Current holdings: reasons and targets

FRO

1. Dividend.
2. Management - John Fredriksen is continuing to funnel money to Seadrill. To do that, he's got to pay the maximum dividend.
3. Tankers are at record newbuilding prices. (Long-term plus.)
4. Imports of gasoline this year should keep tanker prices strong. (short-term plus)
5. Politics in Venezuela, Nigeria, and Iran is unstable.
6. Sale of equity in Sealift is worth $3/share for FRO.

Target: 15% dividend rate = $50

CFC (short)

1. Hedge against recession
2. 50% of income is from ARM's
3. 40% of $30 billion loan portfolio is in negative amortization ARM's. Most of these are in California.
4. Foreclosures totaled 8,099 worth $1.5 billion on 5/15. They are increasing 20% every month.
5. 10% of income is from increasing negative amortization booked as income
6. 37% of income in Q1'07 is from negative amortization booked as earnings.

Target: yearly low = $33

CNE

1. Dividend.
2. Play on Canadian currency.
3. Natural gas has phenomenol long-term growth potential
4. It was cheap after the overreaction to the termination of trust status in 2011.

Target: Price before trust termination = $18

PDC

1. Good management - sound expansion plan.
2. No debt
3. Long-term growth in natural gas
4. 4.3x cash flow

Target: 6x cash flow = $17.92