Stock Portfolio and Watch List Updates for February 2010

Following are the activity from the previous month:

1. Sold Costco (COST) on 02/09/2010 at $58.29 for a 6.6% loss. The stock was purchased in October 2008 just before the credit bubble blow up. The share price went as low as $38 during the March lows before bouncing back. We realized some income from dividends and covered calls during the period of our ownership making the overall return around break-even.
2. Doubled our Kraft (KFT) position at $28.57 on 02/09/2010. The Cadbury purchase is a huge step that should help grow Kraft – Cadbury has very good market share in fast growing developing areas of the world. The deal price was generous and the Pizza deal with Nestle (a side-deal to raise cash) was tax-inefficient and at less than fair value according to Warren Buffet. Even so, assuming Kraft is able to realize synergies while expanding globally, it should turn-out well.
3. Bought Telefonica SA (TEF) at $68.74 on 02/09/2010. The stock offers a very good dividend. The mobile operator has a strong presence in Spain and in Latin America. Overall, it is the third largest wireless operator in the world behind Vodaphone and China Mobile. Broadband & TV make up only around 12% of its customer base which makes those areas a growth opportunity.
4. Closed our ICICI Bank (IBN) March 40 Covered Calls at 0.95 on 01/22/2010. The calls were written on 10/06/2009 at $5.95. The transaction generated income of around 0.5% compared to the current portfolio value.

Our cash position is around 5%. Below is our updated portfolio – it is about 4.5% in the red:

Stock	Buy Date	Buy Price	Current Price	Current % Of Portfolio	Unrealized % Return	Yield as % of Portfolio Value
Altria (MO)	Various	16.69	20.16	3.13	20.83	0.38
Philip Morris International (PM)	1/4/2005	32.19	49.98	6.43	55.25	0.45
Kraft Foods (KFT)	Various	26.33	28.92	5.98	9.85	0.23
Pfizer (PFE)	Various	24.37	17.99	4.65	(26.17)	0.30
ICICI Bank (IBN)	5/18/2006 and 08/01/2008	25.28	36.52	9.44	44.49	0.30
Advantage Energy Fund (AAV)	11/2/2006	11.22	7.07	1.83	(37.01)	0.17
Central Europe & Russia Fund (CEE)	Various	39.23	32.94	5.96	(16.02)	0.03
Itron Inc. (ITRI)	11/07/2007	85.01	66.89	3.46	(21.41)	None
Anthracite (ACPI – formerly AHR)	11/09/2007	7.97	0.18	0.05	(97.72)	0.00
iRobot (IRBT)	12/18/2007	18.65	17.50	3.62	(5.36)	None
LDK Solar (LDK)	01/22/2008	30.49	6.58	1.02	(78.42)	None
Aegon N.V. (AEG)	04/28/2008	15.99	6.05	0.94	(62.16)	0.00
Frontline Limited (FRO)	10/06/2008	36.95	27.54	2.13	(25.46)	0.17
DryShips Incorporated (DRYS)	02/09/2009	6.96	5.62	2.03	(19.30)	0.00
Plum Creek Timber (PCL)	07/23/2009	30.50	36.65	7.58	20.17	0.46
CPFL Energia S.A. (CPL)	07/28/2009	50.45	63.78	6.59	26.43	0.55
BP plc (BP)	08/05/2009	51.49	54.30	5.61	5.46	0.45
AT&T (T)	08/27/2009	26.38	25.10	5.19	(4.87)	0.39
Sysco Corporation (SYY)	10/13/2009	25.23	29.14	6.02	15.48	0.39
Exelon (EXC)	12/30/2009	49.38	44.88	8.66	(9.12)	0.39
Telefonica SA (TEF)	02/09/2010	68.74	70.94	9.12	3.13	0.57
Cash				5.34
Total Portfolio					(4.45)	4.60

Below is a summary of transactions during the year:

Stock	Buy Date	Buy Price	Sell Date	Sell Price	% Gain (Loss)	% Portfolio Return*
Ameritrade (AMTD)	5/21/2008	17.69	01/19/2010	17.45	(1.33)	(0.05)
AMTD Jan 17.5 Covered Calls (TQAAW)	1/19/2010	NA	9/10/2009	NA	NA	0.57
COST Jan 60 Covered Calls (PRQAL)	1/19/2010	NA	9/10/2009	NA	NA	0.14
IBN Mar 40 Covered Calls (ITZCN)	1/22/2010	NA	10/06/2009	NA	NA	0.50
Costco (COST)	8/01/2009	62.27	02/09/2010	58.18	(6.57)	(0.20)
Realized Gain/(Loss) YTD	-	-	-	-	-	0.95

• % Gain/Loss Relative to Portfolio Value at Beginning of Year + Deposits
• The table assumes realization of profits associated with selling options only after the option is exercised or expiry.

Our current watch list follow – Archer Daniels Midland (ADM), Automatic Data Processing (ADP), Boeing (BA), Becton Dickinson (BCK), BHP Billiton (BHP), Cardinal Health (CAH), Cresud (CRESY), Eaton (ETN), Emerson Electric (EMR), AgFeed (FEED), Glaxo (GSK), Home Depot (HD), Intel (INTC), Nokia (NOK), China Nepstar (NPD), Nutrisystem (NTRI), Nucor Steel (NUE), Qiagen (QGEN), Telefonica (TEF), UPS (UPS), and Waste Management (WM).