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Executive Summary May 14, 2010

The Economy

The state of the economy over the past two weeks really depends on which economy you're talking about -- the U.S. economy or the global economy. In the U.S., the positive news and data continues to roll in as the economic recovery progresses. Overseas, however, some significant tremors are rumbling through Europe. And for investors, the question is how much the latter will impact the former.

The main source of the tremors is, of course, Greece, but other European countries, including Spain, Portugal, Italy, and Ireland, also were showing serious debt-created cracks. That led to a nearly $1 trillion liquidity package being created for struggling European Union members, financed by EU countries and the International Monetary Fund, of which the U.S. is a part. Some initial reports are estimating that the U.S. is on the hook for about $55 billion in loans, since it is responsible for about one-sixth of the IMF's contribution to the loan. (The IMF is responsible for one-third of the $950 billion package.) The U.S. has also agreed to open currency swap lines with the European Central Bank to help ease liquidity fears.

So far, initial reports indicate the direct risk to the U.S. for its involvement in the European crisis is minimal -- the IMF, which usually is the preferred creditor in its dealings and thus gets paid back first, says none of its members have ever lost money on their IMF contributions. But it appears no official word has come on whether the IMF will be the senior party in this debt arrangement.

In today's global economy, the risks to the U.S. (and U.S. companies) goes beyond the direct participation in the European bailout. Troubles in Europe certainly have the potential to impact the rest of the world if European demand for goods and services declines. For now, however, confidence seems high that the EU nations' debt problems are being brought under control.

While Europe is in crisis, it's a different story at home. The U.S. economic data continues to impress, with one of the recent highlights being the April jobs report. The Labor Department said the economy added 290,000 jobs during the month, the biggest gain in more than four years. New data also showed 230,000 jobs were added in March, up from initial estimates of 162,000. The economy has now shown positive job growth for four straight months and five of the last six. The unemployment rate did rise, however, from 9.7% to 9.9%. But that appears to be because many job-seekers who'd given up on finding work restarted their searches as the employment situation improved.

New data also showed that initial claims for unemployment dipped in the most recent week (ending May 8), though the decline was less than analysts expected.

Since our last newsletter, we've also learned that the U.S. economy grew at a 3.2% clip in the first quarter. While slower than the previous quarter's 5.6% pace, it was still a strong figure, and it marked the third straight quarter of expansion after a full year of contraction. And it's important to note the source of the growth. While inventory replenishment drove the fourth-quarter 2009 surge in GDP, personal consumption expenditures played a much bigger role in the recent first-quarter growth. They jumped by 3.6% -- the biggest increase in three years. And given that the U.S. economy is driven largely by consumer spending, that's the number that needs to keep growing to sustain the recovery over the longer haul.

Good news also came from the manufacturing sector, which expanded for the ninth straight month in April, at the swiftest pace in almost six years, according to the Institute for Supply Management. The group's new orders sub-index also showed rapid acceleration, as did its employment sub-index, which grew for the fifth straight month.

ISM's non-manufacturing (or services) index also showed expansion, for the fourth straight month, though its employment sub-index indicated a services job market contraction for the 28th straight month.

Another positive sign: First-quarter earnings are coming in quite strong. Through last week, with 437 of 500 companies in the S&P 500 having reported, an impressive 77% had topped expectations, with the average being a 15% upside surprise, The Wall Street Journal reported. And the growth isn't just from cost-cutting -- 66% of the reporting companies announced revenues that beat expectations, the Journal said.

Of course, the government's bailout and stimulus efforts have a lot to do with corporate America's rebound -- and they also have a lot to do with its giant deficits. Treasury Department data released this week showed that the federal government ran up a deficit last month for only the third time in the past 30 Aprils; traditionally, the month has been a surplus month, CNNMoney reported, because of the April 15 tax filing deadline. This year's April deficit was more than $82 billion, a record for the month.

Still, there were more positive signs in the past two weeks. Some even came in the housing market, which had been showing mixed data in recent months. According to the National Association of Realtors, pending home sales rose 5.3% in March. That data involves a period prior to the April 30 expiration of the first-time homebuyer tax credit, however; in coming months we'll see if the housing market can push forward with that carrot no longer dangling.

The positive data for the U.S. economy and the flare-up of the European debt crisis have made for a very volatile fortnight, one that was made even wilder by an apparent trading input error that briefly wreaked havoc on an already turbulent market on May 7. All in all, the S&P 500 has fallen -4.1% since our last newsletter. The Hot List, meanwhile, lost -6.1%. For the year, the portfolio is now up 3.9% vs. 3.8% for the S&P. Since its inception in July 2003, the Hot List is far outpacing the index, having gained 150.4% vs. the S&P's 15.7% gain.

A Major Shakeup

The Hot List is undergoing a major overhaul on today's regularly scheduled rebalancing. It's selling 7 of its 10 holdings and replacing them with seven new picks -- not surprising given the volatility we've seen over the past month. The big ups and downs have shifted a lot of firm's valuation metrics, as has the recent rush of first-quarter earnings releases.

The departing stocks include a couple winners (EMCOR Group and ITT Educational Services), and a handful of losers (lululemon athletica, Telestone Technologies, Telefonica, Sanofi-Aventis, and The Brink's Company). The newcomers are a diverse bunch that run the gamut from a healthcare giant (AstraZeneca) that has a $63 billion market cap and 8% dividend yield to a $190-million-small-cap, federally chartered financial (Federal Agricultural Mortgage Corp.) that offers loans to agricultural and rural customers. Also in the mix: a paper company, a specialty vehicle maker; a niche health insurance firm; a for-profit private education company; and a key player in the video game industry.

While these firms come from a variety of different areas of the market, they all share at least one thing in common -- very strong fundamentals. All have long-term EPS growth rates between 17% and 46%, for example, and all trade at yield-adjusted P/E/Growth ratios of 0.4 or lower (which would fall into the "best-case" category of my Peter Lynch-based model).

What Makes Stocks Tick

The market turbulence has helped shake these bargains loose in the past week or two. It's also done something on a broader level: It has highlighted just how many factors impact stock market returns. Politics, both at home and overseas, interest rates, earnings, and, of course, good old fear and greed -- all of these and more have been in play over the past couple weeks, pushing and pulling the market upward and downward.

To me, all of that begs the question: What really drives stock market returns over the long haul? It's a tough question, but one that a recent study attempted to answer.

The study -- "What Drives Long-Term Equity Returns?" -- was performed by MSCI Barra, creator of the MSCI market indices. It broke historical stock market returns down into four main sources: inflation; dividend income; real book value growth (how much the company's underlying business and assets grow); and price-to-book growth (how the amount of money investors are willing to pay for every dollar of that book value changes over time).

The study covered the period from 1975 through the third quarter of 2009, and its findings were very intriguing. According to Barra, over that period, inflation played the greatest role in stock market returns, both in the U.S. and on a global scale. In the U.S. (measured by the MSCI USA index), stocks averaged an 11.4% annual gain over that 35-year period; inflation accounted for more than a third (4.2 percentage points) of that. Global stock returns (measured by the MSCI World Index), meanwhile, averaged 11.1% per year; inflation also accounted for 4.2 percentage points of that gain.

The second-greatest factor that goes into equity returns also might surprise you: dividend income. Dividend payouts made up 3.2 percentage points of the U.S.'s 11.4% annual gains in the 35-year period covered by the study; they also made up 2.9 percentage points of the global 11.1% annual return.

Coming in third was real book value growth, accounting for 1.8 percentage points in the U.S. and 2.1 percentage points globally. And bringing up the rear was price-to-book growth, which accounted for 1.7 percentage points in the U.S. and 1.5 points globally.

One of the study's other interesting findings was that the price-to-book growth was by far the most volatile component of equity returns. In the 1990s, for example, it accounted more than half (10.4 percentage points) of the U.S. market's 19% average annual return. In the 2000s, however, it dragged returns into negative territory all by itself, falling almost 10% while the other three components all showed positive growth.

So, what are the implications of MSCI's study? While the study examines returns of stocks as a group, I think a few key points pertain to investors buying individual stocks as well.

The first is that fundamentals and financials matter. Real book value growth and dividend income accounted for about 45% of returns both in the U.S. and globally, according to the study, and you're not going to grow book value or have cash to pay out dividends unless you are running a strong, efficient business. That's why my guru-based models focus on firms with the best balance sheets and most attractive fundamentals in the market.

The second point is that inflation is a far greater factor than most people believe. In the past, I've noted how David Dreman (one of the gurus upon whose approach I base my strategies) has conducted research showing that inflation eats away at the returns of bonds, bills, and even gold over the long haul. Because stocks represent companies, and companies can adjust their prices as inflation rises, they are less impacted. With the massive stimulus and bailout efforts that the U.S., Europe, and other parts of the world have recently enacted, it stands to reasons that inflation will rear its head at some point in the next couple years, if not sooner. And stocks should offer protection that most other assets can't.

The third and last point I'll make is that pricing matters. If you take away the price-to-book growth component in MSCI Barra's study (that is, the change in what people were willing to pay for the same dollar of book value), the other drivers of equity prices accounted for an 8.6% annual gain during the 1990s. In the 2000s, the ex-price/book growth factors accounted for gains of 8.0% -- nearly the same. Yet in the 90's, stocks gained an average of 19% per year, while in the 2000s they lost an average of 1.9% per year. According to the study, the huge difference in the market's returns in those two decades thus weren't due to the collective performance of U.S. businesses; it was instead due almost entirely to the amount of money investors were willing to pay for the same dollar of book value. (In fact, the book value of U.S. businesses actually grew at a faster rate in the 2000s than it did in the 1990s, according to the study.)

The discrepancy in returns during those two decades no doubt is a result of the 1990s ending and 2000s beginning amidst a speculative, technology-stock-driven mania (as well as the fact that the 2000s ended shortly after one of the worst financial crises in history). Buy into the market when stocks are trading at very high valuation levels, and you're likely to have a much harder time making hay than if you bought in when valuations are low.

The same is certainly true a good deal of the time when it comes to individual stocks. That's why almost all of the gurus I follow -- even several who used growth-oriented strategies -- included a value component in their analyses. Peter Lynch is a great example. Lynch put together one of the greatest mutual fund track records of all-time in large part by finding stocks whose underlying businesses were growing rapidly -- between 20% and 50% per year. But he wasn't willing to pay indiscriminately for that kind of growth. That's why he pioneered the P/E/G ratio, which divides a stock's P/E ratio by its long-term growth rate. The rationale: It's okay to pay a premium for a stock -- if it's growing earnings rapidly.

This focus on value is, I believe, a big part of why the Hot List has fared so well since its July 2003 inception, during a period when the broader market has fared so poorly. And, while the market is up some 70% off its lows, the portfolio is still finding plenty of stocks that are producing strong growth at a reasonable price -- as I noted earlier, each of the seven stocks being added to the portfolio this rebalancing has a P/E/G of 0.4 or lower. Moving forward, there will certainly be bumps in the road -- perhaps some very large ones given all that is happening in the U.S. and world economies. But by focusing on strong companies whose shares are trading at good values, I expect the Hot List will keep outperforming the broader market over the long haul.

Editor-in-Chief: John Reese

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The Fallen

As we rebalance the Validea Hot List, 7 stocks leave our portfolio. These include: Itt Educational Services, Inc. (ESI), Telefonica S.a. (Adr) (TEF), Emcor Group, Inc. (EME), Sanofi-aventis Sa (Adr) (SNY), The Brink's Company (BCO), Telestone Technologies Corporation (TSTC) and Lululemon Athletica Inc. (LULU).

The Keepers

3 stocks remain in the portfolio. They are: Aeropostale, Inc. (ARO), China Automotive Systems, Inc. (CAAS) and Ares Capital Corporation (ARCC).

The Newbies

We are adding 7 stocks to the portfolio. These include: Oshkosh Corporation (OSK), Astrazeneca Plc (Adr) (AZN), Federal Agricultural Mortgage Corp. (AGM), Lincoln Educational Services Corporation (LINC), Healthspring, Inc (HS), Gamestop Corp. (GME) and Clearwater Paper Corp (CLW).

Portfolio Changes

Newcomers to the Validea Hot List

AstraZeneca PLC (AZN): Based in London, AstraZeneca is one of the world's largest drugmakers. The $63-billion-market-cap firm is active in more than 100 countries, and makes a variety of well-known medications, including Crestor, Symbicort, and Nexium.

AstraZeneca gets strong interest from three of my models, those I base on the writings of Peter Lynch, James O'Shaughnessy, and David Dreman. To find out why my models are high on the stock, check out the "Detailed Stock Analysis" section below.

Clearwater Paper Corporation (CLW): This Spokane, Wash.-based firm makes a variety of tissue and paperboard products, with the former including facial and bath tissue, paper towels, and napkins, and the latter including paper used in brochures, mailers, and packaging. It also makes lumber products for builders and distributors.

Clearwater ($750 million market cap) gets approval from both my Peter Lynch- and Kenneth Fisher-based Guru Strategies. To read more about why the stock makes the grade, see the "Detailed Stock Analysis" section below.

Federal Agricultural Mortgage Corp. (AGM): Known as "Farmer Mac", this federally chartered Washington, D.C.-based firm works to establish a secondary market for agricultural real estate and rural housing mortgage loans, rural utilities loans, and USDA-guaranteed farm program and rural development loans. It's a small-cap ($190 million), so it may be subject to more volatility than other stocks, but my Peter Lynch-based model is very keen on the firm. To read more about the stock, scroll down to the "Detailed Stock Analysis" section below.

GameStop Corp. (GME): The world's largest video game retailer, GameStop sells all sorts of Nintendo, Xbox, and PlayStation games and game units, as well as a variety of computer games. The Texas-based company has more than 6,000 stores in the U.S. and 17 other countries, operating under the GameStop, EB Games, and Electronics Boutique names. The firm has a $3.5 billion market cap, and has taken in more than $9 billion in sales over the past 12 months. It spent some time in the Hot List earlier this year, gaining 5.4% from Jan. 22 to March 19.

GameStop gets approval from my Peter Lynch- and Joel Greenblatt-based strategies. To find out more about the stock's fundamentals, see the "Detailed Stock Analysis" section below.

HealthSpring, Inc. (HS): Based in Nashville, Tenn., HealthSpring is one of the U.S.'s largest Medicare Advantage-focused coordinated care firms. It owns and operates Medicare Advantage plans in Alabama, Florida, Georgia, Illinois, Mississippi, Tennessee and Texas, and also offers a national stand-alone Medicare prescription drug plan.

HealthSpring gets strong interest from my Peter Lynch- and James O'Shaughnessy-based Guru Strategies. To read more about the stock's strong fundamentals, see the "Detailed Stock Analysis" section below.

Lincoln Educational Services Corporation (LINC): Lincoln offers high school graduates and working adults various degree and diploma programs. The New Jersey-based small-cap ($650 million) has seen its earnings surge in recent years, as the weak jobs market has sent many job-seekers back to school for more education or training.

Lincoln gets approval from my Peter Lynch- and Joel Greenblatt-inspired models. For more on the stock, see the "Detailed Stock Analysis" section below.

Oshkosh Corporation (OSK): Not to be confused with the children's clothing company, this Wisconsin-based firm makes specialty vehicles, access equipment, and truck bodies for the defense, concrete placement, refuse hauling, and fire & emergency markets. The $3.5-billion-market-cap firm has taken in almost $8 billion in sales over the past year.

Oshkosh gets high marks from my Joel Greenblatt- and David Dreman-based models. To read more about the stock, scroll down to the "Detailed Stock Analysis" section below.

News about Validea Hot List Stocks

Ares Capital Corp. (ARCC): On May 10, Ares announced a net first-quarter profit of $76.4 million, or 61 cents a share, more than doubling the $35.0 million, or 36 cents a share, it posted in the year-ago quarter. Excluding professional fees related to the acquisition of Allied Capital, earnings were 28 cents a share, Reuters reported, falling short of analysts' estimates of 33 cents per share.

China Automotive Systems (CAAS): On May 6, China Automotive announced net first-quarter income attributable to common shareholders of $10.3 million, or $0.34 per diluted share, more than four times the $2.3 million, or $0.08 per diluted share, posted in the year-ago quarter. Net sales jumped 88.5% to $84.2 million, breaking the company's record for first-quarter sales. The company said all of the revenue increase was due to organic growth.

The Next Issue

In two weeks, we will publish another issue of the Hot List, at which time we will take an in-depth look at one of my individual guru-based strategies. If you have any questions, please feel free to contact us at hotlist@validea.com.

Current Portfolio

Detailed Stock Analysis

Disclaimer: The analysis is from Validea's selection and interpretation of content from the guru's book or published writings, and is not from nor endorsed by the guru. See Full Disclaimer

AZN   |   HS   |   OSK   |   ARO   |   CLW   |   CAAS   |   LINC   |   GME   |   AGM   |   ARCC   |  

AstraZeneca PLC (AstraZeneca) is a biopharmaceutical company. The Company focuses on the discovery, development and commercialization of prescription medicines for six areas of healthcare. Its six areas of healthcare includes cardiovascular, gastrointestinal, infection, neuroscience, oncology, and respiratory and inflammation. The Company's products include Crestor, Nexium, Synagis, Seroquel, Arimidex and Symbicort. The Company owns and operates a range of research and development (R&D), production and marketing facilities worldwide.

HealthSpring, Inc. (HealthSpring) is a managed care organization with a primary focus on Medicare, the federal government-sponsored health insurance program for United States citizens aged 65 and older, qualifying disabled persons and persons suffering from end-stage renal disease. As of December 31, 2009, the Company operated coordinated care Medicare Advantage plans in Alabama, Florida, Illinois, Mississippi, Tennessee, and Texas. As of January 1, 2010, it also commenced operations of Medicare Advantage plans in three counties in Northern Georgia. As of December 31, 2009, the Company's Medicare Advantage plans had over 189,000 members. The Company also offers prescription drug benefits in accordance with Medicare Part D to its Medicare Advantage plan members, in addition to providing other medical benefits (MA-PD) plans. It also offers prescription drug benefits nationally on a stand-alone basis in accordance with Medicare Part D (PDP).

Oshkosh Corporation (Oshkosh) is a designer, manufacturer and marketer of a range of specialty vehicles and vehicle bodies, including defense trucks, access equipment, fire & emergency vehicles and concrete mixers and refuse collection vehicles. The Company operates in four business segments: defense, access equipment, fire & emergency, and commercial. It manufactures defense trucks under the Oshkosh brand name, and is a manufacturer of severe-duty heavy- and medium-payload tactical trucks for the United States Department of Defense (DoD). The Company is also the manufacturer of aerial work platforms under the JLG brand name. Under the Pierce brand name, the Company manufactures fire apparatus assembled on both custom and commercial chassis. The Company manufactures aircraft rescue and fire fighting (ARFF) and airport snow removal vehicles under the Oshkosh brand name and ambulances under the Medtec brand name.

Aeropostale, Inc. is a mall-based specialty retailer of casual apparel and accessories. The Company designs, markets and sells its own brand of merchandise principally targeting 14 to 17 year-old young women and young men. The Company also sells Aropostale merchandise through its e-commerce Website, www.aeropostale.com. During the fiscal year ended January 30, 2010 (fiscal 2009), the Company launched P.S. from Aeropostale, which offers casual clothing and accessories focused on elementary school children between the ages of 7 and 12. During fiscal 2009, the Company completed the closure of its 14 store Jimmy'Z concept. Jimmy'Z Surf Co., Inc., a wholly owned subsidiary of Aeropostale, Inc., was a contemporary lifestyle brand targeting young women and men aged 18 to 25.

Clearwater Paper Corporation is a producer of tissue and paperboard products in the United States. The Company's products are manufactured in the United States and utilize primarily wood pulp. The Company operates in three segments: Consumer Products, Pulp and Paperboard, and Wood Products. Its private label tissue products, such as facial and bath tissue, paper towels and napkins, are used at home and are principally sold in grocery stores in the United States. The Company's paperboard is sold in the packaging industry and it is used by its customers to make packaging for products, including liquids, pharmaceuticals, consumer goods packaging. The Company is vertically integrated and produces the pulp required in its tissue and paperboard businesses. The Company also manufactures wood products, including cedar and lumber products.

China Automotive Systems, Inc. (China Automotive) is a holding company and has no significant business operations or assets other than its interest in Great Genesis Holdings Limited (Genesis). Through Genesis, the Company manufactures power steering systems and other component parts for automobiles. All operations are conducted through eight Sino-foreign joint ventures in China and a wholly owned subsidiary in the United States. The Company has business relations with more than 60 vehicle manufacturers, including FAW Group and Dongfeng Auto Group, automobile manufacturers in China; Shenyang Brilliance Jinbei Co., Ltd., light vehicle manufacturer in China; Chery Automobile Co., Ltd, state-owned car manufacturer in China, and Xi'an BYD Auto Co., Ltd and Zhejiang Geely Automobile Co., Ltd., car manufacturers.

Lincoln Educational Services Corporation is a provider of career-oriented post-secondary education. As of December 31, 2009, the Company operated 43 campuses in 17 states. It offers recent high school graduates and working adults degree and diploma programs in five areas of study health sciences, automotive technology, skilled trades, hospitality services and business and information technology. For the year ended December 31, 2009, the Company's health science program, its automotive technology program, its skilled trades program, its hospitality services program and its business and information technology program accounted for approximately 37%, 31%, 13%, 10%, and 9%, respectively, of its average enrollment. The Company had 29,340 students enrolled as of December 31, 2009 and its average enrollment for the year ended December 31, 2009 was 27,808 students.

GameStop Corp. (GameStop) is a retailer of video game products and personal computer (PC) entertainment software. The Company sells new and used video game hardware, video game software and accessories, as well as PC entertainment software, and related accessories and other merchandise. As of January 30, 2010, the Company operated 6,450 stores in the United States, Australia, Canada and Europe, primarily under the names GameStop and EB Games. GameStop also operates the electronic commerce Website www.gamestop.com and publish Game Informer, a multi-platform video game magazine in the United States based on circulation, with approximately 4 million subscribers. During the fiscal year ended January 30, 2010 (fiscal 2009), GameStop operated its business in four segments: United States, Canada, Australia and Europe.

The Federal Agricultural Mortgage Corporation (Farmer Mac) is a federally chartered corporation that combines private capital and public sponsorship to serve a public purpose. Farmer Mac was created to establish a secondary market for agricultural real estate and rural housing mortgage loans. This secondary market was designed to increase the availability of long-term credit at stable interest rates to America's rural communities, farmers, ranchers and rural homeowners. Farmer Mac conducts these activities through three programs: Farmer Mac I, Farmer Mac II and Rural Utilities. The loans eligible for the Farmer Mac secondary market include mortgage loans secured by first liens on agricultural real estate and rural housing; certain agricultural and rural loans guaranteed by the United States Department of Agriculture, and loans to finance electrification and telecommunications systems in rural areas.

Ares Capital Corporation (Ares Capital) is a specialty finance company, which is a closed-end, non-diversified management investment company. Ares Capital's investment objective is to generate both current income and capital appreciation through debt and equity investments. It invests in United States middle-market companies. It invests primarily in first and second lien senior loans and mezzanine debt, which in some cases includes an equity component like warrants. First and second lien senior loans generally are senior debt instruments that rank ahead of subordinated debt of a given portfolio company. Its investments have ranged between $10 million and $100 million each, although the investment sizes may be more or less than the targeted range. The Company's investment adviser is Ares Capital Management LLC. In April 2010, Ares Capital Corporation completed its merger with Allied Capital Corporation.

Watch List

The Watch List contains the highest scoring stocks according to our guru consensus system that are not currently in the Hot List portfolio. We provide this list both for informational purposes and for investors who are not comfortable with a portfolio of ten stocks.


The names of individuals (i.e., the 'gurus') appearing in this report are for identification purposes of his methodology only, as derived by Validea.com from published sources, and are not intended to suggest or imply any affiliation with or endorsement or even agreement with this report personally by such gurus, or any knowledge or approval by such persons of the content of this report. All trademarks, service marks and tradenames appearing in this report are the property of their respective owners, and are likewise used for identification purposes only.

Validea is not registered as a securities broker-dealer or investment advisor either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. Validea is not responsible for trades executed by users of this site based on the information included herein. The information presented on this website does not represent a recommendation to buy or sell stocks or any financial instrument nor is it intended as an endorsement of any security or investment. The information on this website is generic by nature and is not personalized to the specific situation of any individual. The user therefore bears complete responsibility for their own investment research and should seek the advice of a qualified investment professional prior to making any investment decisions.

Performance results are based on model portfolios and do not reflect actual trading. Actual performance will vary based on a variety of factors, including market conditions and trading costs. Past performance is not necessarily indicative of future results. Individual stocks mentioned throughout this web site may be holdings in the managed portfolios of Validea Capital Management, a separate asset management firm founded by Validea.com founder John Reese. Validea Capital Management, which is a separate legal entity and an SEC registered investment advisory firm, uses, in part, the strategies on the web site to select stocks for its clients.