The S&A Digest

Goldsmith on the Digest... Pabrai Wins!... A bottom in the dollar... Don't compare... And the best analyst is...

Goldsmith comment: It happened again... I get into the office, grab my coffee, and see the e-mail waiting: "on your own." I didn't have to open it to know what it was. Porter's fishing in the Outer Banks... all day... so I'll be writing the Digest...

Our friend Mohnish Pabrai won the eBay auction for a lunch with Warren Buffett at New York steakhouse Smith & Wollensky. The lunch for Mohnish, his wife, and two daughters only cost $650,100 ($30,000 higher than last year's winning bid), which will go to the Glide Foundation. Mohnish said he plans on knowing what he wants to eat before entering the restaurant, giving him more time to grill the Oracle.

P.S. Mohnish, we're available if you have an extra seat.

Rupert Murdoch's News Corp. reached an agreement to purchase Dow Jones (DJ) for $5 billion. Dow Jones' board will make a decision today regarding the sale.

Plains Exploration & Production Co. (PXP) will buy Pogo Production (PPP) for $3.6 billion. That's $61.50 per share, a 22% premium to Pogo's closing price of $50.48 yesterday.

S&A Oil Report readers will make 33% in six months on the deal.

Here's Matt's take: This deal highlights the importance of buying cheap reserves. In January, Pogo was one of the cheapest companies by price to reserve. We bought Pogo for about $1.22 per thousand cubic feet of natural gas equivalent (mcfe).

If you take into account the 700 million mcfe of reserves Pogo recently sold for $2 billion, Plains paid about $1.63 per mcfe to acquire the company. That's exceptionally cheap in my opinion.

Our bargain-basement strategy parallels what oil companies' analysts are doing. In this case, we beat them to the deal and earned a nice return in a short period.

Shares of Extreme Value and Inside Strategist pick American Express (AXP) gained nearly 4% this morning after Goldman Sachs upgraded the credit card company from neutral to buy. Readers have made between 9% and 14%.

We got a mountain of responses to our discussion about when to deliver the S&A Short Report (read more here and here). Jeff weighs in below...

I just spent the last two hours reading all 267 responses – every single one of them (and I had a bottle of scotch within arm's reach just in case)...

There were 13 requests to move it back to after the market close. Everyone else wants it during market hours. Several offered to pay extra to get it before everyone else (ha!).

Many agreed that nearly every recommendation comes back down after the initial spike, and only two think that my mother should be slapped for having given birth to me.

I expect we'll still get a handful of complaints about front running and leaking the info, but I think the best thing for our subscribers is to issue Short Report during market hours. And now we know that most of them like it this way...

New highs: FLIR Systems (FLIR), Janus (JNS), Coca-Cola (KO), Pozen (POZN), Schlumberger (SLB).

Well, we asked for your opinion on which analyst is best, and we got it... except from this guy below. Porter should be back tomorrow. Keep your fingers crossed, and you may get a story about how he caught the biggest fish in the world. Let us have it... feedback@stansberryresearch.com.

"Porter, don't compare people. You can compare results if you like, but even then when the results are filtered for risk, investor predilections, and whatever else, does it really make sense when every one of the analysts is in different ways beating the hell out of the market? What information are you looking for? Or is it just a game like horseshoes, and nobody goes home bloodied? Good luck with that, because if you want harmony and people working together, you don't pit them against one another like they were cocks in a ring. It's demeaning. Myself, I love 'em all, even you, Porter. The intelligence running out of S&A is like watching honey flow into a pail. Golden, thick, and ultimately delicious. What's to compare? It's all incomparable... Play horseshoes at home but not at work would be my advice." – Paid-up subscriber Michael Meek

Porter comment: Well, I didn't think about it that way. I just thought... we're all different... we all do something better than others.

"Dan Ferris and the Extreme Value is the main reason I joined the S&A Alliance last week. I actually subscribed the Extreme Value during a half-price promotion last year and canceled it within a month. I thought the investment style is too boring for me. After 6+ months being a Private Wealth Alliance member and an active 'investor,' I learned a bit more about [investing] and start to see Dan's points." – Paid-up subscriber Chris M.

"My vote goes to Steve Sjuggerud. Why? Because of the depth of research he does. And his willingness and ability to explore ALL fields of investments – not just stocks and bonds, i.e. coins, EverBank CDs, stamps, etc. Couple that with the obvious honesty and integrity and you have the top analyst." – Paid-up subscriber Jim Nolan

"Dan Ferris gets my vote. I just like his thoroughness to his research. His

picks are not the most exciting, and often you have to wait for the gains,

but seldom is there a loss. It is just good solid investing without the

hype." – Paid-up subscriber Dave Diehl

"OK! The best S&A analyst is (are)... Porter for having the insight, integrity, guts, and vision for S&A (as well as good grilling recipes). Dan Ferris for giving us stocks with good fundamentals at a cheap price. And last but not least, Jeff Clark, for giving us options with big returns in a short time period. Now, if we could just get one analyst that had good recipes, for a cheap price, with big returns all in one, then we'd be talking. Not related, don't drink, and happy with my research." – Paid-up subscriber Brent Ordway

"Hey Porter, no offense intended (because you are 'the Man'), but how can I not choose Steve after buying Seabridge Gold at $3.05 a share, now trading at near $27. With 3,000 shares, you know who has my vote! Keep hiring the 'good guys'..." – Paid-up subscriber Bob Hunter

"Tom Dyson is the best for my money. We can't change who we are, and I was born a conservative value investor. Tom's reasoning is consistently solid, his stock picks are slightly under the mainstream radar, they don't blow up so I don't need to monitor closely for stop losses, and dividend income is always reassuring. The ultimate test of an analyst for me is: When the stock starts moving against me, how comfortable do I feel continuing to own it? With Tom's picks, I never think twice... Second place would be a tie between Sjuggerud, Ferris, and Stansberry." – Paid-up subscriber Robin

"Qualities I look for in an analyst: Careful, even nit-picking. Assembles the parts into a coherent whole. Reasons logically. Methodical in approach. Writes clearly. Has above-average batting and slugging numbers. Adapts to change, but keeps basic analytical procedure intact... You guessed it: Ferris. Porter – this is no popularity contest. If it were, Sjug would get the nod.

"If it were a contest for gutsiness, you'd get it hands down. If it were a contest for instinct and 'feel,' it would be Jeff Clark. If it were for most improved, willing to learn, it would be Graham Summers. And... if it were for iconoclasm, it would be Dyson. And don't forget Davis – he and Goldsmith are new, but promising.

"There's a special award for departed – I think Hancock is by far the best analyst to leave S&A. I thought Walters was solid, but I like Dyson better at the 12% – so far. But he has not been stress-tested.

"This contest was easy. You have called Ferris your best analyst. I just happen to agree this time!" – Paid-up subscriber Jim Pursley

"I'm up the most with Sjug, so I'll say he is [the best]. Of course, I've been subscribed to True Wealth the longest of all your services. I'm really doing well with the Oil Report, too, so Badiali deserves consideration. Also Dan Ferris, Tom Dyson, Medical Investor [edited by Rob Fannon], and Porter are all doing well for me. I'm an Alliance member and consider the subscription fee money well spent. Thanks for all your team does for us, Porter." – Paid-up subscriber John Musil

Regards,

Sean Goldsmith

Baltimore, Maryland

July 17, 2007

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