Ranked by 28-Period Williams %R as of 06/28/08 *

Stock	Reference Date	% Chg	Gain in 2008	Company	Industry	% from Max	Monthly % Gain	%R1	%R2
CB	03/28/08	1.6%	1.6%	Chubb Corporation, The	Insurance (Property & Casualty)	-7.9%	-6.3%	-100	-96
NBL	03/14/08	28.5%	28.5%	Noble Energy, Inc.	Oil & Gas Operations	-5.8%	0.3%	-81	-72
EGN	09/15/06	90.2%	17.4%	Energen Corporation	Natural Gas Utilities	-5.4%	0.2%	-59	-69
APA	11/24/06	112.7%	27.9%	Apache Corporation	Oil & Gas Operations	-6.6%	2.3%	-72	-59
NE	03/20/08	39.1%	39.1%	Noble Corporation	Oil Well Services & Equipment	-4.7%	2.6%	-60	-50
UNT	03/28/08	45.2%	45.2%	Unit Corporation	Oil & Gas Operations	-4.3%	5.7%	-33	-31
NOV	05/30/08	6.1%	6.1%	National-Oilwell Varco, Inc.	Oil Well Services & Equipment	-3.4%	6.1%	-22	-29
HP	03/20/08	66.5%	66.5%	Helmerich & Payne, Inc.	Oil Well Services & Equipment	-6.6%	14.7%	-27	-27
WHQ	03/20/08	54.5%	54.5%	W-H Energy Services, Inc.	Oil Well Services & Equipment	-2.9%	9.6%	-26	-24
LUFK	05/09/08	10.8%	10.8%	Lufkin Industries, Inc.	Construction & Agricultural Machinery	-2.1%	5.3%	-17	-23
ESV	03/28/08	34.7%	34.7%	ENSCO International Incorporat	Oil Well Services & Equipment	-1.9%	12.4%	-24	-18
RS	03/07/08	37.4%	37.4%	Reliance Steel & Aluminum	Misc. Fabricated Products	0.0%	13.1%	-13	-11
MTXX	06/20/08	6.0%	6.0%	Matrixx Initiatives, Inc.	Biotechnology & Drugs	0.0%	2.8%	-22	-6

Warren Buffet neither sponsors nor endorses this information.

Key

 

Warren Buffett Screening Criteria

      Buffett is often identified with Benjamin Graham, with whom he studied, worked under, and maintained a long friendship. However, his own investment experience has led him to adopt the approaches of other investment pioneers, as well, in particular Philip Fisher's focus on the importance of a business's growth prospects and management.  Buffett has never expounded extensively on his investment approach, although it can be gleaned from his writings and explanations of holdings in the Berkshire Hathaway annual reports. Outsiders, however, have attempted to put together explanations of his investment style. One recently published book that discusses his approach in an interesting and methodical fashion is "Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor," by Mary Buffett, a former daughter-in-law of Buffett's, and David Clark, a family friend and portfolio manager [the book is published by Simon & Schuster, 800-223-2336; $27.00]. This book was used as the basis for screening stocks.

      Warren Buffett's approach identifies "excellent" businesses based on the prospects for the industry and the ability of management to exploit opportunities for the ultimate benefit of shareholders. He then waits for the share price to reach a level that would provide him with a desired long-term rate of return. The approach makes use of "folly and discipline": the discipline of the investor to identify excellent businesses and wait for the folly of the market to buy these businesses at attractive prices. Most investors have little trouble understanding Buffett's philosophy. The approach encompasses many widely held investment principles. Its successful implementation is dependent upon the dedication of the investor to learn and follow the principles. For individual investors who want to duplicate the process, it requires a considerable amount of time, effort, and judgment in perusing a firm's financial statements, annual reports, and other information sources to thoroughly analyze the business and quality of management. It also requires patience, waiting for the right price once a prospective business has been identified, and the ability to stick to the approach during times of market volatility. But for individual investors willing to do the considerable homework involved, the Buffett approach offers a proven path to investment value.

Philosophy and Style

     Investment in stocks based on their intrinsic value, where value is measured by the ability to generate earnings and dividends over the years. Buffett targets successful businesses-those with expanding intrinsic values, which he seeks to buy at a price that makes economic sense, defined as earning an annual rate of return of at least 15% for at least five or 10 years.

Universe of Stocks

     No limitation on stock size, but analysis requires that the company has been in existence for a considerable period of time.

Criteria for initial consideration

     Consumer monopolies, selling products in which there is no effective competitor, either due to a patent or brand name or similar intangible that makes the product unique. In addition, he prefers companies that are in businesses that are relatively easy to understand and analyze, and that have the ability to adjust their prices for inflation.

Other Factors

·     A strong upward trend in earnings

·     Conservative financing

·     A consistently high return on shareholder's equity

·     A high level of retained earnings

·     Low level of spending needed to maintain current operations

·     Profitable use of retained earnings

 

Valuation

      In one case, Buffett determines a firm's initial rate of return and its value relative to government bonds. This based on earnings per share for the year divided by the long-term government bond interest rate. The resulting figure is the relative value-the price that would result in an initial return equal to the return paid on government bonds.

      In another case, value is based on projecting an annual compounding rate of return based on historical earnings per share increases. Current earnings per share figure and the average growth in earnings per share over the past 10 years are used to determine the earnings per share in year 10.  This figure is then multiplied by the average high and low price-earnings ratios for the stock over the past 10 years to provide an estimated price range in year 10.  If dividends are paid, an estimate of the amount of dividends paid over the 10-year period should also be added to the year 10 prices.

      Stock monitoring and when to sell does not favor diversification.  Buffett prefers investment in a small number of companies that an investor can know and understand extensively.  He favors holding for the long term as long as the company remains "excellent", is consistently growing and has quality management that operates for the benefit of shareholders. Sell if those circumstances change, or if an alternative investment offers a better return.

Modifications

     The screen used also requires a PE of 17 or less and that the stock is optionable.  This is done to reduce the number of picks.

 

     Information is provided by the American Association of Individual Investors.