Fat Pitch Financials Portfolio Update for February 2008

The Fat Pitch Financials Portfolio basically broke even in February. I started the month out with a balance of $1,375,445.21 and ended the month with a balance of $1,350,582.57 for a change of 0.04% this month. Nevertheless, this still beat out the negative 1.61% return for the S&P 500 over the same period.

This month was not your typical boring month for this value portfolio. As you might remember, I added shares of Premier Exhibitions (PRXI) on February 15th. I picked up the shares for $4.41 per share. Since then, the shares have gone up as the fear of the 20/20 report past. Premier shares have gone as high as $6.20, but closed the month out at $4.78. I was tempted to sell when the shares quickly appreciated to over $6 per share, but I thought even at that price there was still a ways to go before reaching intrinsic value. Time will tell if I was being a bit too greedy.

The Fat Pitch Financials Port holds ten other positions in addition to Premier Exhibitions. These positions include the following stocks along with their returns since inception:

  • Western Sizzlin (WEST) 40.17%
  • Concord Camera (LENS) 14.72%
  • Microsoft (MSFT) 12.62%
  • Premier Exhibitions (PRXI) 8.21%
  • Broadridge Financial Solutions (BR) -0.78%
  • Western Union (WU) -4.8%
  • US Bancorp (USB) -5.94%
  • McGraw-Hill (MHP) -6.02%
  • Mothers Work (MWRK) -8.81%
  • Pfizer (PFE) -10.52%
  • USG Corp. (USG) -26.90%

There were several interesting developments with my holdings this month. The biggest news was Microsoft’s bid for Yahoo (YHOO). This has now basically turned into a hostile bid and it has negatively impacted Microsoft’s shares. I really hope that Microsoft does not raise their bid for Yahoo, especially since I’m not very in favor of the merger between these two companies. I’d rather see Microsoft focus on their strengths and not their weaknesses, such as media and online content.

This month Western Sizzlin also made the news by announcing that its listing on the NASDAQ. The symbol for the shares changed from WSZL to WEST and the stock has performed nicely in response to being listed on a major exchange. Western also announced that it is extending its tender offer for ITEX, which is not great news, since I was hoping the share exchange would have been successfully completed in February. At the end of this week, we will also find out how Western’s bid for two board seats at Steak & Shake (SNS) turns out.

Concord Camera finally started seeing some positive price appreciation this month. Several institutional investors have increased their stake. This month there was a 13G filings by Zeff Daniel and Everest Special Situations Fund run by Elchanan Maoz. Maybe Concord Camera is ready to move forward with a “strategic alternative” now that pressure is starting to build.

Finally, Mothers Work is finally starting to recover. Shares ended the month above $20. Maybe the new free shipping for those who can’t find their size in a store was received positively by the market.

The bottom line is that the Fat Pitch Financials Portfolio’s total return so far is 34.68%. The portfolio has a 9.03% annualized rate of return since inception versus 6.87% for the S&P 500. My goal is to continue beating the S&P 500 and eventually raise my absolute performance to above 12% annualized.

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