Another Arbitrage

Dear Diary,

I just picked up shares of HUN for $13.52 per share, plus a minimal brokerage fee. The sale is to close "October 2" and represents a 107% gain over 6 weeks, based on my math. The close is to be at $28.00 cash. Buffett says that these 100% deals don't always get closed because of financing, etc., but some do work out. Broad diversification in the field is the key to the most stable returns Buffett has ever known.

CROX continues to sit at about $4 per share, but "Value Line" indicates it thinks the stock has $16 per share in it over the coming few years. I agree. This is a situation where the company is sitting in the economic downturn and opening a new production facility, the latter being Buffett's favorite dynamic and the former being probably his second favorite dynamic. My average purchase price is $8.98 per share.

American Eagle Outfitters (AEO) is also sitting still at about $14 per share or 8 times earnings. It's all about the economic downturn.

Out of the 75 stocks in my long term non-arbitrage investment universe, only 16 have a widening Net Profit Margin. HANS is on target to hit $40 per share or 20 times earnings within the next several months.

Gene

My 1st Arbitrage

Dear Diary,

I bought shares of AHG for $19.44 per share on August 5, 2008 for sale by September 30, 2008 at $21, an 8.01% gain in 61 days, or a 47.87% annualized gain. This is my first arbitrage ever.

HANS has been meeting all the "Holy Grail" criterion, so I should see a 100% gain from its recent selling price near $20 per share to $40 within the next 8.14 months on average. It is currently selling at $23 and change after a 30% gain in earnings announced August 8th.

Gene