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Flaherty Financial News Newsletter #21
17 Favorites of the Famous 2010 Stock Picks! 
March 22, 2010
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in this issue
Part Six: The Invisible Man Returns!
Flaherty's Favorites of the Famous
Give Flaherty Financial News A Try.
Disclaimer and Safe Harbor Statements
Bob Flaherty Rides Again! 
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Bob Flaherty Rides Again! At 76 I am still having fun; I hope all of you are too. Spring has sprung and it feels great to be alive!
Welcome to our 21st issue of Flaherty Financial News Newsletter which contains our most popular annual feature, Favorites of the Famous. We are thrilled to have favorite 2010 stock picks from 16 friends whom we admire greatly. If you have not already done so, please join our financial family. To receive our next issue of Flaherty Financial News #22 and also our sister Flaherty Special Situations #20 simply go to our website www.flahertyfinancialnews.com and opt in as a reader. There is no charge, and you can opt out any time too.
First An Expose Follow Up! Part Six: The Invisible Man Returns. Jason Galanis Reappears. In a recent press release Fund.com Inc. (FNDM.OB-0.85) noted its majority controlled actively managed ETF IPO initiator AdvisorShares Investments, LLC. is on schedule to bring out two new ETF funds this April in addition to the already existing over $20 million-in-assets-under-management Dent Tactical ETF ( NYSE: DENT). Transactions at $0.21 a fraction of the public market price at Fund.com between related parties, some apparently related to Jason Galanis, would require a forensic accountant to track. The shuffling was needed because of defaults which occurred because Fund.com had much of its assets tied up in an uninsured CD frozen in an offshore bank, again related to The Invisible Man. The complex transactions were also needed before Fund.com can take an equity interest in a hedge fund manager with somewhere around $1 billion in assets under management. 
On the surface the influence of Jason Galanis appears to have increased. It is hard to know because in response to an SEC staff inquiry previous financial statements have been put in the no reliance category, leaving investors to fly blind. Meanwhile, Arrow Investment Advisors, an employer left out of the impressive bio of the CEO of AdvisorShares, popped up in the settlement of a messy arbitation proceeding stemming from his ouster at Arrrow by his two partners. The conclusion means his ownership in shares of AdvisorShares is no longer in question. Why do some boring bios always leave out the most interesting stuff?  
Most importantly, Fund.com announced a strategic partnership to create "a new generation search engine" and a system for matching investor interests with mutual funds and ETFs. Ironically, in the most supposedly transparent part of the investment world, funds for the public, The Invisible Man still moves unnoticed. No where so far has influence-or even presence-of online credit card processing pornography entrepreneur Jason Galanis been revealed. Shouldn't prospective future fund and ETF investor viewers be made aware of Jason's involvement with those creating the new scoreboard for funds and ETFs and also his conflicting involvement with those initiating actively managed ETFs which will be compared with competing products? Ditto for his creative innovative products for online investor education.   
Consider the Galanis record: his white collar criminal father's fraud conviction in looting a $400 million fund, his brother's conviction for distribution of the date rape drug ecstasy and the consent decree Jason himself and an executive signed to settle SEC accounting fraud charges for turning a quarterly loss into a profit at Penthouse, which also was charged with using an unauthorized electronic signature to meet Sarbanes Oxley certification. All this resulted in Jason currently being banned from serving as an officer or director of a U.S. public company. Meanwhile, Jason is associated with various entities (some offshore) working together to create "the New Morningstar." Shouldn't his presence at least be disclosed to adequately inform and to protect the every day investors? At least that is this financial writer's opinion.  

So far, we haven't seen Jason's name disclosed to Fund.com Inc. shareholders or their prospective actively managed ETF fund investors or to those every day investors they would provide with financial education. Truly he still deserves the title of The Invisible Man. LET THE SUNSHINE IN!!!-RJF

"If You Could Love Only One..." 
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Since 1981 the combined portfolios of Bob Flaherty's Favorites of the Famous have topped the S&P 500 for 17 of the last 20 efforts. For 2009 with three over 200% gainers, our Favorites did it again! Their picks rose an average of 73.5% versus 47.6% for the S&P 500. That is the best long-term performance of any similar effort by an annual stock picking panel  on the planet. Read on for 17 new 2010 favorite ideas by our all star team of proven  pros. Besides U.S. -based stocks, picks in Brazil, Canada, China, India, Russia, King Solomon's Mines in Saudi Arabia by Ray Dirks and Mario's play in Switzerland.

By Robert J. Flaherty and Poonkulali Thangavelu      
 
After sensational gains in the last 12 months, once more we turn to the wisdom of the group with our most popular annual feature "If You Could Love Only One..." where seasoned professionals and financial journalists pick just one favorite stock to hold for at least one year.   
For almost three decades Flaherty's Favorites of the Famous portfolios have the best long-term record of its kind on the planet with combined portfolios which topped the S&P 500 17 of the last 20 efforts. Last year our pros were up 73.5% versus a gain of only 47.6% for the S&P 500. Three of our 15 2009 favorites had spectacular gainers of over 200%, while only four had losses. At a moment of maximum pessimism when risk taking was most rewarded, the doomsday bunch was wrong once again. Now as our global economy normalizes our pros have given us for 2010 the most global portfolio ever.

Last year Chairman Russell Cleveland of Global Entrepreneurs Fund, Inc. (NYSE Amex RCG-2.80), just back from Galapagos feeling great because no gloomy financial news could reach him, chose a China infrastructure play with superior management and growth and a very low P/E.
Russ should stay away from the office more often.  His 2009 choice of HLS Systems International LTD. (Nasdaq:HOLI- then 2.80, recently 11.02), the largest domestic automation and control company in China, rose a spectacular 294%. Specifically, HOLI designs, implements and maintains patented control systems for China's rail, nuclear and industrial sectors. HOLI continues to benefit from the People's Republic of China stimulus plan and its emphasis on high speed rail infrastructure build-out across the country. Cleveland's fund continues to hold millions of shares of believes HOLI, which he believes is destined to become "the Honeywell of China."
"Perhaps I should retire with this pick!" teased Russ, noting last year's gain of almost 300% will be hard to top. "But in the spirit of the game, my new pick this year is Access Plans, Inc. (APNC.OB-1.15)." This Oklahoma-based company reported $0.19 per share for the year ending September 2009 on revenues of $46.7 million. Access Plans is in the business of discount value cards, including healthcare. It also can save money for America's suddenly value conscious consumers in other areas such as restaurants, food, shopping, entertainment, automotive service, etc. A membership and insurance marketer, Access Plans sells wholesale membership programs through clients like Rent-A-Center and CVS among others. Access' program for Rent-A-Center, which has thousands of stores, offers a discount card for all kinds of things like restaurants, etc for modest weekly fees just right for today's penny pinched citizens. Access also designed and runs a discount card program for CVS Pharmacy where for a modest amount a year generic drugs can be bought for a very low price plus other advantages. That is the essence of their business. Also a 5,000 agent Access sales force sells low cost health insurance. 
Stressing since he is a director and investor in Access, Cleveland warns that he should not be considered objective as a disinterested outsider. (The same is also true of all the Favorites of the Famous money persons in this feature.) Then came the excitement. Access' Price/Earnings ratio based on trailing 12 month earnings is under 10, and operating momentum is tremendous. "Access is the cheapest stock in my whole portfolio and out of 50 companies that is a very big statement," Cleveland concludes. "Access appears to be a bargain."
     
Celebrating his 26th anniversary, John W. Rogers Jr. started the first U.S. African-American money management company in l983. His Ariel Fund www.arielinvestments.com was the first African-America mutual fund. He has since added two others.  With over $ 2 billion in assets Ariel's trio covers the entire spectrum from small cap to mammoths. Out of 100 holdings for 2009 he picked as his favorite stock Chicago-based Jones Lang LaSalle (NYSE: JLL- then 19.83, recently 69.58), one of the two largest real estate services companies in the world.  
For daring to pick a real estate company in last year's horrible collapse, Rogers was rewarded with a 250% gain. JLL has a very big outsourcing business. They take care of the worldwide real estate needs of large corporations and do everything for them in management of real estate properties. In other parts like leasing and capital markets JLL helps others buy and sell. They have a very large investment management unit with almost $50 billion in assets as increasingly endowment and pension use real estate as one of their investment options. He is still holding on to this stock considering that "the wind is at their back as the global economy recovers." 
Betting big on the recovery, Rogers expects that it is likely to be a 'V-shaped. "We are very bullish," he says. "We think that the economic recovery is going to be significantly stronger than most people anticipate."  Wall Street doesn't quite believe in this recovery. In spite of concerns about whether Greece will default on its sovereign debt obligations, Rogers believes that the credit crunch is past.  His evidence is that a number of his portfolio companies are experiencing real growth.
Based on his very bullish outlook, his favorite stock pick for 2010 is Interpublic Group of Companies (NYSE: IPG-8.61). As the economy recovers, more companies are going to be looking for creative ways to market their products. All the big advertising agencies are well positioned to benefit from this effect and because Interpublic Group has stumbled its stock is on the bargain counter.  "Companies need outstanding marketing advice more than ever to help market their products," says Rogers. " A big global advertising agency like Interpublic which can help you with your Internet and digital opportunities, as well as traditional network broadcasting, cable and print. IPG is just so well-positioned to help people solve their marketing concerns." 
The stock is now trading at a significant discount of more than 30% to what Rogers thinks the company is worth. That is a hangover from some past "horrific problems" too - including balance sheet issues, changes in its management team and pursuit of too many acquisitions. The past is not pretty. All have negatively impacted its stock price and created a current buying opportunity. "A lot of shifting and changing there  has made the stock appear more expensive than it really is," says Rogers. It's current P/E multiple of 19 times anticipated earnings will start to look cheap based on a longer time horizon of up to 2012. 

Last year in the then investor forsaken Balkans Larry Auriana, co founder of Federated Kaufmann Fund (KAUFX) and Federated Kaufmann Small Cap Fund (FKCSX) liked a stock down 92% from $110 to as low as $4.67 Central European Media Enterprises, Ltd. (Nasdaq: CETV- then 9.60, recently 29.22.) which roared back 204%. The Eastern European countries were in big economic trouble and frightened shareholders were dumping shares. But Auriana felt investors were throwing this promising baby out with the bathwater. CETV invests in, develops and operates TV channels in central and Eastern Europe. Things may be bad, but Eastern Europeans weren't going to stop watching TV. Some might watch even more to escape or because it is cheaper than going out to movies. Correctly valuing CETV's properties in Bulgaria, Croatia, Czech Republic, Romania, Slovak Republic and Ukraine contrarian Auriana won big.     
Now Larry is at it again with a new controversial choice. For 2010 he picks Dynavax Technologies Corp. (Nasdaq:1.32) This stock is down 87% from its all time high and is cash strapped as President Dr. Dino Dina is accelerating a Phase III trial of its Heplisav (liver-saver) vaccine to give results to the FDA six months early in the third quarter of 2011.  Like many promising biotechs, DVAX needs capital to develop its vaccine dreams into commercial reality. Noting its need for a cash infusion, its auditor has slapped DVAX with a Going Concern Warning. Even good news is being interpreted negatively. Pfizer, which 15 months earlier dropped out of developing Heplisav with DVAX after spending millions, recently agreed upon a final wind down settlement to exit of $4 million. The DVAX message board immediately raised with the scary question of what did Pfizer know that it paid to exit rather than buying the whole company?  
That is the bad news. In contrast, here is an overlooked contrarian case for being optimistic. Dynavax's Phase III Heplisav trials for its hepatitis B vaccine promises faster more effective life-saving protection with few doses and injections. This disease can cause deadly cirrhosis of the liver and cancer. If the trial succeeds, the drug could be a blockbuster. In China alone 120 million people, about 10% of the entire population already is infected with Hepatitis B and there is a desperate need for an improved vaccination. Heplisav could be a company maker. Longer term Dynavax is developing other blockbuster products already allied with partners to help commercialize them.
Dynavax and mighty GlaxoSmithKline (NYSE:GSK) have a worldwide strategic alliance to conduct research and early clinical development in up to four programs and Dynavax is eligible to receive future milestone payments of up to $200 million per program.
 
With our old guru Sir John Templeton "gone home" as he referred to dying, we asked his grandniece Lauren Templeton of Lauren Templeton Capital Management, LLC.  for a pick last year.
Granduncle John encouraged and trained this willing pupil. He even suggested she start a mutual fund as soon as she graduated from high school at 18. After she went to college instead , he  helped set her up in her very own investment firm at 24. Value investing the Templeton way  still survives.  Now a veteran at 34, Lauren and her husband Scott Phillips , who also worked for Sir John, are overseeing assets of $115 million. Scott is the portfolio manager of their Lauren Templeton Global  Maximum  Pessimism Fund. He is also the author of the upcoming new book "Buying at the Point of Maximum Pessimism" , FT Press.  
"Sir John's last great investment play, which has yet to be fulfilled, was that China would rise in the decades ahead ( and that the total stock market cap of  China stocks would exceed that of all  U.S. stocks)," Lauren says. "In fact, some felt Sir John had lost it when he made that extreme call, but the long term will probably prove him right again."
Based on this advice, Lauren's pick for last year was Sino-Forest (Toronto Stock Exchange TRE.TO  then Cnd $7.47, recently Cnd $l9.88), a forestry plantation operator in the mainland of China, which has gained 166%. The fundamental driver supporting this is that there are not enough trees to go around in China.  Per capita consumption for wood in China is only 6% of the U.S. average, providing a tremendous growth opportunity.  
 
Lauren's new pick is Canadian-based Viterra Inc. (VT.TO Cnd $9.55), a bet on rising global prosperity from ever increasing technology. Viterra is trading at 0.9x its book value, but it has recently been strengthening its footprint in the global grain trade and the broader agribusiness industry.
"The company appears well positioned to capitalize on rising food and protein demand in the emerging markets, where per capita consumption levels remain low, but are growing steadily alongside rising incomes and standards of living," she says. 

 
Husband Scott Phillips, for his choice, favors Net Servicos (Brazil ADR - Nasdaq:  NETC-13.50). The company is a leading provider of cable television and broadband Internet in Brazil, with about half of the market share in the cable television space. Even with this strong position, there is still room for growth since cable television service in Brazil has only penetrated 15% of the base of installed television sets, compared to a market penetration average of 60% in the developed world.  Moreover, Net Servicios was the first provider to bring in the "triple play" of cable television, broadband Internet and VOIP to the Brazilian market. The company trades at a P/E of 10.9X and 6.7X cash flow.

A new China bet comes in from Douglas Makepeace of New York City-based Sperry Fund Management. Doug was a close friend and country sector advisor to Sir John and the author of A New Way to Choose Money Managers for Greater Safety & Higher Returns. 
 Makepeace's pick last year of Exchange Traded Fund iSharesMSCI Brazil Index (NYSE internext: EWZ- then 38.05, recently 71.30) was up 87%. He says this pick remains a hold considering that Brazil has gotten a taste of free market principles and will only go forward. Makepeace's new choice is China Petroleum and Chemical ADR (NYSE:SNP - 80.36).  This is a play on the overall Chinese economy as well as China Petroleum and Chemical, a company that is, as the name indicates, engaged in the exploration and production of oil, gas, and chemicals.
The company has some problems getting market prices for consumer products like gasoline. Makepeace sees value in this stock considering that it has a trailing P/E of less than 10. Even better, the ADRs are trading at a 50% discount to the Shanghai A shares of the company. "ADRs and Hong Kong H shares have historically traded at a discount to the A shares, but 50% is at the high end that I have seen," notes Makepeace. There is also a dividend yield of 3%. "Time is necessary for these shares to appreciate, and if oil goes too high then the profit margins may be hurt. Looking out one year, SNP looks like a good bet."

 
Amazing Max Bowser, the 92-year-old dean of financial writers who is also the active and highly amusing editor of The Bowser Report. www.thebowserreport.com has doggedly stuck to covering his niche of quality stocks under $3 and was ridiculed by the media and many critics who dismissed all very low priced shares as penny stocks to be avoided.
Surprise! From August 9, 2001 to March 3, 2010 Bowser Microcap Stock Index is up 186%, while the Dow Jones is up an anemic   1% and the Russell 200 Stock Index is up 36%. Last year Max did not pick a big lemon for us but another little diamond. ZAGG, Inc. (ZAGG- then 1.66 and recently 3.20) rose 77% after being as high as $7.91 or up 381% before correcting. Max picked ZAGG when it was trading on the OTC Bulletin Board, now the stock has moved up to Nasdaq
What is Max's new pick? "This editor has done something that may appear to be the height of inconsistency," says Max. Last quarter because sales fell sharply profits turned into losses and Max lowered the shares of  Canadian-based  TurboSonic Tech (TSTA.OB-0.54), which designs and markets air pollution control devices to industrial customers from his Bower Category One: Our Best Picks to Category Two: Worthy of Consideration.  At the same time, Max has inconsistently picked TurboSonic as his favorite stock for 2010.
U.S. companies hurting from our Great Recession are holding back their orders to reduce our pollution. Still, Americans want a cleaner environment so we all can breathe cleaner air.  So Max is betting on a cyclical turnaround and a profitable rollercoaster ride on his new favorite.  "We are betting that in the next year TurboSonic will snap back and the demand for their products will rebound. Plus, we like the management," Max explains.
 
Last year Thomas Forester of Forester Value Fund went with Microsoft (Nasdaq:MSFT then -17.06, recently 29.59) for a gain of 73%. His new pick is blue chip Kimberly-Clark Corp. (NYSE:KMB-61.43).  
  
John Connor of Third Millennium Russian Fund (TMRIX-22.25) has a new Russian pick this year, following last year's pick of Lukoil (Pink Sheets: LUKOY.PK-then 58.09, recently 57.30), an ADR for Russia's largest non-state controlled oil producer which  is up 50%.  Now he has cooled on it since Lukoil has had difficulty in maintaining its margins and output and is actually underperforming Rosneft, Russia's largest oil company.
John's new pick is the Global Depository Receipt (GDR)  of Novatek (Pink Sheets: NVATY.PK 42.85), "a Russian gas major which has maintained great margins and is a low cost highly efficient provider to Russian industrial and commercial uses." 
 
 
Tom Putnam of founder and CEO of Fennimore Asset Management with two no loads FAM Value Fund and FAM Equity-Income Fund (www.famfunds.com) bet on McGrath Rentcorp (Nadaq: MGRC - then 16.54, recently 24.21) up 47%. It is still a buy, considering its strong management and assets that provide downside protection. It was a very safe pick at a precarious moment. 
This year, Putnam sees opportunity in Digital River (Nasdaq:DRIV- 30.02), a provider of e-commerce outsourcing solutions for software, gaming and consumer electronics companies. Its customers include household names such as Adobe and Microsoft.  Digital River helps companies run their Websites and also provides product fulfillment, including handling the complexity involved in multi-country sales tax collection and customer support in multiple languages.
"We became interested in DRIV after Wall Street reacted to the loss of a major customer in the second half of 2009," says Putnam. "While a big hit to revenue and earnings, we feel that the decline in the stock price was overblown and that this represents more of a one-time event than a trend."
Excluding this customer, Digital's core business has actually been growing in the mid-teens and there are potential new customers in the pipeline that could replace the business lost.  Also Putnam liked the fact that the CEO of Digital River bought a significant amount of shares when Digital sold off.
Financially, Putnam is in a strong position, with no debt and $13 net cash per share on its balance sheet. After adjusting for the significant amount of cash on its balance sheet, the stock trades at about 10% FCF yield based on Putnam's estimate of its normalized results after excluding the effects of the lost business and its associated costs. Returns on capital have historically been solidly above 20%.
Putnam's  team fills his  portfolios  with quality   companies that have good market share  positions not only in their industries, but have strong characteristics of  generating free cash flow accompanied by low debt balance sheets .  "We want not only survivors now, but winners in the next economic rally." 
 
Marc Liu of Capitol Isle Partners LLC gave us a gold play Northern Dynasty Minerals Ltd. (NYSE Amex: NAK-6.16, recently 8.98) for a nice gain of 45%. Fortunately, Liu's a frightening apocalyptical vision of a world economy  perched on what threatened to be a collapse causing the price of gold to explode has not come to pass.  (Or should we add yet?)
 
Our old friend Mario Gabelli of GAMCO Investors (NYSE:GBL) with numerous Westwood  Gabelli Funds www.gabelli.com  picked Ascent Media Corp.   (Nasdaq:ASCMA- then 25.13, recently 28.10) last year  for a gain of about 12%.  Mario sees this stock as a hold, considering that there is about $28 per share of cash on the books and there is the positive benefit of global businesses that carry about $30 million of EBITDA on a revenue basis. 
For his new pick, Gabelli is betting that as investors try to recoup the downslide seen in their portfolios during the last couple of years, there iwill be increased emphasis on wealth management. His play is GAM Holding (SIX: GAM-CHF12.91), a Swiss diversified asset management company, with CHF 113 billion of assets under management, listed on the Swiss SIX exchange. The company has two segments, GAM and Swiss & Global. Gabelli finds the enterprise value of this company, at CHF1.5 billion, to be cheap relative to some other U.S and global asset managers, and also relative to assets managed. For an extra as well, investors could get exposure to ARTIO Global Investors (NYSE: ART-$23.70), in which GAM Holding has a stake.

Larry Rader, one of the steadiest stock performers ever and a student of identifying outstanding small-cap, non-technology growth stocks, rose to head small-cap research at Merrill Lynch in the  days before investing was replaced by gambling.  Now 72 Rader still manages money for old friends, and plays snow bird between New York and West Palm Beach, Fl. Rader's 2009 pick FTI Consulting Inc. (NYSE:FCN- then 47.18, recently  39.03 ) is down 17% , but he still sees it as a strong hold considering that business continues to be good.
Also betting on a financial services revival, Rader picks Bank of America Corporation (NYSE:BAC-$17.08), one of the companies badly hit by the housing market downturn and financial crisis.  "The company has restructured its management and its operating philosophy," says Rader. " It has a new CEO and it seems to be starting on a more visible growth pattern, rather than helter-skelter as it was for the previous two or three years."  Rader  expects that B of A's  exposure to problems from bad loans is mostly behind them and it has a lot of operating leverage as it cleans up its books.

 
Like Count Dracula we are always interested in new blood and add newcomers who have never picked a stock for us. Debuting in this issue is Muriel Siebert, first lady of finance. Among her many accomplishments was being the first woman to own a seat on the New York Stock Exchange  and being the first and only  female founder and owner  of  a big board brokerage firm, appropriately named Siebert & Co. While our rules are that each participant only chose one favorite stock, we are so delighted to finally have Muriel pick for us that we let her chose two.
Right now with everyone looking so short term, Muriel likes two of the bluest blue chips General Electric (NYSE:GE-18.07) and Pfizer Inc. (NYSE:PFE-16.91). Each based upon a trailing 12 months commands a P/E of around 17 with respective dividend yields of 2.3% and 4.7%. Both are well run multinational growth stocks combining growth, safety and yields which should rise over time. 
Muriel is also upbeat about the market overall, noting, "Despite the market being up about 60% from its lows last March, there are still some solid companies selling at good prices. You can be an international trader these days by investing in the stocks of well-managed multinationals that earn revenues from all over the world."

As we were closing Editor Bob Flaherty noticed we had no pick covering India. So he asked this writer Poonkulali Thangavelu, who has written both in India for a local stock market magazine and also for Bob here in the U.S. on Indian companies, to just pick one herself. While working for the Indian stock market magazine, Poonka came to develop an understanding of the dynamics of developing markets.
One of the most basic needs is housing and aspiring to own one's home is a cornerstone of the middle-class lifestyle. As the name implies, Housing Development Finance Corp. (BSE: HDFC-INR 2,693) provides financing to make this dream a reality. Initially, set up in 1977 under the auspices of the Indian government, HDFC now trades as a public company.
For the nine months ending December 31 2009, the company's loan disbursements were up 23% from the comparable period of 2008, while nonperforming loans made up less than 1% of its loan portfolio.  Based on earnings per share of (Indian Rupees) INR 78.72 as of March 2009, the last full year for which earnings are available, the stock is trading at a P/E of 34.2.  However, there is considerable scope for earnings growth in meeting the housing needs of a country whose population count is second only to China's. 
Interest rates in India are on an upward path, now that the Reserve Bank of India, the Indian central bank, has started tightening interest rates, as fears of global recession abate and governments now focus more on containing inflationary pressure. Even then, the demand for housing is more of a necessity, rather than a discretionary demand, and this company should do well in the long run.  At an exchange rate of 45.465 Indian Rupees for one U.S. Dollar, the stock currently trades at about $60 per share.

With a powerful flight from risk last year many micro-caps took a beating and three of our 4 losers last year were in that niche.  For those who seek adventure Martin Wilens, who had just written a book about his activities as a spy as "a real live behind enemy lines spook" during the Vietnam War, gave us a highly speculative micro-cap start-up plucked from the wild and wooly illiquid Pinks Sheets   little known Los Angeles- based Hydrogen Hybrid Corp. (Pink Sheets: HYDB.PK- then 1.01 and recently 0.03.) It bombed declining 97%. 
 
Greenwich Village gadfly Ray Dirks picked as his favorite stock for 2009 a long shot Swiss- based and globally backed Mymetics Corporation (MYMX.OB-then 0.20, recently 0.17.), down 15%.  Mymetics is engaged in trying to develop a vaccine platform for HIV/AIDS and other maladies. At present there are about 33 vaccines in circulation. Over 1,000 viruses could be addressed in the immune system and there are multiple applications for Mymetics' acquired virosome delivery system in their treatment. Dirks believes MYMX is still a terrific buy.
Ray Dirks' new pick is the fabled  King Solomon's mines, now known as Arabian American Development (Nasdaq:ARSD-$2.80). This company is in the chemical business and also has a 50% stake in a Saudi Arabian mine. A leader in the field of high purity petrochemical solvents, the company has a petrochemical facility in Beaumont, Texas. 
As for the mine, its partners are wealthy Saudi Arabians, it is going to be in production by 2011 to produce copper, zinc, gold and silver, all of which could be sold in the world market. "They have got all the very high quality engineering appraisals of the mine. There is no question - this mine goes way, way back to the old days. This is the original facilities for King Solomon's mines, but it hasn't been mined for 2000 years," claims Dirks. He expects the stock, which is currently at about $2.80, to generate earnings per share of about $0.50 to $0.60 this year.
Dirks is also in the bull camp when it comes the outlook for the market. "Actually, it's going to be very good for the next five years, but people are not yet convinced of that," says Dirks. "We have to have some progress in terms of improved employment and more of the world market is going to be in countries like China where we're seeing the best growth." 

Editor Bob Flaherty's own last five Favorites of the Famous picks in Equities Magazine   won top honors with four doubles in five years. But Bob couldn't do it again in 2009 for Flaherty Financial News. He struck out badly. Bob went with AMDL (NYSE AMEX: ADL- then 0.86) which is down 73% and is now renamed Radient Pharmaceuticals Corp. (NYSEAmex: RPC-0.22) A year ago AMDL not only had a projected P/E of one, but also boasted of revenues from China where its Jade Pharmaceutical Corp. had soaring sales  increases of 100% in four consecutive years.
ADL also had a colon rectal cancer test in the U.S.  which it hoped could become a general cancer screening test. But what drew Bob was AMDL's ambitious goal of expanding marketing by its 98% controlled Jade Pharmaceutical distributor from its then 36 Chinese cities with over one million people to all 167.  Jade's hot sellers included detection kits, cosmetics and therapeutics. Jade even harvested precious afterbirth from thousands of Chinese mothers for use in products like anti-aging skin creams. Now that was a unique and exciting China play.
Alas, it was too much for the new turnaround CEO to handle. Cash-strapped, ADL pulled back from its China expansion as losses instead of the promised profits popped up. Worse, the company sold debt when it needed more equity. Currently in default on some of its debt, AMDL, now Radient Pharmaceuticals Corp., has shifted emphasis to In-Vito Diagnostics. Management has had to put its jewel Jade Pharmaceuticals on the sales block to survive. If it does not raise new capital and monetize its holdings of Jade, RPC is in danger of NYSEAmex delisting. Recently the stock price was down 76% and Bob has egg on his face. Remember man that thou art human. Ouch!
For Bob this is a broken concept of failed China expansion where the turnaround management did not deliver what was promised. Bob suggests taking a tax loss and looking for a new management that not only promises but will deliver like your local pizza pallor.  
Bob's new favorite stock for 2010 is Power-Save Energy Company (PWSV.OB-0.45), which  has astute leadership and no crippling debt. Founded and led by one of American Airlines prized alumni Michael Forster, this San Luis Obispo, Ca. -based green start up profitably grows with affordable renewable energy saving products for homeowners and companies. After government and utility incentives cost can be reduced to as low as zero while eliminating or lowering customers' sky high electric bills for 25-to-30 years. Management also plans to patent a product for its niche to create solar billboards to produce electricity. Just one contract with a major billboard owner could be a company maker. Helping to save the planet is O. K. too.
Our Flaherty Special Situations Newsletter #19 features Power-Save and is archived on our website www.flahertyfinancialnews.com  under newsletters. Be sure to read the disclaimer which notes that Flaherty Financial News Inc.  received $10,000 in cash to create and distribute a report on this company. So we do have a conflict and may even be less objective than usual.
Anyway we like the management of this tiny new enterprise which has a total stock market cap of around $12 million. Best of all, we like the fact management understands how to sell profitably and has growing sales of around $5 million.  We like the fact it is focused on a real unfilled need to reduce sky high electric bills, reduce the dependency on foreign energy and reduce pollution so our air will be more breathable. These objectives should be near the top of every president's list. For a management which will go with the flow of encouraging more energy efficiency and renewable solar power, the best should yet to come.
 
Global stocks are not anywhere as cheap as they were last year. The late Sir John Templeton's   "moment of maximum pessimism" for buying at the bottom has come and gone.  Still flight from risk again has popped up. Some turn to cash while others flee to equities of other countries than their own   worried about inflation which will kill local  purchasing power.
No one knows the future.  The global stock market is always filled with outstanding value and those who are not frozen with fear and buy a diversified batch of quality stocks at bargain prices to hold for the long run should do well. At least they always have.  With trust in God and in ourselves we will meet all the challenges ahead. Fortune Favors the Brave!  Bob Flaherty
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Disclaimer: This newsletter contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements and to supplement this newsletter with specific company SEC filings and their own research. Please be aware that there is risk in every company you buy. Coverage or other mention of a stock in this newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. We are not investment dealers or investor advisers registered with the SEC or State security authorities. We   do not guarantee all the information in this newsletter is correct, timely or will be updated. Remember some errors are inevitable. Reproduction without written permission from FFN is forbidden.  No one at Flaherty Financial News is a shareholder of any individual company profiled in this issue and our policy forbids editorial from buying or selling any stock mentioned until this issue is out at least ten business days, which for the 15 Favorites of the Famous stocks featured in this newsletter would be April 7, 2010. Power-Save Company did not pay to be picked as Bob Flaherty's favorite stock in this feature or even know about its selection. But in a third party paid a fee of $10,000 in cash  for a sponsored BUY report and extra distribution of the report in our March 13 , 2010 Flaherty Special Situations newsletter, but did not pay to sponsor or appear in this current March 22 issue. In cases where FFN receives compensation for writing or for extra distribution we warn that such company coverage becomes an advertorial and does not have the same degree of independence as unpaid coverage. We have tried to be objective, but may have failed. We are not security analysts or stockbrokers but financial journalists with all the failings of that profession. You readers must decide the merits of each company yourself and whether to invest. Bob Flaherty, Editor. 

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