Risks abound on [[UBS]]'s balance sheet, off the balance sheet, and across the pond. Yet, UBS trades at an astonishing premium to its peers. We are initiating a SELL rating.

INVESTMENT THESIS

We are initiating Choice Hotels (CHH) with a BUY rating. Based on its franchise model and presence in the economy and mid-scale space we expect CHH to outperform the lodging group.

INVESTMENT THESIS

The balance of risk remains highly skewed towards the negative, with further asset write-downs, earnings revisions, and dividend contractions to come. We are initiating coverage on Wells Fargo (WFC) with a SELL rating.

INVESTMENT THESIS

19-FEB-09 - General Electric (GE) Increasing non-earning assets without commensurate charge-offs, dramatic decline in industrial orders and excessive leverage leads to high likelihood of credit rating cut and dividend cut. Initiate coverage with SELL rating.

INVESTMENT THESIS

18-FEB-09 - Under Armour, Inc. (UA): While UA remains a premier brand, fewer people can afford to pay up for the gear and thus we don’t believe investors should pay up for the shares. We expect growth to slow and valuations to compress given the challenging economic environment. Initiating with SELL rating.

INVESTMENT THESIS

Transcend Services, based in Atlanta GA, provides accurate, reliable, and timely medical transcription services to medical professionals, hospitals, and clinics throughout the U.S. It has developed Beyond TXT, an Internet-based speech recognition and editing system that substantially boosts the productivity (and profitability) of its transcriptionists, nearly all of whom work from home. The company also utilizes third-party transcriptionists located in India, which provide lower labor cost and 24/7 workflow capability.

Transcend Services Inc. (TRCR) Q4:08 diluted EPS of $0.17 was $0.02 short of our estimate due to acquisition costs while revenue of $12.8 million trailed our estimate by $800,000. New business wins position TRCR for a solid 2009. Raising price target; reiterate BUY rating.

Advent Software Inc. (ADVS) provides software solutions which are used primarily by the asset management and investment community. Advent enables the automation and integration of data across money management enterprises as well as with external parties. Solutions are designed to improve informational accuracy resulting in improved decision-making.

• ADVS will be challenged to maintain its recent growth given the substantial shrinkage in its target market.
• ADVS has benefitted from the increased investment in complex financial instruments. With the current trend moving away from such vehicles, marginal demand for related analytics may suffer.
• Coming increases in regulation may result in attrition in the asset management space, which would be a negative for ADVS. If substantial industry shrinkage occurs, ADVS' deferred revenue trend may turn negative as well.
• Although it is a relatively small portion of ADVS's overall business, the MicroEdge platform is also likely to suffer due to pressures being felt by the grant-making/philanthropic community.
• We are initiating coverage with a SELL rating.

RISKS

• Changes in the asset management community at large result in growth of traditional asset managers at the expense of managers such as hedge funds. The net result is little or no shrinkage in ADVS' overall target market.
• Increased risk management/reporting needs drive increased adoption for analytical platforms such as that offered by ADVS.

INVESTMENT THESIS

Pension funds and wealthy individuals alike are leaving hedge funds faster than ever before, lawyers and managers said. Between July and September, investors pulled out a record $31 billion, which helped shrink the industry 11 percent to $1.7 trillion.

The following is excerpted from a recent note that Singular Research sent to clients:

Growth Play

Ebix, Inc. (EBIX) is an international provider of software and e-commerce solutions for the insurance industry. It focuses on the sale and support of its insurance carrier systems, broker/agency management systems and exchange family of products, which provide connectivity between consumers, agents, carriers, and third party providers. It also provides services for software development, delivery of software as an application service provider ((ASP)), software license, maintenance and business process outsourcing. EBIX trades 8x our 09 eps estimtate. We project 35%+ eps and revenue growth. The company beat estimates last quarter by 13%; eps estimates are revised higher for 09. All are extrememly rare events in this environment.

Bank of America Corporation (BAC), a financial holding company, provides a wide range of banking and nonbanking financial services and products to customers in the United States and internationally. The pending merger with Merrill Lynch (MER) will make Bank of America one of the largest financial services companies in the world.

Initiating with SELL Rating

We believe that Bank of America’s balance sheet will ultimately have to be fortified by a Citigroup (C) type of government bailout. As a result, BAC's stock price continues to have substantial downside risk. We are initiating coverage with a SELL rating.

National Presto Industries (NPK) operates in two primary segments: Defense Products and housewares/Appliances.The Defense Products segment makes precision mechanical/electro-mechanical assemblies and medium caliber cartridge cases, and performs load, assembly, and pack operations for the U.S. government and prime contractors. Its Housewares segment distributes various small appliances to retailers in the U.S.

Initiating with BUY rating. Dec 8 2008 - National Presto Inds. (NPK) - The Best Offense is a Strong Defense. Initiating Coverage with a Buy Rating.

Singular Research is initiating coverage on Hurco (HURC), citing that unmatched computer control systems will lead to market share gains, and that the stock is a value play with strong earnings power beyond 2009. Key excerpts follow.

INVESTMENT THESIS

Singular Research is initiating coverage on Overhill Farms (OFI), citing that new business with current and new customers will drive revenue and earnings growth in 2009 and beyond. Key excerpts follow.

Investment Thesis

In a recent note to clients, Singular Research reduced estimates and maintained their SELL rating on Tech Data (TECD) following Q2 earnings (see conference call transcript). The firm cited fundamental deterioration masked by share repurchase and currency gains; weak demand in North America; and pricing pressures which lead to lower margins and worse than expected EPS. Key excerpts follow:

EARNINGS SUMMARY

Tech Data reported revenues that were at the upper end of its guidance, but below our forecast. EPS was below our forecast and consensus estimates. The increasing pricing pressures that management had reported at the end of Q1:09 continued through Q2:09. Price competition remains particularly acute in large accounts in the Americas. Demand for IT products also is weakening further, particularly in the US.

Singular Research recent sent a note to clients on PriceSmart, Inc.'s (PSMT) 3Q earnings. Key excerpts follow:   

OVERVIEW

PriceSmart’s fiscal Q3:08 results handily beat our estimates as total sales for the quarter rose 23.7%, to $250.4 million. Total warehouse club sales were up 26.5%, to $283.7 million, driven both by stronger traffic and higher average ticket. Membership revenue jumped 15.5%, to $4.1 million as membership increased 11.4% during the quarter, to 583 thousand members, and average membership fees rose approximately 10%. Operating EPS came in at $0.36, far exceeding our $0.26 estimate, as higher sales, SG&A leverage and a lower tax rate drove upside to our model. EPS were also aided by a one time $2 million expense reversal relating to a settlement agreement with RSC, S.A. Overall it appeared to be another solid quarter for the company, with comps remaining above 20% and margins continuing to expand nicely.

Singular Research is initiating coverage on CREDO Petroleum Corporation (CRED), citing that the oil and gas exploration company's complementary business lines reduce risk yet generate double digit EPS growth. Key excerpts follow.

Investment Thesis

Headquartered in Denver, Colorado, CREDO is involved in two business lines: one locates and drills new gas and oil wells, and one uses its patented Calliope Gas Recovery System to extract the hard to reach remnants of older wells. The company operates primarily in the Mid-Continent and Rocky Mountains of the U.S. Recently, the company has expanded its 3-D seismic operations into south Texas and north-central Kansas.

Singular Research recently sent a note to clients, raising their price target and reiterating their BUY rating on IRIS International (IRIS). Key excerpts follow:

Q2:08 EARNINGS SUMMARY

Despite coming up against the last few units from the large multi-unit order last year, IRIS International (IRIS) sold 125 units of its key iQ200 product in Q2:08, compared to 128 units in Q2:07. The decline in units led to a small YOY contraction (-2% YOY) in revenue from the IVD instruments division. The broad installed base of iQ200 units (more than 1,900 installed worldwide at quarter’s end) is leading to substantial growth in the company’s IVD consumables and service business, which saw 22% YOY growth in Q2.

Singular Research recent sent a note to clients on ShengdaTech's (SDTH) Q2 earnings (see conference call transcript). Key excerpts follow:

Earnings Summary

ShengdaTech reported strong revenue growth of 75.7% to $39.9 million from $22.7 million in Q2:07. 

Singular Research is reiterating their BUY rating on Thermadyne Holdings Corporation (THMD) after the company exceeded the firm's expectations on revenue growth and margins. Key excerpts follow: 

Company Overview

Thermadyne Holdings Corporation (THMD) is a leading global supplier of cutting and welding products.  It designs and manufactures welding and cutting torches, consumables, power sources and accessories globally. 

Methode Electronics (MEI) ( $11.91) is a manufacturer of electronic components in the midst of transforming from an auto supplier to a broader, product-driven model. Singular Research believes that MEI's discounted valuation offers an attractive entry point ahead of future growth, and is initiating coverage with a BUY rating.  

INVESTMENT THESIS

Methode Electronics (MEI) offers an attractive entry point for value investors looking to invest in the continued adoption of next-generation electronic technologies.

Singular Research is initiating coverage on Moody's Corporation (MCO) with a SELL rating, citing that continued dislocation in credit markets and material changes to the legacy business model are expected to hurt results, leading to further share price erosion. 

Key Points

• Ratings agencies, including MCO, have been identified as key culprits in the current credit crisis, which we expect will lead to significant changes in how these companies do business.  The ultimate resolution of this issue is still in doubt and thus will depress valuations until resolved.
• Results over the prior several years  were aided by growth in structured finance and other areas of securitization.  The current credit crisis has led to an evaporation of these activities, removing a key growth engine for MCO.
• Multiple parties including regulators and legislators have proposed a wide range of changes to the status quo, all of which are likely (if implemented) to have a negative effect on MCO’s core ratings business.
• A key casualty of the current environment is the concept of “Trust”.  With objectivity in doubt, trust has diminished, which further opens the door to competition. 

Risks

• Regulatory changes may ultimately result in minimal changes to the current business model.
• Strategic buyers may emerge for the company, resulting in support for MCO.
  

Company Overview

Beginning in January 2008, in response to the unfolding credit crisis, MCO reorganized its business into two segments: Moody’s Investor Service [MIS], which consists of the legacy ratings business and accounted for 79% of FY:07 revenue, and Moody’s Analytics [MA], which is focused on developing and marketing analytical tools used in credit portfolio management.