Apis Bull
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FOR
END OF BUSINESS DAY OF 1 Aug 2005
TABLE
OF CONTENTS
SECTION
I: STOCKS
--------------------------------
SECTION
I: STOCKS
1)
STOCK Apis Bull Stock and Commodity Trading Education *****
I
have no new picks at this time. I have all the
strocks I should have in to the market at this
time. It would not be wise to be fully invested in
this market. It's been a few weeks since I last
wrote you, but there wasn't anything to talk about.
The market is so ho hum and I have the positions I
wanted.
There
are many other reasons why I bought these stocks
and some differ from the others. I do not list all
the reasons why I buy a stock because I would be
writing for a whiile. These are the important parts
of the decision making for these purchases and
future purchases.
Here
are a few of my past trades
|
TICKER
|
DATE
BOT
|
PRICE
BOT
|
DATE
SOLD
|
PRICE
SOLD
|
% GAIN
/ LOSS
|
|
SWN
|
26 MAY 05
|
34.67
|
7 JUN 05
|
36.17
|
4.326
|
Prices for SWN have been adjusted for the 2 for 1
stock split which took place on 6 June 2005
|
LKQX
|
20 MAY 05
|
23.66035
|
1 JUN 05
|
24.71869
|
4.473
|
|
DIOD
|
18 MAY 05
|
31.22
|
1 JUN 05
|
33.0071
|
5.724
|
|
AMHC
|
21 APR 05
|
37.53714
|
25 APR 05
|
40.15
|
6.960
|
To
see more of my trading History
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2)
WHAT I HAVE UP FOR SALE *****
Why?
This is ed a protective stop. Helps me from
losing my shirt.
3)
MY CURRENT POSITIONS *****
As
of 1 Aug 2005
|
TICKER
|
DATE
BOT
|
PRICE
BOT
|
CURRENT
PRICE
|
% GAIN
/ LOSS
|
|
FADV
|
14 JUN 05
|
23.97
|
23.85
|
(0.500)
|
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4)
MARKET CONDITION *****
The
market is improving but very slowly. When the Dow
reaches 11,000 then we will consider the Dow to be
strong. For the NASDAQ if or when it surpases 2200
things should be looking good. It's less than 100
points away. If you look at the chart
you will see the market is going sideways, not up
and not down.
Save
your money because within the next 2 years when the
real estate market falls apart you'll be able to
pick up foreclosures at pennys on the
dollar.
5)
News and Info
A
superior financial firm
First
American (NYSE: FAF) is usually characterized as a
title insurance company, but it is so much more
than that. Sure, title insurance is a major part of
the business, but the key to First American's
success is its focus on creating, expanding, and
improving its consumer and business databases. I
also happen to like First American because its
share price has risen by 50% since I first
recommended the company to Inside Value members
last September. Despite the rise, I still believe
the company to be significantly undervalued -- just
not quite at the margin of safety that I would
require before purchasing shares.
First
American is divided into two main divisions:
financial services and information technology,
although First American occasionally transfers
portions of its portfolio to its 80%-owned
subsidiary, First Advantage (Nasdaq: FADV), as it
did recently with its Credit Information Group. The
biggest cost to title insurers is the search and
preparation of documents; claims are a mere
fraction of the cost of doing business. First
American holds a huge "title plant," a database
that helps title insurers limit their risk by
performing accurate searches and examinations. It's
much quicker than thumbing through public records.
The database slashes search costs and allows the
company to provide timely responses in line with
the demands of the industry. That's crucial,
because title insurance constitutes 72% of the
company's sales and 50% of net income.
The
company continues to grow its business organiy
and through small acquisitions. The acquisitions
spur greater growth by regularly adding valuable
records to the database. The company has an
exceptional record of wringing cost savings out of
acquisitions by adding manual records to the
database.
The
information technology division is also built on
databases and consists of four main segments:
mortgage, property, credit, and screening
information. The mortgage information segment
provides real estate tax-monitoring services,
flood-zone certification, and default management
services in the handling of loss mitigation,
foreclosures, and claims processing. First American
is the dominant service provider in each of these
service industries. It provides credit data to
credit bureaus such as Experian and Equifax (NYSE:
EFX).
Competitive
landscape
In
the U.S., title insurance is dominated by First
American and Fidelity National (NYSE: FNF), and to
a lesser extent, Old Republic International (NYSE:
ORI) and LandAmerica (NYSE: LFG). The industry is
heavily price-regulated, and prices vary from state
to state. Only Fidelity has a similar reach and
technology, but while First American emphasizes its
database advantages, Fidelity's strength is in
software applications. Old Republic is a hybrid
title and mortgage insurance company, and
LandAmerica is a smaller, but competitive, pure
title insurance company.
In
addition to its domestic growth strategy, First
American will continue to grow in Canada and the
U.K., where it is already the leading title
insurer. The use of title insurance has been slow
to catch on outside the U.S., but there is a
growing requirement by mortgage lenders for its
use.
Risks
The
biggest risk to First America is the volatility of
the mortgage refinancing market which, when in full
flood, adds significantly to the bottom line.
Regular mortgage originations do not fluctuate to
the same extent, and are generally projected to
increase 8% to 10% nationally over the next several
years. Any hint of a serious downturn in housing is
likely to result in a drop in share price. This
happened as recently as last year, when the shares
dipped below $25. Since that time, the company has
taken steps to reduce its reliance on cyclical
revenues. Insurance regulators could bring pressure
to bear on prices, as recently happened with
refinance rates in some states.
First
American's underlying non-cyclical businesses are
on a nice growth trajectory. I view the cyclical
revenues, particularly those from refinancings, as
an irregular bonus that improves the company's
ability to buy back shares and self-finance its
growth. The company sports a P/E of around 11, a
price-to-book ratio of around 1.5, and has a net
cash position of $700 million. Better still, the
company's enterprise value-to-free cash flow is
below 8.
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