At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

The Middleby Corporation (MIDD) is another company tied to the retail sector which has seen its stock improve significantly over the past few months. In March, investors were panicking and selling stock as fast as they could pushing the price to a low of $20.45. Since that time, the stock has rebounded to reach a high of $50 - nearly a 150% return in a few short months. That’s quite an incredible gain for a boring company which makes ovens for restaurants and food processing customers.

Despite the sharp rise in the stock, earnings for the current year are actually expected to come in below last year’s levels with an expected EPS of $3.40. While operating profitably in this market is certainly positive for any company, the stock currently trades at nearly 14 times earnings, which is a bit rich for this company which has limited growth capabilities.

In March, Jim Jubak of MSN Money released a list of stocks that he believed should be stocks that you should pay attention to in the upcoming months/quarters as potentially attractive investment opportunities. ValueExpectations.com set out to answer the question, which stocks on Jim’s watch list look attractive according to AFG’s valuation model and should be on your watch list?

Provided in the table below are Jubak’s watch list companies and how they fare from a valuation perspective using The Applied Finance Group’s Value Score variable which ranks the valuation attractiveness of each company based on the discrepancy between the company’s current trading price and AFG’s target price.

When the Against the Sky Portfolio was initially launched, I stated the principles of the portfolio and how investments would be allocated. Now is a good time to look at the current allocations of the portfolio and re-visit the principles as initially conceived.

Below is a table of the portfolios holdings as of 3/31/09:

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up is Pequot Capital Management run by Art Samberg. Pequot was founded by Art in 1986 with $3 million in assets and peaked with $15 billion in assets around the tech bubble. Today, he manages over $4 billion. They have 150 employees and employ multiple strategies, including private equity and venture capital, as Art believes equity returns will decline over time. Art holds a S.B. from Massachusetts Institute of Technology, an M.S. from Stanford University, and he received his MBA from Columbia University. Pequot Capital Management was recently ranked 93rd in Alpha's hedge fund rankings. In terms of their 2008 performance, their main fund was -17.5% for 2008, while their health care fund finished -27.9% as noted in our post on hedge fund year-end performance. Recently, we had noted that they amended some 13G filings and made some portfolio changes to a few larger positions. You can also read Pequot's March Commentary here by Byron Wien.

The Middleby Corporation (MIDD) is a leading manufacturer of commercial kitchen and food processing equipment that competes with divisions of Illinois Tool Works (ITW), Manitowoc (MTW) and United Tech (UTX). Founded in a merger of two companies in 1985, Middleby has grown by acquiring competitors and complementary brands and, through superior management, improving operational efficiency and sales.

The current CEO Selim Bassoul owns 5% of outstanding shares and is well respected as a manager. He has led Middleby from obscurity to a darling stock of Fools (the Motley sort) and small cap investors everywhere. Middleby has had quite a run, with revenue growth averaging 18% annually over the last 9 years, with net margins improving from 1.6% in 2001 to 9.6% as of 9/27/08.

This is the Third Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.

The other funds we've already covered include:

The October 27, 2008 issue of Forbes lists the 200 best small companies of the U.S. These may be good companies, but I want to know whether they are good investments. So I’ve set up a new challenge.

My goal - go through each company and find the ones worthy of investment.

Allow me to start out by illustrating that I’m paying my college tuition with proceeds from the stock market. In fact, I’m making more in the stock market than I do as an engineer, and I’m only investing 40K.

Below you will find my current holdings and my reasoning behind holding each one, but first, what do they have in common? They all have historically exhibited huge growth potential and show little to no signs of stopping. They are all priced ridiculously cheap for this potential. The stock market is a huge grocery store, and if you see 59-inch plasma TVs on sale for $5, it only makes sense to purchase a few… right?

Uh oh.  Now the rest of the world is sliding into our abyss...

It was patently obvious to me very early Friday as one of my clients called me frantically about the soaring dollar and every stock I watch with low international exposure was soaring from the get-go.  Yes, we hit a round number on the Euro - 1.50, and suddenly it's not so trendy to have massive exposure to foreign economies relative to ours.

Q1 2008 Earnings Call

May 8, 2008 11:00 am ET

No doubt, this past week was a tough week for the market. One of my favorite indicators, though not widely known, turned negative, as Investors Business Daily changed its market outlook from "confirmed rally" to "market correction". They don't always get it right, but I don't take it lightly that the recent number of high-volume sell-offs (primarily outside of the NASDAQ) has triggered this concern. As someone who recently declared that the bear market is over, I am, of course, somewhat concerned that perhaps my judgment is incorrect. For now, though, I stand by my call.

For those who didn't read that article, I went from being a "tactical bull/strategic bear" to a "strategic non-bear" - I wasn't covering a bad position. Rather, I decided to ditch my previous strategy of being prepared to short the market again and to remain long, though I expected some resistance about where we encountered it. Specifically, I don't expect a new low or even a test of the old lows, but I am not ready to declare it a bull market either.

Q4 2007 Earnings Call

February 28, 2008 11:00 am ET

As I mentioned in a previous article, Middleby (MIDD) reported impressive fourth quarter results. Its earnings per share increased 32.8% to $0.89 in the fourth quarter of 2007 as compared to $0.67 in the fourth quarter of 2006. For the full year, earnings per share increased 21.0% to $3.11 in 2007 from $2.57 in 2006. Net sales rose 48.1% in the 2007 fourth quarter, and 24.1% for the full year. The net sales increase reflects the impact of several acquisitions that were made during the year. Excluding the impact of acquisitions, sales organically grew 11.9% in the 2007 fourth quarter, and 5.7% for the full year.

I always try to been very conservative when building valuation models. I had been modeling 15% earnings growth for Middleby, but this may be too conservative. Middleby’s CEO is now guiding to 20-25% earnings growth.

With the S&P 500 down about 8.6% for the year, it seems like a good time to look for some bargains among the stocks that I have researched. Some of the cash within my Against the Sky Portfolio needs to be put to work. Below are some additions that will likely occur over the next week provided that prices do not rise about certain price targets.

Automatic Data Processing (NYSE: ADP) - If another market drop occurs, I will look to purchase shares of ADP. I’d like to get shares below $36, which would represent a 25% discount to the probable intrinsic value of $48. The price of $48 per share assumes 12% growth for five years followed by 5% growth for years 6-30. ADP is the perfect stock for this portfolio as it is demonstrating steady earnings growth, continuing share buybacks, and has steady dividend growth. It falls squarely into the large-cap value bucket of the portfolio. ADP will comprise 4% of the Against the Sky Portfolio if Mr. Market will cooperate and give me a deal. Further analysis of ADP can be found here.

Every time I see that a regional restaurant is going national, I think of Middleby (MIDD). They sell commercial cooking equipment to fast food restaurants, casual dining restaurants, and other commercial users. They are one of the most well-managed companies that I have seen.

Current management began a turnaround about five years ago by selling off low margin pieces of their business. They focused intensely on their commercial oven business and began to develop innovative new technologies. Soon, the company was generating profits at good margins. These profits were then used to purchase smaller companies that represented a strategic fit for Middleby. Taking advantage of a fragmented market, Middleby would plug each new acquisition into their international distribution and sales infrastructure, streamline operations, and quickly increase margins for the purchased product line.

Stocks discussed in the lightning round session of Jim Cramer’s Mad Money TV program, Thursday November 8 Click on a stock ticker for more analysis:

Bullish calls:

Hologic (HOLX): 'There was a downgrade today. ... They are creating the premier woman's diagnostic company in the world. ... but back up the truck HOLX. [buy] That downgrade was dead wrong.'
First Solar (FSLR)
Las Vegas Sands (LVS): 'I want to go back into Las Vegas Sands.'
SiRF Technology (SIRF): 'I caught this one for about five points and I got off. But it has been a home run and I have not been there. But I think you're right, it is going higher.'
FirstEnergy (FE): 'I think FE recovered nicely from that outage.'
NRG Energy (NRG): 'You only need one of these, though. [utilities] NRG.'
VF Corp (VFC): 'If you're gonna own anything apparel why not own VF Corp?'
McDonald's (MCD): ' … is still smoking.'
Yum! Brands (YUM)
Darden Restaurants (DRI)
CVS Caremark (CVS): ' They're kicking butt in the front of the store. ... You need to swap out of Walgreen now and go into CVS.'

Bearish calls:

Applied Materials (AMAT): 'Applied Materials is not a solar play. It's a semiconductor equipment play, and we know we don't want to be in that business. So ixnay on Applied Materials.'
Time Warner (TWX): 'This one perturbs me. They need to split the company up … The industry is bad, but Time Warner is good. Dick Parsons [CEO and Chairman] is great and he couldn't figure it out.'
NorthStar Realty Finance (NRF): 'Everyone's lumping these together and this one doesn't have any subprime. ... I don't like real estate, but I don't think this one's a short like everyone's saying.'
Xilinx (XLNX): ' I am not a buyer of semiconductors. DontBuy Don'tBuy.'
Middleby (MIDD): 'I recommended it and then it reported a bad quarter. ... The restaurant business is having a bad time.'
Carters (CRI): 'I was disappointed. I'm not gonna go with you on that.'
Buffalo Wild Wings (BWLD): 'No, no, no, no, no! That is a post-momentum bad play. ... That was a bad quarter.'
Walgreen (WAG): "Switch out of WAG and into CVS.'

Seeking Alpha publishes a summary of Jim Cramer's stock picks every day including: Mad Money Recap, Lightning Round, Stop Trading and Wall Street Confidential

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How did this self-described “company engaged in the design, manufacture and sale of commercial and industrial foodservice equipment” pull off a 15-bagger over the past 5 years? MIDD has been around since the 80s – the 1880s. Long a premier name in the stodgy commercial oven industry, the company bet the ranch in late 2001 by purchasing the Blodgett division from Maytag, financing the purchase with debt. This worked out very well and said a lot about the strength and vision of its management team. For investors now, though, is there still money to be made?