Last week, Radian reported weak earnings in the 2nd quarter due to higher credit losses. It is possible that the 2nd quarter was sort of a "one-off" quarter in that the company took large writedowns related to reserves for current as well as future periods.

At present they are selling at a 12% discount to book/tangible book and less than 7x trailing earnings. Radian has a conservative balance sheet and generates huge free cash flow. They have a history of aggressively buying back stock, which hopefully will continue with shares at current levels.

CLST was previously under investigation by the SEC, but in late June the investigation was concluded and no action was taken. CLST has no other legal issues.

When the plan of liquidation was announced, Cellstar had anticipated net proceeds to shareholders of $2.91-$3.25/share. With the liquidation wound up, CLST Holdings has revised that range to $2.91-$3.03. Shares are presently trading at $2.65-$2.70.

Covidien is going for $49, a few bucks under our value estimate. Tyco Electronics looks the most undervalued, at $37.60 versus a low $40's estimation. Tyco looks overvalued to us at $50.60. The sum of the parts are going for $34.29 versus $34.19 for old Tyco shares.

Of course, the when-issued market remains thinly traded and typically is volatile. A half-hour after the market open, Covidien's when-issued stock has traded less than 14,000 shares. This for a company with a market valuation of $25 billion. So it's worth watching all the when-issued securities for the next couple of weeks, as the volatility could create bargain prices. This offers small investors have a huge advantage over larger, less liquid types.

TYC 1-yr chart:

This is a stark contrast to the spring of 2006, when bird flu fears had sharply pressured chicken prices, pushing industry margins into the red. The industry responded by slashing production and idling capacity. Sanderson delayed construction on their new Waco, TX facility, but resumed it earlier this year as chicken prices rebounded.

Despite the solid quarter, shares are off late in the day after being up as much as $3 earlier. Obviously the stock is fighting market headwinds. But shares aren't even getting credit for the $1.04 in unexpected additional book value, much less acknowledgment of improved trends.

So there is disappointment and less trust of management among the analysts. The issue, a recurring one for Wall Street research, is that estimates are built completely around management guidance rather than actual research.

Discosure: We still own shares of CRYP.

Aspreva receives all of its revenue and income from Roche (RHBBY.PK) through a licensing agreement for a drug called CellCept. CellCept is presently being used off-label to treat Lupus Nephritis, the more debilitating form of Lupus. There has not been a drug developed to treat Lupus in over 30 years, and the company estimates that 11% of patients with Lupus Nephritis are already on the drug. Aspreva is also running trials to use CellCept on patients with Pemphigus Vulgaris, a rare autoimmune disease.

Selling at $20.32, Aspreva has little in the way of assets besides their cash pile of $7.83/share (big cash piles are a recurring theme for us). They are receiving a royalty stream based on off-label sales of CellCept to treat Lupus Nephritis. What they are doing is "indication partnering" in which a smaller firm agrees to run the clinical trials for a large firm who is too big to bother with small-market drug applications. Aspreva is running all the clinical trials and working on FDA approval. It is assumed that FDA approval is a virtual certainty as the drug has already been well accepted for Lupus Nephritis use within the medical community.

The company saw a big decline in their photostamps business despite higher marketing spending. It isn't immediately clear why this business has fallen off. But it appears that Stamps.com will refocus on their PC software business.

Stamps.com looks fairly cheap. Pro-forma free cash flow minus option expense is about $0.78/share. The company has no debt and about $4.70 in cash per share. They have been and will likely continue to aggressively repurchase shares. Stamps.com enjoys a safe little competitive niche. The business enjoys huge margins with big returns on capital.

Stamps.com has significant deferred tax assets valued at about $102 million, most of which don't begin expiring until 2018. These tax assets are not listed on their balance sheet as the company is making the worst case assumption that they are all forfeited. At present they are paying almost zero taxes. It is possible that the company loses these assets if a shareholder owning more than 5% of the company makes a big shift in their holdings.

I was reminded this week why the only research I pay for is Valueline.

The stock which supplied this refreshing reminder is Jos. A. Bank (JOSB). Jos. A Bank is a chain of mens suit and formal wear stores, numbering just under 400 at present. Last June, JOSB "shocked" the street when they missed earnings for only the 2nd quarter in the previous 17. Inventory was up more than sales, worrying analysts. Management insisted it was just a bump in the road. Wall Street disagreed. Two analysts downgraded the stock that day.

Two-thirds of Broadridge's revenues come from handling investor communications for businesses. With all the shareholder activism and corporate buyouts, this has been a solid business in the past couple of years, and Broadridge is dominant, with around 70% U.S. market share. Broadridge also does trade settlement and clearing for securities transactions.

The primary negative with this story is that effective July 1, the SEC is implementing a new rule which will accelerate digital delivery of proxy and other investor communications. As this will push down the amount of paperwork Broadridge sends out, it will also pressure their revenue to an unknown degree. Management has not estimated, but is forecasting overall mid-single digit revenue growth.

Decades ago, coffee shops were mom and pop operations, and were much less popular and common than they are nowadays. Starbucks has grown coffee consumption overall, but also has changed consumer habits in that they are more likely to drop by Starbucks for their fix than they are to tap the office or home coffeepot.

The 2nd biggest operator in the industry is tiny Caribou Coffee (CBOU). Caribou has under 500 stores compared to Starbucks' 9,000. Relative to sales, Caribou is selling at around a third of sales compared to 2.5 times for Starbucks. The companies have similar offerings and the same historical gross margins, indicating that purchasing scale does little for Goliath. Operating expenses per store are comparable.

Housevalues provides web services to realtors and operates a number of real-estate related web sites. Their results have dipped along with the real estate market. 4th quarter revenues were down 15% over the previous year; some of that decline was related to their exit of the mortgage business, which failed to reach critical mass.

Revenue was also hurt as SOLD lost some customers, many of which left the bloated real-estate selling business. Overall, the company posted a small loss on the year due primarily to an asset writedown, versus $0.52 in EPS in 2005. Free cash flow remained positive in 2006, at about $0.14/share versus $0.65/share in 2005.

Given the current softness in the market, particularly anything associated with residential real estate, it's very likely that the deal will go through. We think a private equity buyer is less likely to get skittish than if Realogy were being purchased by a peer.

Realogy shares, however, were off 2% yesterday, in-line with the market, and it looks like there is an opportunity to scoop up some spare change.

It happened to the poultry industry last year during the bird flu scare. Chicken prices plummeted as overseas demand was sapped by consumer fear (despite the fact that you can't get bird flu from eating cooked chicken). Chicken prices fell, and poultry stocks dropped precipitously, including diversified giant Tyson (TSN), as well as specialized names such as Sanderson Farms (SAFM), which we still hold.

Since that time, producers cut back on supply, chicken prices have recently rebounded sharply, and consumers returned to eating birds. In the case of SAFM, the stock is up 70% off the low it hit during the scare.

Most of the data was pro forma, but we estimate that the company has the ability to generate about $25 million in free cash flow at this point ($2.84/share). Management is primarily focused on growth.

As TA has a lot of operating leverage, they feel that expending growth capex on new centers and expanding old centers is the best way to bring the company to profitability. Rent increases are going to be moderate over the next 5 years (less than 2% per year), so any growth in EBITDA over 2% annually will be accretive to earnings and free cash flow.

MDC is a buy and hold, long-term growth play. Of all the homebuilders, MDC probably has the best balance sheet. Their land policy is extremely conservative, as the company avoids spec homes and doesn't purchase land until they are ready to build. The stock, at $50, is selling at a slight premium to book (around $47 and change). Given the company's conservative business approach, book value is meaningful, tangible and not at much risk, especially compared to many other builders. MDC is in a prime position to capitalize on opportunities within the industry as the shake out continues.

Disclosure: We own shares of MDC Holdings.

TA doesn't own properties, but rather has a 15 year lease on the TA full service truck stops you often see next to highways. HPT retained the properties and leased them to TA. The lease appears to be normal and fair.

Realogy management conceded that:

"The valuation takes into account the substantial pressures and uncertainties facing the residential real estate markets that may well continue for some time."

This is all great and fine for the headlines, but how much does it matter? The growing split between CEO and rank and file pay is alarming from a social perspective. But in the two cases above, the amounts are not significant to the company's shareholders. McKinnell's $83 million exit check, for example, amounts to a little over a penny a share pre-tax for Pfizer shareholders.

The company was a high-flier after being spun-off from 3COM. On the day of the IPO on March 2, 2000, the stock soared to $165 before settling at $95. Back then, the company was dominant in making handheld computers. Two and a half years later, Smartphones started hitting the handheld computer market and the stock was selling for less than $1.

The company did a big reverse split in 2002, bought Handspring a couple years ago and now has a strong position within the Smartphone market with their Treo products. Free cash flow is about a buck a share.

A special dividend of $25/share is being paid to current holders of Alberto Culver. This is being financed by a private placement of 47.5% of Sally Beauty Holdings stock and the $1.85 billion in debt which is being piled onto SBH.