Status/Strategy Report

BAM.A Brookfield Asset Management--> I think the market deeply misunderstands this company as a REIT. A relatively small share buyback of 1 million shares was just completed this month (remember the market cap is $17 Billion). I have put in a standing bid for more shares at $25, hoping that this bear market rally will collapse soon and drag BAM down with it to even cheaper levels. It is definitely possible that BAM may find it more difficult to find other equity partners to make their multi-billion dollar deals with in the current environment-- without such a catalyst, I doubt that this stock will take off any time soon, so I'm biding my time to acquire shares in small increments, slowly.

BBSI Barrett Business Services--> Remains debt free despite acquisitions. I went over the annual report in detail and barring one accounting irregularity, the company's prospects appear solid. The irregularity was an internal control problem with the IT dept regarding the cash management and reporting of cash flows between offices and the head office in Vancouver, WA. The remediation procedure was well covered. I'm surprised that the analysts didn't bring it up in the Q4 conference call but it may be possible that this information wasn't available to them at that time. Accounting irregularities of any type do make me nervous so I may wait for another quarter before adding to my position as I previously planned. I doubt that this issue will make a material impact on the company's financial health and it is the only big question mark/vunerability I can find to date. This company is maximally exposed to the turn down in the local California economy, so we are seeing the company remain profitable and debt free during adverse times, something that strongly suggests a large margin of safety despite being a small cap security. I think that the management is top notch.

KMX CarMax--> Wall St. is not enamored with this stock but its customers and employees certainly are. I've been hard pressed to find any negative feedback about it, even on the Motley Fool discussion boards. It's not dirt cheap at a P/E multiple of 20; however, the following issues add to the margin of safety: EPS growth exceeding 16% p.a. over the last 5 years, the lowest leverage in the industry D:E 0.12, a current ratio of 2.4 and committed management with considerable insider ownership (7%) and let's not forget that Berkshire is a major holder (10%). Their business plan (discussed previously) is solid and difficult to replicate.
Like BAM, I don't expect the share price to appreciate much in the next 18 months and I think recession has been already factored into the share price. Despite small-mid cap status, I think it is another good long term hold that I will add to on dips. Morningstar has reaffirmed its fair market value at $32/share recently and since its currently trading at about $19 this gives a P/FMV ratio of 60%. I would buy at any price less than or = to $19.

CKI Clarke Inc--> Definitely not a boring company. Armoyan (the CEO/President/Chair all in one) is aggressively buying back shares personally and through Geosam, a holding company owned by his family. He is still buying up small Canadian trusts and although I can see the strategy he is using paying off over the long term, I am concerned about debt. The annual report suggested a current ratio of over 6; however, recent investments (and share buy backs) will have consumed this readily available cash. It's difficult to estimate CKI's total short and long term debt with the information I have available. The last D:E ratio was 0.67 and I'm guessing it's closer to 1 now. I plan to hold tight with my fairly large stake until the next financial report. Unfortunately, Clarke doesn't host conference calls so the tough questions don't get asked. Armoyan is no dummy and he has a massive stake in this company, so I think that his interests are still aligned with the shareholders--- definitely more so in Clarke Inc that in the trusts he's swallowing up.