 |
Vol. 6, No. 30
Aug 20, 2001
In This Issue
The portents suggest caution The Searaven Report - Buy Rayovac (ROV) Blue Chip Portfolio updated Webscan - RRSP vs. Mortgage paydown
Dear Member,
Internet Wealth Builder #2130
Vol. 6, No. 30
Aug. 20, 2001
In This Issue
The portents suggest caution
The Searaven Report - Buy Rayovac (ROV)
Blue Chip Portfolio updated
Webscan - RRSP vs. Mortgage paydown
Dear Member,
Im an optimist by nature. Trot out any of the old cliches (every cloud has a silver lining;
things always happen for the best; its darkest before the dawn) and they apply to me. Its part
of my mental fabric.
Perhaps its because I have seen the end of the world as we know it predicted too many times during
my life. If its not the Earth itself that is about to be destroyed (the Cold War), its society, or
the economy, or the climate or our computer system (Y2K). Somehow, weve managed to muddle through.
After youve heard enough of these prophesies of doom, you tend to become immune to them.
This preamble is to enable you to put what Im about to say next into some context. Im worried. I
dont like the portents Im seeing. I said a couple of months ago that I thought the worst was
behind us in terms of the current economic slowdown and that the second half of 2001 would see the
start of a recovery. Not only am I having second thoughts about that, but I am now wondering whether
in fact were heading straight for a full-blown recession.
Most economists and politicians keep saying no. But there are so many negative indicators out there
that I have trouble maintaining my usually cheery view.
Just look around. Europe is struggling. Japan is in recession and the Nikkei is testing new lows.
Industrial production in North America continues to lag. The technology sector shows no sign of
snapping back to life. More layoffs are announced, with Ford dropping the latest bombshell.
On Friday we got the international trade figures for June and they werent good, with both U.S. and
Canadian exports down. The weakness in the rest of the world is starting to hit us right in our own
pocketbooks.
Investors are being battered by one bad news story after another. No wonder markets are falling
again after a brief early summer rally.
So far, we here in Canada have been spared the worst of the global slowdown. But how much longer can
that last?
In seems that every 10 years or so, the world decides to collectively pause and catch its economic
breath. We went through a major downturn in 1969-71. Recession hit again in the 1980-82 period. We
saw yet another repeat performance in 1990-92. Now here we are again.
So what conclusions do I draw from all this? There are three.
1) Interest rates are going to fall further, perhaps more than anyone expects. Bonds look pretty
good right now, especially short and mid-term positions.
2) The big stock market rally weve been waiting for has been postponed for the time being. It will
eventually happen, but probably not until next year. In the meantime, dont be surprised if the Dow
falls back below 10,000, the TSE drops to the 7,000 range and Nasdaq tests 1,500 again.
3)Prudent investors will maintain good cash reserves and be very selective in their choice of
securities. Quality and value will be the keys to success in the months ahead.
THE SEARAVEN REPORT
RAYOVAC (ROV) LOOKS GOOD
We are joined this week by our new contributing editor, Glenn Rogers, who is writing a monthly
column for us from his boat, Searaven 1, on which he and his family have embarked on a lengthy
cruise through the Mediterranean. For the benefit of new members, Glenn is a former senior newspaper
and magazine executive with a passion for the stock market. He is taking a years sabbatical to
spend time with his young family and to see the world. Over to him.
Glenn Rogers writes -
Sitting here, dockside, at the port of Hendaye in Southwest France, its hard to imagine that anyone
has a financial care in the world. Hendaye is just across the border from Spain, but far from being
Spaniards, the locals there are most definitely Basque. Just imagine Quebec with bombs (not too
many) and you get the idea.
Unlike Gordons experience in Greece, I have found that people here seem unconcerned with the
economy. This region mainly survives on tourism and judging by the lines in the supermarkets and the
roads, which are clogged with holiday travellers, this area seems to be doing okay. Granted this is
not a wealthy region, but it appears to be solidly middle class and the people are proud of what
theyve got.
We took a water taxi or Bus de Mer to Spain last night to look around the ancient fishing village
of Hondarribia that, over the years, has been repeatedly attacked by the French. Fortunately the
only thing being attacked last night was the chipirones en su tinta (squid in its own ink) or besugo
(sea bream). The restaurants were full and the bars were hopping and we noticed a number of
construction projects underway, one of them a block-long structure that would seem major in Toronto
let alone in this relatively quiet backwater.
Does all this inspire me to invest here? In a word, no. In France they are down to a thirty-five
hour work week and they think thats too long! The E.C. bureaucrats are spreading like cancer
throughout Europe, drafting new legislation and creating more rolls of red tape than you can
imagine. The Economist reported this week that there are 33,000 bureaucrats working for the
Commission right now and they expect to hire an additional 2,500 soon. This doesnt include the army
of lawyers and lobbyists who live off the commissions largess. Nope, Im sticking with the USA for
investments but the food is much better here.
Although the locals dont seem interested in the economy or the stock markets, I certainly am, even
from this distance. In this new wired world, I can keep on top of events through the Internet and
through the pages of such publications as The Economist, The Financial Times of London, the
International Herald Tribune, etc. Given whats been happening with the markets lately, I sometimes
wish I could feign total ignorance. However, its like an addiction. I cant tune out.
So with that, let me move to my second stock pick for IWB members. Its Rayovac, which trades on the
New York Stock Exchange under the symbol ROV. It closed on Friday at $19.85 (all prices in U.S.
dollars)
Rayovac is the third-largest maker of batteries in the U.S. and, according to AC Nielsen, it is also
the fastest-growing U.S. battery company. Its products cover all the major battery segments. Rayovac
is a strong player in the hearing aid battery product area which, as the population ages, will be an
increasingly powerful market. The company also leads in the rechargeable battery segment; in fact
Rayovac owns nearly 77% of the unit market share in this category. Given the proliferation of
electronic gizmos and gadgets and the high cost of feeding them nonrechargable batteries (not to
mention environmental concerns), this area should continue to grow for them. The firm also makes
batteries for computer clock backups, keyless auto entry systems, and, of course, for flashlights
and lanterns.
The company has broad distribution channels, which include mass merchandisers, warehouse clubs,
food, drug and convenience stores, professional industrial distributors, e-tailers, electronic
specialty stores, department stores, and original equipment manufacturers.
The firm also has a strong international presence; Rayovac's European and Latin American regions
accounted for 24% of the companys year 2000 revenue.
Whats especially impressive is that Rayovac has been picking up market share from Duracell, which
is owned by Gillette (NYSE:G) and the ubiquitous Energizer Bunny (NYSE:ENR), which was spun out by
Ralston Purina in April 2000 as a tax-free deal to its shareholders. The keys to this market share
gain have been aggressive pricing, with products selling at 20% less than the market leaders, and
increased distribution, which we will speak more about in a moment. Rayovac also hired Michael
Jordan as their spokesperson, which has raised the companys profile.
Getting back to increased distribution, recently the company announced that Home Depot had chosen
them as their major branded battery supplier. Home Depot had been testing Rayovac products in 100
stores in the Atlantic Region and customer response was so good that they decided to roll them out
into all 1,200 stores across the U.S. Rayovac began shipping to Home Depot in July.
CEO David Jones, another refugee from Jack Welchs General Electric, runs the company. He's been
with the firm since September 1996 and has assembled a seasoned management team.
Last year, Rayovac had sales of $677.6 million, with income of $23.1 million. But it has not been
all smooth sailing so far this year. The Y2K phenomenon drove battery sales in the first quarter
last year so the comparables year to year have not been great. Also, there were fewer hurricanes
last year, which depressed sales of their alkaline batteries. That created an inventory build-up
that hurt them in the first quarter of this year. Overall sales were down 13% from the comparable
quarter a year ago.
As a result, the company announced restructuring initiatives, which will reduce manufacturing
capacity and eliminate the jobs of approximately 510 domestic employees, which represents 15% of its
global workforce.
The latest quarterly results (to June 30), released at the end of July, indicate the financial
situation is improving. Rayovac reported record third-quarter sales and earnings. Sales were up 6%
to $159.1 million, compared to $150.4 million for the same period last year, with a big jump in the
sale of alkaline batteries the major contributing factor. Operating income before special charges
rose to $21.5 million, compared to $19.8 million a year ago. Pro forma net income was $9.5 million,
a 17% gain for the quarter, although it is down the first nine months of the fiscal year for reasons
Ive previously mentioned. For the nine months, pro forma net earnings per share were $0.78,
compared to $0.88 last year.
That's the bad news. The good news is that the price of Rayovac stock crossed above its 50-day
moving average recently with the relative price strength increasing. A technical note here; when a
stock raises above its moving average it means that it has broken its short-term trend. This is a
bullish signal because it means new buyers of the stock are indicating a willingness to pay more
than the average price paid over the last 50 days.
Relative strength measures the price performance of the stock in comparison to all other stocks.
Many analysts believe that stocks with strong and improving relative strength will outperform. In
this case, Rayovacs three-month relative price strength is at least 20% higher than its
twelve-month relative strength.
We should also note that the three-year revenue growth has been 17.62% and three-year cumulative
earnings per share growth have been 63.82%. At just under $20, the stock is currently right in the
middle of its one-year trading range (52-week low was $11.69, high was $29.13). The first upside
resistance point for the stock should come at $29.12 and it should find downside support in the $18
range.
How has the stock been doing? Pretty darn well in the past three months despite this choppy market.
Rayovacs price increased by 26% over the past three months and 56% over the past six months, but is
still down 1.1% over the past year. Both UBS Warburg and Goldman Sachs, who rated the stock a buy at
$25 and a market outperform respectively, have upgraded Rayovac.
But the real wild card with the stock is that it is often touted as a takeover target. The company
has been in recent discussions, which so far havent resulted in any announcements. But the
investment firm Thomas H. Lee owns 36% the company. Thomas Lee has successfully owned and sold a
number of companies, generally for very high profit. It's very possible that Rayovac could be taken
out sometime in the next year and, since it is the last independently-owned major player in the
sector, it should fetch a healthy premium. So if you are looking for a way to power up your
portfolio, you might consider Rayovac.
Action: Buy now with a price target of $29. I will do a full review if it should drop to the $16
level. If you like to protect your downside with stop-loss positions, you may wish to give your
broker appropriate instructions.
UPDATE ON RITE AID (NYSE: RAD)
Rite Aid stock was off last week following news that the company had received court approval to
settle class action lawsuits arising out of accounting irregularities that forced the firm to take a
big financial hit in fiscal 98 and 99 and led to a management shake-up. Terms for a settlement had
already been reached but were awaiting this go-ahead.
The announcement doesnt solve all the problems that flowed from the accounting debacle, although it
is a major step in that direction. The company is still under investigation by the U.S. Attorney
Generals office and the Securities and Exchange Commission, although settlement talks with the
Attorney Generals office are under way.
The share price dropped a bit after the news came out and RAD closed the week at US$7.62 (the price
at the time of my Buy recommendation was US$8.19. However, I see the news as being positive for the
company, since it goes a long way towards removing the type of uncertainties that investors hate.
Action now: Buy
- end Glenn Rogers
BLUE CHIP PORTFOLIO UPDATED
Its been two months since we last reviewed the IWB Blue Chip Portfolio, so lets take a look at how
its holding up in these sagging markets. To remind you, this is a portfolio of high-quality
companies that is spread across several industry sectors. We use a buy-and-hold approach, but we
will sell positions in certain circumstances.
Heres a look at our current holdings.
BCE Inc. (TSE, NYSE: BCE)
Holding: 50 shares
Reporting currency: Canadian dollars
Recommended Nov. 10/97 at $12.61 (adjusted cost base)
Closing price Aug. 17/01: $40.88 (last review: $39.65)
Change since last review: +$1.23
Change since recommended: +$28.27
Percent change since recommended: +224.2%
Web site: http://www.bce.ca
Comments: The share price has moved up a bit since our last review of this stock, a positive sign in
this weak market.
The company released its second quarter financial results (to June 30)in late July and they were
encouraging. BCE reported cash baseline earnings of $304 million ($0.38 per share), a 38% increase
compared with the pro forma from the same period a year ago. Total revenue was $5.7 billion, a 7%
increase over last year. CEO Jean Monty said the results were in line with expectations, and were
within the guidance ranges given at the time the first quarter results were released.
Major year-over-year gains were recorded in data revenue (Bell Canadas was up 27% to $878 million;
Teleglobes up 49% to $168 million), BCE Emergis revenue (up 33% to $159 million), and in cellular
and PCS subscribers (up 26% to surpass 3 million). One discouraging note was Bell Globemedia, the
companys communications conglomerate, which reported flat year-over-year revenue.
BCE also provided third quarter guidance as follows: revenue in the $5.8 - $6.2 billion range;
EBITDA in the $1.9 - $2.1 billion range, and cash baseline earnings per share in the $0.39 - $0.42
range.
Brokers continue to favour this stock; Merrill Lynch Canada has a $48 target price on it.
We received a dividend of 30c a share on July 15, bringing our total dividends to date to $398.
Action now: Hold
Brascan Corp. (TSE: BNN.A, NYSE: BNN)
Holding: 150 shares
Reporting currency: Canadian dollars
Recommended April 7/97 at $20.68 adjusted for merger.
Closing price Aug. 17/01: $28.80 (last review: $25.99)
Change since last review: +$2.81
Change since recommended: +$8.12
Percent change since recommended: +39.3%
Web site: http://www.brascancorp.com
Comments: Weve seen a good move in Brascans share price since our last review, with the stock
closing the week at $28.80 for a gain of $2.81 in the past two months. We recommended it as a Buy
when we last updated it.
The price move was fuelled by a strong second quarter financial report that showed record
three-month earnings of $107 million, up from $104 million a year ago. This was achieved even though
total revenue was actually down, to $3.36 billion from $3.44 billion in the same period last year.
The reduced revenue was a result of lower commodity prices and a strike at the Sudbury nickel
operations, which has since been settled.
Brascan is also moving on several fronts to enhance shareholder values though a normal course issuer
bid (883,000 shares repurchased in the first six months of the year), acquisition of public shares
in subsidiary companies like Great Lakes Power at a discount to NAV, and high-quality expansion
projects.
We will receive our next quarterly dividend of $0.25 a share on Aug. 31. To date, our total
dividends since the stock was recommended amount to $605.50.
Action now: Buy. We believe there is more upside here despite the recent gains.
Canadian Utilities Ltd. (TSE: CU)
Holding: 50 shares
Reporting currency: Canadian dollars
Recommended May 1/00 (IWB #2017) at $37.75
Closing price Aug. 17/01: $51.65(last review $50.95)
Change since last review: +$0.70
Change since recommended: +$13.90
Percent change since recommended: +36.8%
Web site: http:// www.canadian-utilities.com
Comments: CU shares havent done much of anything since we last reviewed the company. Actually,
thats really not bad news. The sharp upward movement in the stock after our initial recommendation
was driven in large part by the increase in natural gas prices. Now those prices have settled back,
but CU is hanging in nicely and showing a handsome profit for us.
We previously put some of the gains in our pockets by taking half profits on this position. Our
remaining holding is ahead by about 37% on the original purchase price plus we are receiving an
excellent quarterly dividend of $0.47 a share, with the next payment due Sept. 1. Total dividends to
date from this position are $182.
Earlier this month, the company reported second quarter earnings of $45.1 million ($0.71 per share)
on revenues of $852.3 million compared with earnings of $42.6 million ($0.68 per share) on revenues
of $557.2 million in fiscal 2000.
CU said the higher earnings were primarily due to improved operating performance in the Power
Generation Group due to increased earnings from their Barking plant in the United Kingdom and from
the Joffre cogeneration plant in Alberta.
Action now: Hold.
Four Seasons Hotels (TSE: FSH, NYSE: FS)
Holding: 50 shares
Reporting currency: Canadian dollars
Recommended April 30/01 (IWB #2116) at $87.91
Closing price Aug. 17/01: $79.98 (last review $82.30)
Change since last review: -$2.32
Change since recommended: -$7.93
Percent change since recommended: -9.0%
Web site: http:// www.fourseasons.com
Comments: Four Seasons stock has been kicked around lately as investors appear to be worried about
the impact of the economic slowdown on this deluxe hotel and resort operator. This was despite
second quarter financial results released earlier this month that showed that net earnings increased
4.2% to $28.2 million ($0.72 per share, fully diluted) compared to $27.1 million ($0.70 fully
diluted) last year.
Those results didnt make analysts happy, however. For example, RBC Dominion Securities immediately
lowered their earnings per share estimate for fiscal 2001 to $2.78 (from $3.15) and to $3.53 (from
$3.85) for 2002. The brokerage house also reduced its one-year target price to $105 (from $122.50).
However, it did maintain its Strong Buy rating on the stock.
Merrill Lynch was more negative, lowering its rating from Accumulate to Neutral, saying that
EBITDA for 2001 is now expected to decline 10% from last year. The firm had previously been
projecting 4% growth.
Obviously, this is a short-term blow, as the drop in the share price confirms. However, this could
also be construed as a buying opportunity for patient investors. The company is scheduled to open 10
new hotels and resorts over the next year and a half, and all are expected to be positive for the
bottom line. So this is a growth story and a very sound one, we believe.
Action now: Buy below $78. Four Seasons is one of the worlds premier hotel organizations and this
is an opportunity to take a position at what we expect will look like a bargain price two or three
years from now.
MDS Inc. (TSE: MDS, NYSE: MDZ)
Holding: 100 shares
Reporting currency: Canadian dollars
Recommended May 5/97 at $13.625 (adjusted for split)
Closing price Aug. 17/01: $18.24 (last review: $17.70)
Change since last review: +$0.54
Change since recommended: +$4.62
Percent change since recommended: +33.9%
Web site: http://www.mdsintl.com
Comments: We havent seen any new financial results from the company since our last review, although
the share price has moved up a tad.
In fact, the only recent news of note from the company was an Aug. 15 announcement of a $10 million
deal with Signature BioScience whereby MDS obtained exclusive license rights to commercialize
research instrumentation and peripherals based on Signaturess unique new microwave spectroscopy
(MCS) instrumentation, which is regarded as a breakthrough in the development of new drugs.
Action now: Buy. The shares continue to represent good value at the current price.
Nortel Networks (TSE, NYSE: NT)
Holding: 78 shares
Reporting currency: Canadian dollars
Added June 12/00 at $28.34 (adjusted cost base)
Closing price Aug. 17/01: $10.30 (last review $13.50)
Change since last review: -$3.20
Change since recommended: -$18.04
Percent change since recommended: -63.7%
Web site: http://www.nortel.com
Comments: Nortel continues to sink farther, with the shares now trading at their lowest level since
1996. Investors are desperate for some encouraging news from the company, but none seems to be
forthcoming. Right now, the corporate emphasis is on raising cash to see it through this terrible
time. Recently weve seen announcements of an additional US$2 billion in credit facilities and a
US$1 billion convertible note offering.
Nortel shares appear to be approaching a buying range and well keep monitoring them. But we dont
think theyve touched bottom yet.
Action now: Hold.
Petro-Canada (TSE, NYSE: PCA)
Holding: 200 shares
Reporting currency: Canadian dollars
Recommended July 19/99 at $21.95
Closing price Aug. 17/01: $38.50 (last review: $38.25)
Change since last review: +$0.25
Change since recommended: +$16.55
Percent change since recommended: +75.4%
Web site: http://www.petro-canada.ca
Comments: Petro-Can shares have rallied recently after slipping to below $36 in July. The companys
financial results continue to be terrific - last month PCA reported record second quarter earnings
of $326 million ($1.23 per share), up from $259 million ($0.95 per share) in the second quarter of
2000, which included a $66 million ($0.24 per share) gain on asset sales. However, the stock
continues to be held back by concerns that the world economic slowdown will drive demand lower for
oil and gas products, thereby forcing a price decline.
The latest quarterly dividend of $0.10 a share was paid on July 1, with the next one due on Oct. 1.
Dividend received to date total $156.
Action now: Hold. Take half-profits on any move above $40.
Sun Life Financial(TSE, NYSE: SLC)
Holding: 100 shares
Recommended Oct. 23/00 (IWB #2038) at $29.85
Closing price Aug. 17/01: $36.18 (last review: $35.79)
Change since last review: +$0.39
Change since recommended: +$6.33
Percent change since recommended: +21.2%
Web site: http://www.sunlife.com
Comments: Tom Slee raised his target price on Sun Life to $43 in last weeks IWB and will be
providing a complete update of the stock in an upcoming issue.
The next quarterly dividend of $0.12 per share is due at the end of September. Total dividends to
date: $36.
Action now: Buy
Thomson Corp. (TSE, LSE: TOC)
Holding: 100 shares
Reporting currency: U.S. dollars
Recommended Apr. 2/01 (IWB #2112) at $52.55
Closing price Aug. 17/01: $52.50 (last review: $52.70)
Change since last review: -$0.20
Change since recommended: -$0.05
Percent change since recommended: -0.01%
Web site: http://www.thomcorp.com
Comments: Thomsons share price bucked the market trend on Friday, rallying in the face of broad
losses. We view that as a positive sign for this stock, which has held up very well in difficult
conditions.
Thomson released its second quarter financial results earlier this month. They were very good, with
revenues from continuing operations coming in at $1.6 billion (all figures in U.S. dollars), an
increase of 17% over the second quarter of 2000. Operating profit grew 27% to $259 million.
Revenues from core operations, which exclude the impact of acquisitions completed in 2000 and the
first six months of 2001, grew 6% in constant currencies during the quarter, and core EBITDA
increased 11%. However, the company projected a reduced rate of revenue growth for the balance of
the fiscal year.
Analysts saw the numbers as being in line with their expectations. The well-respected boutique
brokerage firm of MacDougall, MacDougall & MacTier maintained their Buy recommendation on the stock,
although they reduced their one-year target price to $64 (from $70), reflecting slower revenue
growth and lower valuations for electronic publishing firms.
RBC Dominion Securities has a slightly lower target at $60. Merrill Lynch rates the stock as
Accumulate with a $70 target over 12-18 months.
We will receive our next quarterly dividend of $0.175 per share on Sept. 17. Total dividends
received to date are C$27 (approximate as dividends are in U.S. currency).
Action now: Buy.
Toronto Dominion Bank (TSE, NYSE: TD)
Holding: 150 shares
Reporting currency: Canadian dollars
Recommended April 27/98 (#9815) at $31.80 (adjusted for split).
Additional 50 shares purchased Sept. 14/98 at $22.25.
Average price per share: $28.62.
Closing price Aug. 17/01: $39.08 (last review: $40.99)
Change since last review: -$1.91
Change in average price: +$10.46
Percent change in average price: +36.5%
Web site: http://www.tdbank.com
Comments: Last time we noted that there seemed to be a lid on the TD share price at around $40.
Were still seeing that. Every time the stock sticks its nose above that level, it gets slapped
down.
There have been no new financial results since our last update. Third quarter numbers are due out on
Aug. 23.
The most recent quarterly dividend of $0.28 a share was paid on July 31. Total dividends received to
date are $410.
Action now: Hold. Buy on weakness below $38.
SUMMARY
Total investment to date (excluding commissions): $34,143.00
Market value of stocks: $38,002.90
Previous cash pool (dividends, covered call revenue, cash from sales): $11,461.54
Plus new dividends received: $116.00
New cash pool: $11,577.54
Total portfolio value: $49,580.44
Gain/loss since inception (April/97): +45.2%
Comment: The portfolio is just treading water right now, although we can hardly be discouraged by
that given the state of the markets. The market value of our stocks is about the same overall as it
was at the time of our last review. However, steady dividend flow provided a bit of a boost to the
total portfolio valuation. We are not making any changes in this line-up at the present time.
WEBSCAN
The financial question we get asked more often than any other is: should I pay down my mortgage or
put the money into my RRSP?
Unfortunately, there is no simple answer. There are a number of factors to consider, including your
tax rate, your mortgage interest rate, the projected return on investment within your RRSP, etc. You
really need a computer program to do a proper analysis for you.
The Empire Financial Group offers one on their Web site at http://www.empire.ca/rrsp_mortgage.cfm
Its okay if you want a rough estimate, but it doesnt give the complete picture. For example, the
mortgage interest savings are effectively received after-tax, while RRSP growth has to be discounted
to allow for the tax payable on withdrawal. The program doesnt appear to do this.
Take a look at it if its a question youve been wondering about. But dont treat the result as the
definitive answer. As I said, its a very complex calculation.
Thats our report for this week. Well be with you again next Monday, Aug. 27.
Best regards,
Gordon Pape
(gpape@istar.ca)
(circulation matters: kimpape2@home.com)
All material in the Internet Wealth Builder is copyright Gordon Pape Enterprises Ltd. and may not be
reproduced in whole or in part in any form without written consent. All recommendations are based on
information that is believed to be reliable. However, results are not guaranteed and the publishers
and distributers of the Internet Wealth Builder assume no liability whatsoever for any material
losses that may occur. Readers are advised to consult a professional financial advisor before making
any investment decisions. Gordon Pape and/or members of his family may hold positions in securities
mentioned in this newsletter. No compensat