DJIA: 10428.05 - S&P 500: 1115.10 - Russell 2000: 625.39

January 2010

Think Big, Think Positive
Buy Low, Sell High
Fear, That's the Other Guy's Problem.

-Dan Aykroyd's advice to Eddie Murphy in the movie Trading Places

If the 2009 stock market were a movie, it would have to be characterized as a swashbuckler; full of action, danger, adventure, and finally redemption. Since the S&P 500 bottomed in March at a level of 666 (wow 666, in retrospect that was probably some kind of omen), we have witnessed the best stock market rebound in decades. Attractive equity valuations and an improving economy were the ingredients needed to spark a powerful 68% rally.

BURKENROAD REPORTS (www.burkenroad.org) continues to grow. Although the recession had a chilling effect on new hiring for a while, we have seen the job market for our graduates beginning to thaw. Nearly 500 students from our program have moved on to positions in investment-related fields.

BARGAINS ON THE BAYOU?

Please join us for our 14th Annual BURKENROAD REPORTS
Investment Conference on Friday, April 23, 2010, at
the Sheraton New Orleans Hotel. This year's keynote luncheon speaker is Jim Paulsen, the renowned chief investment strategist for Wells Capital Management.
This popular event is free and open to the public and provides individual and institutional investors an opportunity to meet management and to learn more about some of the regions top public companies.

Up In The Air

Small cap stocks tend to outperform their larger cap brethren when the markets begin to recover. This trend was true again, and our coverage universe of smaller companies produced some spectacular returns in 2009.

The performance of Reddy Ice, for example, warmed the hearts of its investors, and AFC Enterprises (better known as Popeye’s Chicken & Biscuits) served up an excellent return. The remaining stars all came from the oil patch. This sector was hammered in 2008 but regained its mojo when world economies stabilized and demand for hydrocarbons began tracking upwards. Our biggest winner was NATCO Group, which was acquired by Cameron International and became the 23rd Burkenroad stock to be bought out since we started the program in 1993.

NATCO Group + 215%            CARBO Ceramics + 95%

Reddy Ice + 198% AFC           Enterprises + 74%

Key Energy Services + 99%    ION Geophysical + 73%

Willbros Group + 99%             Stone Energy + 64%

I Love You Man

The Burkenroad Mutual Fund (ticker symbols HYBUX and HHBUX) enjoyed another terrific year posting a total return of 31.63%. This return again outpaced the major averages with the S&P 500 returning 26.47%, and the Russell 2000 coming in with a 27.16% return for 2009. Since its inception (12/31/01) the Burkenroad Mutual Fund has more than doubled in price while outperforming 99% of the nation's 4,348 equity mutual funds. The fund is managed by Hancock Bank and now has nearly $50 million in assets. Hancock's managers utilize our student-produced research reports (as well as other sources) in the management of the Burkenroad Fund.

ADD GRAPH

COMPARITIVE RETURNS SINCE THE FUND'S INCEPTION

12/31/01 - 12/31/09

BURKENROAD MUTUAL FUND: +108.39%

Russell 2000 Index: +42.42%

Standard & Poor's 500: +13.48%

Sherlock Holmes

Each year we try to add a couple of new companies into our coverage universe. We met management and produced a research report on Denbury Resources during the fall semester and plan to do the same with Sharp’s Compliance and Houston Wire & Cable in the spring.

Denbury Resources - (DNR/NYSE). This Houston-based energy producer is "bubbling" over with potential. Using a technique called CO2 flooding, the Company is able to extract additional reserves from older wells that were thought to be depleted. Sufficient supplies of both CO2 and new fields to develop make this an interesting vehicle play for energy investors.

Sharp's Compliance - (SMED/NASDAQ). Odds are that you have actually seen this company in action. When the doctor gives you a shot, the needle is then placed in a box hanging on the wall. Sharp's gathers and disposes of these needles (as well as lancets and syringes), thus, providing a cost-effective solution for healthcare providers. Aging baby boomers provide a growth engine for this business.

Houston Wire & Cable - (HWCC/NASDAQ). An investment in this company may prove to be an excellent way to play the growth in U.S. infrastructure needs. This Company sells the specialty wire needed in the construction and maintenance of power distribution and wastewater systems. Investors should also like the fact that management owns a significant piece of the Company.

It's Complicated

A recent survey by the British journal Science showed that Louisiana is the nation's "happiest state". Researchers credit Louisiana's attractive climate, strong family ties, great food, and relatively low cost of living. I personally believe that our proximity to well run, attractively priced small cap public companies played at least a small part.

Both the region and Tulane University continue to amaze post-Katrina doomsayers. Recently the editor of World Trade Magazine wrote "the transformation that is taking place in New Orleans both socially and economically is stunning." Tulane is a big part of this renaissance. This year the University received a record 40,000 applications for just 1,600 freshman openings.

Full length reports on each of the companies and conference registration information are available at www.burkenroad.org.

We would like to thank Aaron Selber and the Burkenroad family for their continued support and, as they say in showbiz, "keeping the wheels on the bus."

 
Peter Ricchiuti
Founder & Director of Research
BURKENROAD REPORTS