CHARLES MIZRAHI S Insider Alert

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1 CHARLES MIZRAHI S Insider Alert Charles Mizrahi, Editor Buffett s Bet A little more than nine years ago, Warren Buffett made a $1 million bet. The bet was simple: he wagered that a low-cost S&P 500 index fund would outperform a portfolio of hedge funds picked by an expert in the field at the end of 10 years. Over the years, I ve been updating you on this bet. In the latest Berkshire Hathaway shareholder letter, which was released on February 25, 2017, Buffett took a victory lap. "I've talked to huge pension funds, and I've taken them through the math [demonstrating the superiority of low-cost index funds over active fund management], and when I leave, they go out and hire a bunch of consultants and pay them a lot of money. It's just unbelievable." An unmanaged low-cost S&P 500 index fund was up +85.4%, while the portfolio of hedge funds was up +7.1% as of the end of December 31, There is still one year left to go in the bet, but barring a major event, it is highly probable that Buffett won this one hands down. I don t think Buffett was expecting the results of the hedge funds to be so dismal. Warren Buffett What s Inside Special Situation Portfolio... Page 6 Up Close & Personal... Page 8 Portfolio...Page 11 Fundamentals...Page 12 The Inevitable Wealth Portfolio Update...Page 13 Charles Mizrahi is a veteran financial analyst and popular speaker on investing topics. Charles book Getting Started in Value Investing (Wiley & Sons) is avaiable at Amazon.com and fine bookstores. Charles invites you to him at charles. mizrahi@angelpub.com In Berkshire s 2005 annual report, Buffett argued that rank amateurs could outperform active investment by professionals by just doing nothing. In the report, Buffett offered up the bet to the hedge fund world. Instead of having many takers, all he heard was silence. It seemed that hedge fund managers weren t to willing to put up their own money and

2 defend their line of work. Of the thousands of professional investment managers that charge clients additional fees to select hedge funds that will outperform the market, only one person stepped up: Ted Seides, co-manager of Protégé Partners. The reason Buffett was so confident to make this bet? He knew the impact of fees on performance. Buffett s bet exposed the inherent weakness in paying for active management: over time, fees matter, and here s why Most hedge fund managers are compensated by earning a management and an incentive fee. The management fee is usually 2% of assets. For just waking up in the morning, the managers would be entitled to 2% of the assets under management, regardless of whether the fund made or lost money at the end of the year. If a fund manager had $1 billion under management on January 1, they would receive 2% of the total assets every time the earth completed a full rotation. The day limited partners gave their money to a hedge fund manager, the fund would need to make at least 2% just to break even. The hedge fund managers are also entitled to a percent of the profits, in most cases 20%. If the fund made money in year one, in addition to the 2% management fee, the manager would also take 20% of the profits. In year two, if the fund manager lost everything they made in year one, there would be no clawback. In other words, once the manager took the incentive fee, they would never have to pay it back regardless of how terribly they performed in the future. Wall Street s Helpers Now you could have a better picture of why many smart business school graduates open up hedge funds: it is very lucrative if you raise a lot of money. There was also one more fee, on top of the management and incentive fee: a fee paid to the manager who selected which funds to invest. Usually, the fund of fund manager would receive 1% of the total assets. Over the nine-year period of the bet, Buffett estimated that roughly 60% gulp! of all gains achieved by the five funds-of-funds were diverted to the two levels of managers. So, over the nine-year period, when these hedge funds returned +7.5% woefully underperforming an unmanaged index fund that required no skill, high minimums, lock-up periods, or any fees to speak of the hedge fund managers and their helpers became even richer. To put it simply: a Wal-Mart greeter making minimum wage could ve invested their IRA in a Vanguard S&P 500 index fund 10 years ago and outperformed a billion-dollar pension plan that invested in MBAs that had fancy Wall Street offices and mansions in the Hamptons. If that doesn t make you scratch your head and rethink investing, I don t know what will. Caveat Emptor (Latin for Let the Buyer Beware ) If you have money managed by professionals and are currently paying a managed fee, you should at the very least outperform the S&P 500 index, including their fee, over a 10-year period. 2

3 If not, then the only one getting richer is the professional. If only the top 1% of all money managers outperform the index, why take the risk of trying to find a needle in the haystack? Doesn t it make more sense to put your money in an index fund that is guaranteed to match the index? As a subscriber to Insider Alert, you only pay a once-a-year fixed subscription fee there is no management fee for babysitting assets, and you don t pay me a percent of the profits. By subscribing to Insider Alert, you ve demonstrated that you are an intelligent investor: you didn t pay an additional level of fees to follow a portfolio that over time outperforms the S&P 500 index. Unlike other investment approaches, our approach doesn t require you to spend hours in front of a computer watching every wiggle and jiggle of a stock, or burn the midnight oil poring over company filings trying to figure out what stock to buy. Instead, you ve demonstrated your intelligence by doing your own homework and investing in an approach that is both logical and rational: buying financially sound companies when they are trading at bargain prices. If following this approach has made you money since you ve been part of the Insider Alert family, I would love to hear about it. Send me an at charles.mizrahi@angelpub.com Insider Alert Portfolio (IAP) During the month of February, IAP had three trades. Portfolio Updates We sold Wabash National Corp. (WNC) +58%, Pilgrims Pride Corp. (PPC) -26%, and Corning (GLW) +52%. WNC and GLW were sold when they hit our 50% profit target, and PPC was sold because it had hit its two-year time limit in the portfolio without rising by 50% since we added it. We only held WNC less than three months before it hit our 50% target. WNC had all the things we like to see when we added it to our portfolio in November 2016: it was financially sound, trading at a bargain price, had strong management, and owned a very nice niche in its industry. WNC is an example of why we act quickly whenever Mr. Market throws us a bone we never know how long the price will stay at bargain levels. We replaced WNC with First Solar (FSLR), PPC with Noble Corp (NE), and Corning with FutureFuel (FF). So far, all three are showing gains, especially FSLR, which is up +11%. On page 8 we go into more depth on why we like FSLR. In the coming months, we ll share our thoughts on NE and FF and why we like them. NE is an offshore drilling contractor based in London, England, and owns one of the most technically advanced fleets in the offshore drilling industry. On Feb. 23, 2016, NE reported that it got a two-year contract for Noble Regina Allen, which will work for Exxon Mobil in Canada at a day rate of $88,500. While this is a positive sign, offshore drilling is still struggling. However, our analysis is telling us the price we paid for NE already factors in a very murky future. We believe any surprises will be to the upside. Mr. Market is offering us FF at a very attractive price. Insider Alert 3

4 FF is engaged in the chemical and biofuel business. The company s market cap is around $610 million, or $13.60 per share. Cash and short-term investments make up around $6.70 per share and the company has no longterm debt. If you subtract out the cash ($6.70 per share) from the market cap ($13.60 per share), Mr. Market is valuing the business at $6.90 per share. Over the trailing twelve months, FF earned $1.76 per share. To put it simply, Mr. Market is offering us a business at a little less than 4x earnings ($6.90 per share (minus cash)/$1.76 earnings per share). And one more thing: management owns a hefty amount of the company. We ll go into more detail next month, but for now, FF is a stock we wouldn t be surprised to see acquired or taken private by management. Special Situation Portfolio We continue to watch several stocks that we are inches away from recommending. However, each time they came close to our target prices, they stopped falling and began rising. Our objective is not to make a recommendation just to trade, but only when we are able to buy dollar bills at discounted prices. Should the stock market pull back over the next few weeks, that would be a good thing for us. It would then give us the opportunity to add these stocks to our portfolio. So far, we continue to patiently wait. All our most recent additions to the portfolio continue to do well. During the sales scandal that erupted at Wells Fargo (WFC) in September 2016, the stock dropped to levels that we believed offered a compelling bargain. It isn t often that great companies are offered at fire-sale prices, and we ve learned to act, and act quickly. We added WFC on Sept. 21, 2016, just a few ticks from the low made two weeks later. We saw the problem as more of a headline risk than a fundamental problem that would permanently damage the value of the company. WFC is currently up +32% since we made our recommendation, and we believe the worst is behind it. Free Lunch Portfolio The Free Lunch Portfolio (FLP) focuses on merger arbitrage trades. When a merger or acquisition is announced, the company that is being acquired usually sees its stock price jump higher pretty close to the acquisition price. There are several reasons the acquired company usually doesn t trade at the acquisition price after the merger is announced. For one thing, most investors don t want to stick around for the last few dollars in a trade. In addition, there is always the risk the acquisition might not take place due to a host of factors, including regulatory hurdles. This portfolio works best when diversified. Position Updates In the early part of February, we sent out an update with six new positions. Four of the deals (VAL, WWAV, FGL, SWC), if completed on the closing date, would provide us with annualized 4

5 double-digit returns ranging from 12.6% to 19.4%. The other two deals (WOOF and NXPI) would give us returns between 3.9% and 8.7%. These two deals have a very high probability of closing, resulting in a lower annualized return. Three of the four deals should close by the end of March, and one of them (SWC) is listed to close by 6/30. The closing date is usually just a best guess, and the deal can close in a shorter or longer period of time. If the deal closes prior to the closing date, then the annualized return on investment will be higher. If the deal closes later, then the annualized return will be lower. Our most recent position, MON, was made on Feb. 21. This trade came to our attention when Berkshire Hathaway reported its latest 13F filing. Warren Buffett, one of the most successful investors of all time, bought 8 million shares of MON. If this deal should close by 12/31/17, the annualized return would be 18.4%. After we recommended the trade, the stock rose by +2.3% as investors drove up the price. Currently there are only 52 cash deals, and the seven that we have in our portfolio are the most promising. We hope to add a few new positions over the next few weeks if the spread in the deals we are watching widens. For now, our portfolio has eight open positions, and should there be any major announcements, we will keep you updated. Insider Alert 5

6 SPECIAL SITUATION PORTFOLIO This portfolio will have holdings that are great values but won t be able to pass IWP s buy rules. The portfolio will be made up of special situation investments such as spinoffs, merger arbitrage, deeply undervalued stocks, and wherever we can find dollar bills trading for $0.50. Special Situation Issue Company Symbol Buy at or Below Price Buy Price Date Triggered 3/01/2017 Price Return Apr-2010 Atrion Corp. ATRI $ $ $ % Sep-2012 Huntington Ingalls Industries HII $ $38.83 $ % Sep-2013 American Outdoor Brands AOBC $ $10.99 $ % Dec-2014 White Mountains Insurance WTM $ $ $ % Mar-2015 Capital Southwest Corp. CSWC $ $17.26 $ % CSW Industrials CSWI $29.40 $ % Apr-2015 Fabrinet FN $ $18.68 $ % May-2015 MSC Industrial Direct MSM $ $68.51 $ % Jul-2015 Copa Holdings SA CPA $ $74.25 $ % Aug-2015 Wendy's WEN $ $9.49 $ % Sep-2015 Kennedy-Wilson Holdings KW $ $23.76 $ % Oct-2015 Buckle, Inc. BKE $ $30.94 $ % Nov-2015 GameStop Corp. GME $ $32.90 $ % Dec-2015 Hawaiian Holdings HA $ $32.81 $ % Jul-2016 Speedway Motorsports TRK $ $18.02 $ % Aug-2016 Rowan Companies RDC $ $13.73 $ % Sep-2016 Emergent BioSolutions, Inc. EBS $ $26.90 $ % Wells Fargo & Co WFC $ $45.14 $ % MetLife, Inc. MET $ $46.47 $ % Versum Materials, Inc. VSM $ $23.29 $ % New Since Last Issue NOTE: All positions prior to September 2016 were initiated when the portfolio was part of our other investment advisory service, Hidden Values Alert. 6

7 FREE LUNCH PORTFOLIO This portfolio will focus on merger arbitrage deals and will take positions in target companies only after the deals are publicly announced Wall Street s last free lunch. This portfolio should have a low correlation with the overall market. The goal is to pick up the last few dollars in a deal, which should work out to double digit annualized returns. The watch list is comprised of deals that we are looking at but have not yet added to the portfolio. Free Lunch Trade Date Target Company Symbol Current Price Deal Price ROI Closing Date Annual. Return Current Price Open P/L Rite Aid Corp RAD $8.44 $ % % $ % The Valspar Corp VAL $ $ % % $ % WhiteWave Foods WWAV $54.80 $ % % $ % Fidelity & Guaranty Life FGL $26.20 $ % % $ % Stillwater Mining Co SWC $17.22 $ % % $ % VCA, Inc. WOOF $90.72 $ % % $ % NXP Semiconductors NXPI $ $ % % $ % Monsanto MON $ $ % % $ % Watch List Trade Date Target Company Symbol Current Price Deal Price ROI Closing Date Annual. Return Mead Johnson Nutrion Co. MJN $88.11 $ % % LMI Aerospace LMIA $13.78 $ % % New Since Last Issue Insider Alert 7

8 Up Close and Personal An in-depth look at this month s featured IA holding Manufacturer of Solar Modules and Turnkey Solar Systems Ticker: FSLR Market Cap: $4.0 billion Shareholder Equity: $5.2 billion Total Assets $6.0 billion Equity to Asset ratio:.76 (as of 12/31/16) Current Stock Price $35.02 (as of 03/01/17) Current P/E: N/A Company Description First Solar (FSLR) is a leading global provider of photovoltaic solutions, otherwise known as solar energy, and their business is split into two segments: 1. Solar energy components (6% of revenue): A relatively small segment in FSLR s operations, making up only 6% of total revenue. This segment consists of selling First Solar patented products, like solar panels. 2. Developing solar energy solutions (94% of revenue): FSLR is one of the largest solar energy providers in the world. In the US alone, they have developed the five largest solar power plants in the country. They are also responsible for more than 13 gigawatts (GW) of solar energy installed worldwide. Source: SEC 10-K Why we like it Run by a cost-oriented management team that is focused on delivering the most value to its customers. Even after factoring in industry-wide oversupply, the solar industry is still growing quickly in the 8

9 United States, adding 25% more jobs last year. A company with a tradition of innovation and record-breaking technology. FSLR is one of the world s largest manufacturers of thin-film solar panels. These panels are far less costly than most other panels simply because they aren t made from silicon. We believe this gives FSLR a competitive edge because: Lower costs and lower prices make FSLR s products more affordable. Bloomberg compared FSLR against a Chinese-based company called Trina Solar and found that FSLR Solar beat its prices by 15%. FSLR produces its own solar components. Management believes that this maximizes value for its customers by cutting costs. Compared to some of its competitors that must source from third parties, like Mortenson Construction and 8minutenergy, FSLR doesn t have a middleman that increases costs. The key to success in the solar industry is a company s ability to innovate. In that regard, FSLR has proven time and time again its ability to overachieve. It recently accomplished a laboratory cell efficiency of 22.1% on a cadmium telluride solar panel, breaking the world record. FSLR is much more efficient than its competitors: The commercial line has a higher efficiency rating, 16.9% versus 14% for Stion Corp. By continuously innovating, FSLR can provide solar energy at prices that compete with well-established energy sources like coal. Tailwinds Although Chinese solar companies have flooded the market with their products, the cost to develop a solar plant has plummeted by over 30% since This makes them more affordable to the end user and fuels demand for renewable energy from countries like the United States, Germany, and China. Because of the industry s fast-growing workforce and President Trump s emphasis on supporting American workers, Trump could be a friend to the solar industry. The industry s American workers have more than doubled since 2010 to about 260,000 people. Insider Alert 9

10 Mr. Market s overreaction to the oversupply in solar panels provided us with a good entry point. After beating earnings expectations in the last earnings release in February, FSLR continues to move higher. Recommendation: FSLR is up +11% since we added it to IAP on February 02, If you do not currently own FSLR, we recommend NOT buying it at these levels. We add to prior recommendations only if two conditions are in place: 1. The stock price is equal to or less than the price we paid when we initially recommended the stock ($31.59). 2. The P/E is no greater than 10 (current P/E is N/A). Both of these conditions are NOT in place as of March 01,

11 Insider Alert Portfolio Bulletproof Business at a Discount Portfolio Company Symbol Date Entered Purchased Price 03/01/17 Price Shares Total Return Nevsun Resources NSU $4.06 $ % Graham Holdings GHC $ $ % Enanta Pharmaceuticals ENTA $38.12 $ % Murphy Oil Corp. MUR $40.77 $ % AVX Corp. AVX $13.46 $ % Tessera Technologies XPER $35.56 $ % Taro Pharmaceutical TARO $ $ % Westlake Chemicals WLK $48.90 $ % Michael Kors Holdings KORS $39.46 $ % GameStop Corp. GME $35.89 $ % Cal-Maine Foods CALM $53.11 $ % Lannett Company LCI $37.92 $ % Western Digital WDC $57.92 $ % CVR Refining CVRR $16.59 $ % Buckle, Inc. BKE $28.44 $ % Rambus RMBS $13.87 $ % HollyFrontier Corp HFC $34.87 $ % Captial Southwest Corp CSWC $13.79 $ % Tri Pointe Group TPH $11.62 $ % Hollysys Automation Tech. HOLI $16.61 $ % United Therapeutics UTHR $ $ % Rowan Co. RDC $18.60 $ % American Outdoors Brand AOBC $20.89 $ % Dorian LPG LPG $8.58 $ % Navigator Holdings NVGS $11.10 $ % Transocean LTD RIG $15.30 $ % Euronav NV EURN $8.40 $ % First Solar, Inc. FSLR $31.59 $ % Noble Corp. PLC NE $6.90 $ % FutureFuel Corp FF $13.20 $ % All $ in millions except stock price All prices adjusted for dividends and splits All fundamental data is at the time of purchase New Since Last Issue Stocks added to the portfolio need to satisfy two conditions: they must have a strong balance sheet and be trading at a discount. The returns assume an equal dollar amount is invested in each of the 30 stocks in the portfolio. Portfolio is based on starting account size of $75,000 or $2,500 invested in each stock. A stock will be sold from the portfolio if it increases by 50% from the purchase price and sold on the close or if two calendar years elapse from the purchase date, whichever comes first. If you are just starting out, we recommend purchasing all stocks that are currently in the portfolio as long as they are trading at less than their purchase price and their current P/E is less than 10. If a stock in the portfolio has a negative P/E (which simply means that its trailing 12-month earnings are negative), don t purchase the stock. A spin off will be sold at the same time as the parent company. Of course, buy any stock that is added to the portfolio in the IA portfolio updates that are sent to you via . Insider Alert 11

12 Insider Alert Portfolio Bulletproof Business at a Discount Fundamentals Company Equity to Asset Ratio Shareholder Equity Total Assets P/E Industry Market Cap Nevsun Resources 0.69 $677 $987 9 Copper $826 Graham Holdings 0.56 $3,121 $5,525 6 Education & Training Services $5,750 Enanta Pharmaceuticals 0.91 $224 $246 6 Biotechnology $706 Murphy Oil Corp $8,204 $15,161 6 Oil & Gas EP $7,600 AVX Corp $2,132 $2, Electronic Components $2,400 Tessera Technologies 0.95 $540 $ Semiconductor Equip.& Materials $1,900 Taro Pharmaceutical 0.85 $1,524 $1, Drug Manufacturers $5,750 Westlake Chemicals 0.58 $3,123 $5, Specialty Chemicals $6,600 Michael Kors Holdings 0.82 $2,089 $2, Apparel Manufacturing $7,700 GameStop Corp $1,967 $3, Specialty Retail $3,900 Cal-Maine Foods 0.70 $800 $1,136 9 Packaged Foods $2,600 Lannett Company 0.92 $501 $543 9 Drug Manufacturers $1,400 Western Digital 0.61 $9,336 $15, Data Storage $13,600 CVR Refining 0.62 $1,552 $2,506 7 Oil & Gas Refining $2,600 Buckle, Inc $419 $590 9 Apparel Stores $1,400 Rambus 0.70 $392 $558 8 Semiconductor memory $1,480 HollyFrontier Corp 0.63 $5,253 $8,388 9 Oil & Gas Refining & Marketing $6,270 Captial Southwest Corp 0.94 $271 $287 9 Asset Management $219 Tri Pointe Group 0.52 $1,695 $3,234 9 Residental Contruction $1,960 Hollysys Automation Tech $650 $ Industrial Machinery/Comps. $903 United Therapeutics 0.81 $1,849 $2,269 8 Biotechnology $5,045 Rowan Co $5,157 $8,665 5 Oil & Gas Drilling $2,200 American Outdoors Brand 0.52 $376 $728 9 Aerospace & Drilling $1,000 Dorian LPG 0.54 $967 $1,786 8 Shipping & Ports $477 Navigator Holdings 0.57 $948 $1,660 8 Shipping & Ports $600 Transocean LTD 0.58 $15,084 $26,167 5 Oil & Gas Drilling $5,570 Euronav NV 0.57 $1,799 $3,131 5 Intergrated Shipping & Logistics $1,300 First Solar, Inc $5,945 $8,088 7 Solar $3,300 Noble Corp. PLC 0.56 $7,045 $12,584 8 Oil & Gas Drilling $1,770 FutureFuel Corp 0.83 $427 $513 8 Chemicals $570 GLOSSARY Market Cap: The value of a company s outstanding shares. Calculated by outstanding shares times current price. Shareholder Equity: The total assets minus total liabilities; the remainder is the company s net worth. Total Assets: All company owned resources such as property, plant & equipment, investments, loans, cash, etc. Equity-to-Asset Ratio: Ratio used to determine the value that shareholders would receive if the event the company liquidated. To be considered financially sound, a company should own at least twice what it owes for a ratio of 50% or greater. P/E: The ratio of a stock s current price to its earnings over the past twelve months. Gives investors an idea of how much they are paying for each dollar of a company s earnings. 12

13 Insider Alert Portfolio Grouped by Industry Company Ticker Total Return Industry American Outdoors Brand AOBC -7% Aerospace & Drilling Michael Kors Holdings KORS -6% Apparel Manufacturing Buckle, Inc. BKE -33% Apparel Stores Captial Southwest Corp CSWC 20% Asset Management Enanta Pharmaceuticals ENTA -24% Biotechnology United Therapeutics UTHR 31% Biotechnology FutureFuel Corp FF 3% Chemicals Nevsun Resources NSU -38% Copper Western Digital WDC 35% Data Storage Taro Pharmaceutical TARO -9% Drug Manufacturers Lannett Company LCI -42% Drug Manufacturers Graham Holdings GHC -8% Education & Training Services AVX Corp. AVX 19% Electronic Components Hollysys Automation Tech. HOLI 7% Industrial Machinery/Components Euronav NV EURN -3% Intergrated Shipping & Logistics Rowan Co. RDC 0% Oil & Gas Drilling Transocean LTD RIG -8% Oil & Gas Drilling Noble Corp. PLC NE -1% Oil & Gas Drilling Murphy Oil Corp. MUR -28% Oil & Gas EP CVR Refining CVRR -34% Oil & Gas Refining HollyFrontier Corp HFC -16% Oil & Gas Refining & Marketing Cal-Maine Foods CALM -28% Packaged Foods Tri Pointe Group TPH 6% Residental Contruction Tessera Technologies XPER 1% Semiconductor Equip.& Materials Rambus RMBS -7% Semiconductor memory Dorian LPG LPG 16% Shipping & Ports Navigator Holdings NVGS -1% Shipping & Ports First Solar, Inc. FSLR 11% Solar Westlake Chemicals WLK 35% Specialty Chemicals GameStop Corp. GME -32% Specialty Retail New Subscribers Here are the buy rules we suggest on starting your portfolio: 1. Only purchase stocks that have a P/E no greater than 10 AND 2. Are currently trading at or below their original purchase price. The following stocks pass both rules. Invest only 1/30 of your portfolio in each stock. Company Ticker Current P/E Purchase Price 03/01/17 Price Current P/E <10? Price < Purchase Price? Taro Pharmaceutical TARO 10 $ $ YES YES Michael Kors Holdings KORS 8 $39.46 $36.90 YES YES GameStop Corp. GME 7 $35.89 $24.48 YES YES Buckle, Inc. BKE 8 $28.44 $19.05 YES YES Rowan Co. RDC 7 $18.60 $18.54 YES YES American Outdoors Brand AOBC 8 $20.89 $19.45 YES YES Navigator Holdings NVGS 10 $15.30 $11.00 YES YES Transocean LTD RIG 7 $8.40 $14.05 YES YES Euronav NV EURN 6 $8.40 $8.15 YES YES Insider Alert 13

14 Recent Additions Company Symbol Date Entered Purchase Price Replaced Wabash National Corp WNC $12.78 HIBB Rowan Co. RDC $18.60 IOSP American Outdoors Brand AOBC $20.89 BBL Dorian LPG LPG $8.58 MEI Navigator Holdings NVGS $11.10 OXY Transocean LTD RIG $15.30 IMO Euronav NV EURN $8.40 MU First Solar, Inc. FSLR $31.59 WNC Noble Corp. PLC NE $6.90 PPC FutureFuel Corp FF $13.20 GLW Recent Closed Positions Company Symbol Date Entered Date Sold Return Reason for Sale Hibbett Sports HIBB % 50% increase BHP Billiton plc (ADR) BBL % Expired-2 years Innospec Inc. IOSP % 50% increase Methode Electronics MEI % 50% increase Occidental Petroleum OXY % Expired-2 years Imperial Oil IMO % Expired-2 years Micron Technology MU % Expired-2 years Wabash National Corp WNC % 50% increase Pilgrims Pride Corp. PPC % Expired-2 years Corning Inc. GLW % 50% increase Closed Positions: 152 (Since Feb. 2009) Winners 112 Losers 40 Avg. gain per transaction 23.0% 14

15 CHARLES MIZRAHI S Insider Alert Insider Alert 2017, 111 Market Place, Suite 720, Baltimore, MD All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Insider Alert does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. Neither the publisher nor the editors are registered investment advisors. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law. Insider Alert 15 15