SOLD 100 KRAFT AND BOUGHT 50 FRD AS LOTTERY TICKET

This will be my last post until the weekend. I do have a few responsibilities. I will be busy on other matters Thursday and Friday.

1. Sold 100 Kraft at $26.75 (see disclaimer): I had a strong desire to sell something this morning, and dumping my 100 shares of Kraft temporarily relieved that itch. Those shares were bought in March at $22.26: SOLD NADX IN IRA/BOUGHT Kraft & NESTLE/ Bought Lottery Ticket in CBG at 2.39 It also removed from LB one of its 1,060,031 issues under consideration which is a relief of sorts.

200 Shares Kraft/Mondelez (MDLZ) +$570.47

2. Bought 50 shares of Friedman Industries at $5.76-Lottery Ticket (see Disclaimer): This is #32 in the LT parade. If this keeps up, I may have to change the number of holdings to over 400 in the profile section. Since the LB is already suffering from acute information overload in the LT category, I will try to ignore FRD, and just put this one on an email alert with an upside target of $7.5, and a downside of $4. FRD was found using one of my LT type screens at YF. Price to sales is .24 and price to book is .7. FRD: Key Statistics for FRIEDMAN INDS INC

This company is a micro micro cap with a total market capitalization of less than 40 million at its current price. Friedman Industries did have a good fiscal year which ended in March 2009, earning $2.01 per share on sales of 208.779 million. This was up from 66 cents in earnings for fiscal year 2008. However, FRD had a 4 cent loss for the last quarter in the 2009 fiscal year.

As of the last report, which was for the Q/E 6/09, FRD had 21.865 million in cash, property & plant valued at 16.740 million (after depreciation of 20.629 million), inventories of 16.791 million, and receivables of 3.756 million. Total assets excluding goodwill were 61.390 million. Long term debt was nil, and current liabilities were then listed at 4.624 million.e10vq Working capital of 39.234 million at the end of the Q/E 6/09 is fairly close to the current market capitalization of the firm at the $5.7 price (page 7 of 10-Q). As far as I can tell, the company is capable of earning a profit and is selling at significantly less than its liquidation value. The company lost 2 cents in the quarter.

The business of the company is explained in the annual report. It has two product groups: coil and tubular products. e10vk Reuters provides good profiles of corporations: Reuters.com

This is a link to a Seeking Alpha article on FRD, referring to it as unloved, obscure, tiny and undervalued. Part of the problem with FRD currently is discussed in that article and involves the fall off in orders and supplies from U.S. Steel. This is what FRD has to say about shipments to U.S. steel in its last quarterly filing:

"Also, in February 2009, USS announced that it was temporarily idling its plant in Lone Star, Texas, due to weak market conditions. Since February 2009, the Company has received few orders from USS and a significantly reduced supply of pipe and coil material from USS. The Company believes that reduced orders for finished tubular products will continue until the U.S. economy recovers and generates improved demand for these products. Loss of USS as a supplier or customer could have an adverse effect on the Company’s business. The Company can make no assurances as to orders from USS or the amounts of pipe and coil material that will be available from USS in the future." (page 7 of 10Q: e10vq)

That is a good summary of the primary risk. It is also discussed thoroughly in the Seeking Alpha article referenced above.

This firm is going to be cyclical.

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