed that we have a small checklist of questions to be used on newly presented companies in order to enhance our discussion. This could be a separate list, or we could simply follow the presentation guidelines, and add some portfolio questions, such as:
1) How will the addition of this company affect the Quality, Sales Growth & PAR of our portfolio?
2) How will this company fit into our diversification strategy?
Recommendation #7: It is proposed that we do away with our Watch List Pert and Dashboard and use the Best of Breed Portfolio as our replacement. The theory is: Why watch stocks that are not in our buy range if we don’t intend to follow them regularly? If a stock meets our criteria, it will always show up on the Best of Breed list. It may fall off, but we will be alerted when it comes back on.
Ø (7a): It is recommended that the Best of Breed list be updated monthly a week before the meeting.
Recommendation #8: It is proposed that we implement the Stock Presentation Guidelines proposed by Lynn Ostrem earlier this month, as attached.
Lynn Ostrem called the meeting of the Crow River Investment Club to order at 6:30 pm on July 11, 2006. Joshua Smyser was officially welcomed as a new member of the club.
|
Lynn Ostrem |
Present w/pay |
Marion Marshall |
Present w/pay |
|
Carole Ripplinger |
Present w/pay |
Sheryl Sostarich |
Present w/pay |
|
Mike Trisler |
Present w/pay |
Craig Block |
Late w/pay |
|
Steven Schwartz |
Late w/pay |
Kim Windingland |
Late w/pay |
|
Diane Windingland |
Late w/pay |
Joshua Smyser |
Present w/pay |
The minutes of the June 13, 2006 meeting were approved as posted.
Craig made a dues deposit totaling $280, leaving an ending bank balance of $343.34.
Craig bought 7 shares of Walgreen’s for $307.39 and 16 shares of Knight Transportation for $301.35. We received cash proceeds from the sale of 5 shares of Stericycle and cash dividends of $8.72, leaving an ending brokerage account balance of $15.97.
Sheryl gave a new stock presentation for Hydril Company (HYDL) and has written an extensive report which is posted to the club website. For those who like to do outside reading, she recommends Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy by Matthew R. Simmons, Black Gold: The New Frontier in Oil for Investors by George Orwel and Commodities Rising by Jeffrey M. Christian. At an upside/downside ratio of 4.5 to 1 we should buy below $88.00 per share. Sheryl recommends a buy.
Bed Bath & Beyond reported sales of $1.4 billion in the first quarter of 2006, a 12% increase over last year. Earnings grew half as much to 35 cents per share or $100 million. Results were driven by a strong comp-store sales increase of 4.9%. Cash assets of $3 million have dropped to nearly one-third of their levels of a year ago. SG&A expenses increased almost 2% over last year, partly due to stock options expense mandated by FAS 123R and partly due to higher occupancy, advertising, and lease accounting expenses. Management was notably more cautious on the conference call amidst concern about the ever-weakening housing market. Bed Bath & Beyond operates 25.8 million retail square feet, an 11% increase from the prior year. Management reiterated that it plans to add 2.5 million retail square feet in 2006 or about 10% more retail space. Bed Bath & Beyond issued EPS guidance of 51 cents for the second quarter 2006 and reaffirmed its fiscal 2006 EPS guidance of $2.17. Marion recommends a hold.
Biomet’s quarterly net profit fell 5 percent on one-time charges including a $9 million severance package for its former chief executive. Earnings (before one-time charges) rose 8 percent to $113 million on strong sales of artificial knee replacements. Sales of knee implants rose 15% worldwide while hip replacements rose 10%. Biomet is training 114 doctors how to implant its new ceramic hip. The EBI spine products division continues to be a drag on profits and it is taking longer than expected to turn the division around. The company had nothing new to report regarding its contract with Morgan Stanley. Morgan Stanley was hired in April to explore strategic alternatives, including the possible sale of the company. All this comes at a time when the orthopedic industry has been hit with a second round of subpoenas from the Department of Justice alleging criminal violations. Marion recommends a hold.
FactSet Research reported a 24.5% increase in revenue for the third quarter ended May 31, 2006. Third quarter earnings rose to $21 million from $19.6 million in the year-ago quarter. The company added 56 new clients in the quarter and saw its subscriptions revenue increase by $19 million to $399 million. Sales were particularly strong in Europe, up 36% and in the Pacific Rim, up 32%. FactSet’s client retention rate continues to hold above 95%. The company raised its quarterly dividend by twenty percent to 6 cents per share. Craig recommends a hold.
Walgreen’s reported a third quarter sales increase of 12.4% and earnings growth 14.2%. Same store sales grew an impressive 7.6% with prescription sales accounting for most of the increase. Walgreen’s recently landed a contract to fill prescriptions for one of the largest managed-care organizations–United Healthcare. Large retail drugstore chains like Walgreen’s are in a better position than small independent drugstores to attract clients who are using the Medicare drug benefit program. While margins were hurt by the shift in sales mix to prescriptions (namely Medicare Part D business), margins were boosted by sales of generic drugs. Walgreen’s will expand its footprint on the East Coast with the acquisition of 76 Happy Harry’s pharmacy stores. This is Walgreen’s largest acquisition since 1986 when it purchased the 66-store Medi-Mart chain in the Northeast. The club approved Lynn’s recommendation to change judgments on the SSG to 13.6% sales growth and 15% EPS growth, P/E multipliers of 30 for the high and 20 for the low. Lynn recommends a buy
A motion was made and seconded to place a limit order to buy $500 of Hydril at $75, good until cancelled.
New Stock Watchers
Steven Schwartz will be the stock watcher for Hydril Company. Josh Smyser will be the stock watcher for Knight Transportation.
Lynn showed us how data is taken from the Value Line Investment Survey to prepare Manifest’s Fundamental Forecast. She also showed us how to calculate earnings per share [on the SSG] using the Fundamental Forecast and the Preferred Procedure. When we complete our SSGs, we often make the mistake of overstating the high price and overstating the high and low P/E multipliers. This causes us pay too much for our stocks.
Assignments due interim the next meeting:
1. Members were reminded of the summer social event on July 15, 2006 beginning at 4:00 PM at a private residence in Elk River. Bring your appetite and sombrero.
2. Sheryl will not attend the regular meeting in August but will submit a quarterly stock report for Commerce Bancorp, a proxy and a dues check.
Assignments for the August meeting:
1. Steven will prepare the August stock report for Cisco (Nasdaq: CSCO).
2. Sheryl will update the Portfolio Diversification Table.
3. Quarterly stock reports due for Cheesecake Factory (Diane), Commerce Bancorp (Sheryl), Coach (Kim), Hydril (Steven) and Knight Transportation (Josh).
4. Craig will place a limit order to buy $500 of Hydril at $75, good until cancelled.
The meeting was adjourned at 8:30 pm.
Sheryl A Sostarich, Secretary
The next meeting will be at Lynn’s in St. Michael on August 8, 2006.
Lynn Ostrem called the meeting of the Crow River Investment Club to order at 6:35 pm on August 8, 2006. Lynn welcomed our guest, Pat Kerick, who recently moved from Alexandria to St. Cloud where she was a member of a BI club. We hope to entice Pat to become a member of the Crow River Investment Club.
|
Lynn Ostrem |
Present w/pay |
Marion Marshall |
Present w/pay |
|
Carole Ripplinger |
Present w/pay |
Sheryl Sostarich |
Absent w/pay |
|
Mike Trisler |
Present w/pay |
Craig Block |
Present w/pay |
|
Steven Schwartz |
Present w/pay |
Kim Windingland |
Present w/pay |
|
Diane Windingland |
Present w/pay |
Joshua Smyser |
Present w/pay |
The minutes of the July 11, 2006 meeting were approved as posted.
Craig made a dues deposit totaling $395 and transferred $600 to the brokerage account, leaving an ending bank balance of $138.34.
Craig bought 6 shares of Hydril for $456.29. We received cash dividends of $16.44, leaving an ending brokerage account balance of $176.12.
New Business
Do we need to change the meeting time?
If Craig were to change jobs, he might be coming from farther away and it would be difficult for him to make a 6:30 pm start time. Marion is opposed to changing the meeting start time. For now, the meeting start time will remain 6:30 pm.
Quarterly Stock Reports
We used to follow a quarterly stock report format, which covered the specific metrics we used to make our decisions along with any news that would affect our judgments. All metrics on the Quarterly Stock Report are on the PERT report. Without a hard copy summary report, we don’t retain the information presented by the stock watchers.
How can we condense our quarterly stock reports to make them more meaningful? A discussion will be deferred to the September meeting.
Turmoil at the National level
Fourteen members of the Computer Group Advisory Board resigned because they didn’t have enough faith that management is going to survive this. We need money and support at the Chapter level and the National Association is not giving it to us. Dick Holthaus was influential in getting Don Spindel elected to the Board of Trustees but Don Spindel found out it was a hopeless endeavor and quit.
Should we require Crow River Investment Club members to buy individual memberships in BetterInvesting? A discussion will be deferred until the September meeting.
Steven gave a new stock presentation for Cisco Systems (CSCO). Cisco was founded in 1984. The Company developed what is known as Internet protocol, a series of numbers used in routing all networks. Cisco acquired six companies in the past year, the most notable being Scientific-Atlanta, a leading provider of video distribution networks. Cisco is trying to boost sales to the low-end market through its wholly owned subsidiary, Linksys. Linksys is the best of the router companies for individual use. The company is developing SIP (Session Initiation Protocol) products – the voice over Internet Protocol products that are coming out. The sound quality has advanced to the point where it can compete with digital phone quality. When pretax profit as a percentage of sales is dropping, this is a precursor to a negative earnings report. This signal would have prompted investors to sell Cisco in 2001. The latest press release did not give quarterly comparisons so we will need to look at the SSG. Cisco is not a company we’d likely buy today but it is a stock to watch.
Sales at Cheesecake Factory were up 12% primarily due to stores expansion. The company has delayed the release of its second quarter earnings report due to an investigation by the SEC into stock option grant practices. The Wall Street Journal explains that top executives of several public corporations may be cited for wrongdoing having been granted stock options when their company stocks were at monthly lows. Cheesecake Factory is not the only company under scrutiny. Diane recommends a hold.
As presented by Lynn, on a sequential basis Commerce Bancorp reported flat earnings for the second quarter ended June 30, 2006. Revenue rose 14% year over year, which was slightly better than analysts’ estimates. Earnings continue to be hurt by the flat yield curve as net interest margin declined by 14 basis points to 3.39%. The bright spot is that net interest income rose in real dollars by 11% year over year. Commerce Bancorp is well capitalized by regulatory standards and has no plans to issue additional capital in 2006. Commerce is likely to benefit significantly from stores expansion in Washington D.C. Sheryl recommends a hold based on current valuation.
Coach reported a 33% increase in earnings per diluted share for the fourth quarter ended July 1, 2006. Net sales rose 23% combined with significant operating margin improvement. Management raised its guidance for fiscal 2007 and now estimates sales of about $2.5 billion for the year, an increase of 19%. Earnings per share are forecasted to rise to $1.55, up 22% from last year, which is prompting many analysts to raise their guidance. The company repurchased 15.6 million common shares during the fourth quarter at an average cost of $31.20. Kim recommends a buy based on the soft market for retail stocks.
Hydril reported that earnings per share rose 11% sequentially from the first quarter of 2006 and 44% from the year ago quarter. Revenues were $142.1 million for the quarter, an increase of 25%. Operating income was up 10% to $36.2 million. Strong second quarter results reflect a growing demand for Hydril’s products and services in worldwide markets. Premium connections revenues increased 22% to $89.4 million. Operating margin decreased to 32% from 37%. Pressure control segment revenues increased 30% to $52.7 million while capital equipment revenues increased 45% to $28.5 million. Aftermarket revenues increased 16% to $24.2 million. Hydril is a volatile stock, which will prompt us to take a closer look at the PERT. Steven recommends a hold.
Knight Transportation reported that revenues increased 24% in the second quarter. Josh pointed out that adjusted for the fuel surcharge, revenues rose 17%. The refrigerated truck service is viewed as a catalyst for growth. Knight is growing its business by expanding its fleet and by logging more revenue miles. In lieu of a conference call, the company issued a more detailed press release. Analyst’s estimates for growth range between 16% and 18%. Josh recommends a hold.
A motion was made and seconded to buy $300 of Coach and to place a limit order to buy $300 of Hydril at $70, good until cancelled.
Lynn showed us how data is taken from the Value Line Investment Survey to prepare Manifest’s Fundamental Forecast. She also showed us how to calculate earnings per share [on the SSG] using the Fundamental Forecast and the Preferred Procedure. Lynn provided handouts for three stocks–Biomet, Cisco, and Commerce Bancorp.
Surprise Announcement
Steven Schwartz announced that he would be moving out of state later this year and would be leaving the club.
Assignments for the September meeting:
1. Marion will prepare the September stock report for Fastenal (Nasdaq: FAST).
2. Quarterly stock reports due for Lowes (Carole) and Wal-Mart (Mike).
3. Craig will buy $300 of Coach and place a limit order to buy $300 of Hydril at $70, good until cancelled.
4. Come prepared to discuss two topics: Should we require Crow River Investment Club members to buy individual memberships in BetterInvesting? How can we condense our quarterly stock reports and make them more meaningful?
The meeting was adjourned at 8:30 pm.
Sheryl A Sostarich, Secretary
The next meeting will be at Lynn’s in St. Michael on September 12, 2006.
Lynn Ostrem called the meeting of the Crow River Investment Club to order at 6:35 pm on September 12, 2006. Lynn welcomed our guest, Beth Silverwater, who was invited to visit our club meeting. Beth is a member of another BI club and a Chapter director.
|
Lynn Ostrem |
Present w/pay |
Marion Marshall |
Absent w/notice & pay |
|
Carole Ripplinger |
Present w/pay |
Sheryl Sostarich |
Present w/pay |
|
Mike Trisler |
Present w/pay |
Craig Block |
Late w/pay |
|
Steven Schwartz |
Present buyout |
Kim Windingland paid |
Absent w/o notice w/pay |
|
Diane Windingland |
Present w/pay |
Joshua Smyser |
Present w/pay |
Reminder! Members who will be absent from a regular club meeting are required to give advance notice via email or telephone to the Secretary (an email on the message board will do). Members are expected to remit a check for dues to the President or Treasurer prior to meeting they will miss. If a member fails to give advance notice, the absence will be recorded in the minutes.
The minutes of the August 8, 2006 meeting were approved as posted.
Craig made a dues deposit totaling $360 and transferred $500 to the brokerage account. We paid $56.36 to Lynn for the Barbecue. There was a minor snafu on the transfer causing an overdraft fee of $29, which Craig paid out of pocket. Lynn deposited $87.02 and Craig deposited $65 to cover it, leaving an ending bank balance of $65.00.
Craig bought 10 shares of Coach for $306.05 and 4 shares of Hydril for $278.39. We received cash dividends of $3.80, leaving an ending brokerage account balance of $95.48.
Unfinished Business
Steven Schwartz submitted his resignation from the club on August 8, 2006. A motion was made and seconded to sell our club holding in Cheesecake Factory. It passed unanimously. Cheesecake Factory is delinquent on its quarterly SEC filing and endangered of being delisted from the Nasdaq. We needed to raise cash to pay for Steven’s buyout.
How can we condense our quarterly stock reports to make them more meaningful? We can obtain all the quantitative data we need from the PERT report that Carole brings to each meeting. A motion was made and seconded that stock watchers prepare a 3-minute report, in their own words, summarizing a conference call, press release, or analyst report. The stock watcher will also provide a recommendation of buy, sell or hold. The motion passed unanimously.
Should we require Crow River Investment Club members to buy individual memberships in BetterInvesting? Most members agreed that they are not receiving full value from their BetterInvesting memberships. Only a few were reading the monthly magazine. A motion was made and seconded not to require membership in BetterInvesting as a prerequisite of joining the Crow River Investment Club. The motion passed unanimously.
All members feel that the Toolkit software is helpful in applying the BI methodology to analyze stocks. The data files could soon be obtained from a third-party source. A motion was made and seconded to require new members of the club to purchase Toolkit software. The motion passed unanimously.
Wal-Mart is considered substantially undervalued by Morningstar. Wal-Mart has done a good job at managing inventories to reduce markdowns. Margins have come under pressure due to the shift toward groceries. Mike recommends a buy.
Lowe’s expects income growth to moderate in the coming quarters. The company reaffirmed its $2.07 earnings per share guidance for the year. Carole recommends a hold being that our portfolio is overweighted in Consumer Cyclical.
Lynn reviewed the Wells Fargo classroom study on Manifest Investing. Using the study, she walked us through the earnings per share calculation for Wells Fargo, which is fairly complicated.
Diane Windingland is the new stock watcher for Hydril Corporation.
Assignments for the October meeting:
1. Marion will prepare the October stock report for Fastenal (Nasdaq: FAST).
2. Quarterly stock reports due for Bed Bath & Beyond and Biomet (Marion), FactSet Research (Craig) and Walgreen’s (Lynn).
3. Craig will sell our club holding in Cheesecake Factory at the market open. Craig will write a check to Steven Schwartz for the value of his partnership interest.
Last Word Did you notice how concise the club minutes are? This is because Lynn will help Sheryl launch a Blog on the club website called The Buzz on Stocks in place of those embellished quarterly stock reports.
The meeting was adjourned at 8:30 pm.
Sheryl A Sostarich, Secretary
The next meeting will be at Lynn’s in St. Michael on October 10, 2006.
Lynn Ostrem called the meeting of the Crow River Investment Club to order at 6:30 pm on October 10, 2006. Pat Kerick attended her second meeting as a guest.
|
Lynn Ostrem |
Present w/pay |
Marion Marshall |
Present w/pay |
|
Carole Ripplinger |
Present w/pay |
Sheryl Sostarich |
Present w/pay |
|
Mike Trisler |
Present w/pay |
Craig Block |
Absent w/notice; w/o pay |
|
Diane Windingland |
Present w/pay |
Kim Windingland |
Present w/pay |
|
|
|
Joshua Smyser |
Absent w/notice & pay |
The minutes of the September 12, 2006 meeting were approved as posted.
Craig made a dues deposit totaling $340 and we received $400 from the brokerage account. We issued a check for $580.21 to Steven Schwartz for his buyout from the club, leaving an ending bank balance of $224.79.
We received cash proceeds of $367.25 from the sale of 14 shares of Cheesecake Factory and cash dividends of $9.72. Craig transferred $400 to the bank account, leaving an ending brokerage account balance of $72.45.
Unfinished Business
We will have a short December meeting combined with a social event on Tuesday, December 12, 2006 at the Northland Inn. This event will run from 6:30 to 8:30 PM. Please bring a spouse, friend or date. Hors d’oeuvres will be served.
All members were invited to a dress rehearsal of class presentations to be given to the Central Iowa BetterInvesting Chapter. Lynn’s topic is Researching Stocks – the Other 20% and Sheryl’s topic is The Quick & Dirty SSG. Meet at Lynn’s on October 17, 2006 at 6:30 PM sharp.
Marion gave a new stock presentation on Fastenal (Nasdaq: FAST). Fastenal sells threaded connections for industrial and construction use. The company is aggressively building new stores with cash from operations. Fastenal has started to convert its existing stores to a format focused on stocking a broader inventory and displaying that inventory so customers can serve themselves. Marion recommends a buy if the stock pulls back.
Bed Bath & Beyond is spending heavily on stores expansion. Advertising costs were up a hefty 19%. Both sales and earnings have been trending down. We decided, as a group, to hold the stock through the seasonally strong fourth quarter.
Biomet reported gross margins of 70%, which are the envy of its closest competitors Stryker and Zimmer. The weakest link continues to be the trauma and spinal division where sales and earnings continue to decline. Biomet will be forced to aggressively start marketing its products overseas. Marion recommends a hold.
Walgreen’s margins are likely to benefit from increased sales of generic drugs and higher volumes from Medicare Part D recipients. Wal-Mart has announced a $4 generic prescription drug program to try to aggressively compete with Walgreen’s. Wal-Mart’s plan covers a month’s supply of 314 prescriptions. Walgreen’s has said that it will not match Wal-Mart’s promotion. Walgreen’s raised its quarterly dividend by 19%. Lynn recommends a buy.
Hydril issued an earnings warning that helped pull its stock down to a 52-week low. Distributors are purchasing fewer premium connections than they are selling to end-users. As a result, inventories have depleted to a 3-month supply. The rig count is strong and the company expects sales to rise as inventories stabilize. The company expects the fourth quarter to be its best quarter in 23 years. Diane recommends a buy.
Lynn reviewed the Fastenal classroom study on Manifest Investing. Using the study, she walked us through the earnings per share calculation for Fastenal.
A motion was made and seconded to buy $300 of Walgreen’s.
Assignments for the November meeting:
1. Lynn will prepare the November stock report for PetSmart (Nasdaq: PETM).
2. Quarterly stock reports due for Coach (Kim), Commerce Bancorp (Sheryl), FactSet Research (Craig), Hydril (Diane) and Knight Transportation (Josh).
3. Craig will buy $300 of Walgreen’s.
4. Each stock watcher will order an investor packet for the portfolio stock he or she is assigned. Each stock watcher will prepare an update report and give a 5-minute summary.
The meeting was adjourned at 8:43 pm.
Sheryl A Sostarich, Secretary
The next meeting will be at Lynn’s in St. Michael on November 14, 2006.
Lynn Ostrem called the meeting of the Crow River Investment Club to order at 6:30 pm on November 14, 2006.
|
Lynn Ostrem |
Present w/pay |
Marion Marshall |
Present w/pay |
|
Carole Ripplinger |
Present w/pay |
Sheryl Sostarich |
Present w/pay |
|
Craig Block |
Present w/pay |
Mike Trisler |
Absent w/notice; w/o pay |
|
Diane Windingland |
Present w/pay |
Kim Windingland |
Present w/pay |
|
|
|
Joshua Smyser |
Present w/pay |
The minutes of the October 10, 2006 meeting were approved as posted.
Craig made a dues deposit totaling $330 and transferred $300 to the brokerage account. We issued a check for $580.21 to Steven Schwartz for his buyout from the club, leaving an ending bank balance of $254.79.
Craig bought 6 shares of Walgreen’s totaling $273.11. We received $300 in a transfer from the bank account and cash dividends of $5.04, leaving an ending brokerage account balance of $104.38.
Unfinished Business
We will have a short December meeting combined with a social event on Tuesday, December 12, 2006 at the Northland Inn. This event will run from 6:30 to 8:30 PM. Please bring a spouse, friend, or date. Hors d’oeuvres will be served. Please RSVP to Sheryl by Friday, December 8, 2006.
All members were invited to a workshop on completing the Stock Selection Guide. This hands-on class will be held at the Rogers Library on Saturday, December 2, 2006 10:00 AM to Noon. Attendees should bring a working computer with Toolkit installed.
Lynn gave an energetic new stock presentation on PetSmart (Nasdaq: PETM). PetSmart is a full service pet supply chain. Margins are expected to rise with the company’s entry into the pet hotel business. The company need not beg too hard for investor dollars if top line growth expands as expected. A positive feature article in Barron’s should also help to attract new shareholders. Lynn recommends a buy below $29.80.
Bed Bath & Beyond is spending heavily on stores expansion. The stock has suffered with the housing slowdown. We decided, as a group, to continue to hold the stock through the seasonally strong fourth quarter.
Biomet continues to trade in a narrow range despite changes in management and enhancements in accounting practices. The weakest link continues to be the trauma and spinal division where sales and earnings continue to decline. Biomet will be forced to aggressively start marketing its products overseas. Marion recommends a hold.
Commerce Bancorp continues to struggle with the flat yield curve, yet its deposit growth remains strong. The company has reiterated that it will not issue additional capital or restructure its investment portfolio in 2006. There is optimism that margins will stop getting worse in the fourth quarter wherein income should rise in line with the growth in deposits. The bankruptcy filing of New Jersey-based Kara Homes had no impact on Commerce’s operations. Sheryl recommends a hold.
FactSet Research has again reported consistent results. The company’s most recent two acquisitions are now accretive to earnings. FactSet is trading at a premium to its market value. Craig recommends a hold and a buy below $47.60.
Hydril reported third-quarter earnings per share of 84 cents that were 4% higher year-over-year. Distributors are purchasing fewer premium connections than they are selling to end-users. As a result, inventories have depleted to a 3-months’ supply. The rig count is strong and the company expects sales to rise as inventories stabilize. The board of directors has approved a $150 million stock buyback. Diane has chosen judgments as follows: 12% sales growth, 20% EPS growth, high P/E of 25, low P/E of 13, low price of $35. Diane recommends a buy below $65.
Several analysts have lowered their estimates due to slowing economic growth. Worry continues over the availability of drivers. Analysts are positive about Knight’s acquisition of the refrigerated trucking firm Roads West Transportation. Josh has chosen judgments as follows: 18% sales growth, 20% EPS growth, high P/E of 27, and low P/E of 13.3. Josh recommends a hold.
Walgreen’s continues to build it store base and demographics are positive for future growth. Medicare Part D is bringing more seniors into its stores. Walgreen opened its first in-store health clinic in 2006. Lynn has chosen judgments as follows: 11% sales growth, 14% EPS growth, high P/E of 26, low P/E of 18. Lynn recommends a buy.
A motion was made and seconded to buy $400 of Walgreen’s.
Assignments for the December meeting:
1. All members are to complete their due diligence for PetSmart (Nasdaq: PETM).
1. Quarterly stock reports due for Lowe’s (Carole) and Wal-Mart (Mike).
3. Craig will buy $400 of Walgreen’s.
4. Sheryl will give a new stock presentation on Morgan Stanley (NYSE: MS) in January.
The meeting was adjourned at 8:33 pm.
Sheryl A Sostarich, Secretary
The next meeting will be at the Northland Inn, Brooklyn Park on December 12, 2006.
Lynn Ostrem called the meeting of the Crow River Investment Club to order at 6:35 pm on December 12, 2006 at The Northland Inn. Five guests were present at this combined business/social event.
|
Lynn Ostrem |
Present w/pay |
Marion Marshall |
Present w/pay |
|
Carole Ripplinger |
Present w/pay |
Sheryl Sostarich |
Present w/pay |
|
Craig Block |
Present w/pay |
Mike Trisler |
Present w/pay |
|
Diane Windingland |
Present w/pay |
Kim Windingland |
Present w/pay |
|
|
|
Joshua Smyser |
Late w/pay |
The minutes of the November 14, 2006 meeting were approved as posted.
Craig made a dues deposit totaling $340 and transferred $400 to the brokerage account, leaving an ending bank balance of $194.79.
Craig bought 9 shares of Walgreen’s totaling $383.24. We received $400 in a transfer from the bank account and cash dividends of $3.80, leaving an ending brokerage account balance of $124.94.
A committee comprised of Craig, Lynn and Kim was elected to audit the club books in February 2007. K-1 Partnership Forms for the 2006 tax year will be prepared at that time.
Wal-Mart reported a drop in November sales despite an aggressive pricing campaign. Wal-Mart continues to rollout its $4 prescription drug program. Time will tell to what degree this impacts sales at competitor companies such as CVS and Walgreen. Investors should expect more international growth. Mike recommends a hold.
A motion was made and seconded to buy $300 of PetSmart and $300 of Knight Transportation.
Sheryl summarized a Wall Street Journal article titled How the Pros tell if a stock is a Bargain? by Gregory Zuckerman. Zuckerman describes five measures the pros use to decide whether stocks are cheap or expensive. P/E ratio is a key judgment on the Stock Selection Guide. It is best to compare a company’s P/E with a benchmark P/E for the Standard & Poor’s 500 Index or the industry P/E ratio. Free cash flow is a number derived from a company’s financial statements. Generally, the pros like companies that are increasing their cash reserves. Price to book value is meaningful to financial stocks. The pros like stocks that trade below a 3 to 1 ratio. The pros prefer to buy companies with a low price to sales ratio. Companies in the S&P 500 currently trade at 1.5 times their sales.
A motion was made and seconded to reinstate the Watchlist. This list is to be used to watch the activity on stocks that have been presented to the club but are too richly valued by our risk/reward standard. The vote in favor of the Watchlist was unanimous.
Assignments for the December meeting:
1. Sheryl will give a new stock presentation on Morgan Stanley (NYSE: MS) in January.
2. Quarterly stock reports are due for Biomet and Bed Bath & Beyond (Marion), FactSet (Craig) and Walgreen (Lynn).
3. Craig will buy $300 of PetSmart and $300 of Knight Transportation.
The meeting was adjourned at 7:28 pm.
Sheryl A Sostarich, Secretary
The next meeting will be at Lynn’s in St. Michael on January 9, 2007.