The Deen's List(TM) A service of Deen Capital Management, Inc. (www.deencapital.com) Vol.1 #69 Wednesday November 26 2003 10:16am ET Please read carefully our disclaimers at the end of this newsletter. Market stance: BULLISH (since Oct 3 2003) ******************************* Contents ******************************* Bought AMKR Bought ENH ***************************** Bought AMKR ****************************** Amkor Technology Inc (AMKR) Net buy price in managed accounts(*)... $19.75 Yesterday's close (Nov 25)............. $19.29 Net change (based on net buy price).... +$0.46 Today's volume as of 9:50am ET ........ 110,214 ($2.2 million) Average daily volume................... 1.7 million ($33.3 million) This year's earnings-per-share......... -$0.22 (est) Next year's earnings-per-share......... $0.76 (est) P/E using next year's earnings......... 26.0 (est) Earnings growth rate, next 5 years..... 17.5% per year (est) (*) The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. On Wed Nov 26, I bought AMKR. Amkor Technology Inc. (www.amkor.com) is the world's largest independent provider of semiconductor packaging and test services. Here's why I bought this stock: + News: On Mon Oct 27 after the close, the company announced results for the quarter ended Sep 30. Earnings came in at 9c per diluted share (vs last year's 36c loss and the First Call consensus 1c). Revenue was up 8% to $423.8 million (First Call estimate $416 million). Excluding items, earnings were about 4c. + News: The company said (and other news I have seen supports this claim) that "the semiconductor assembly and test industry is on the cusp of a period of sustained growth". + A "true surprise"(*): Prior to the news, the stock was trading in the middle of a 3-month trading range. Then, on Tuesday Oct 28, the stock was up 20% to $19.38 on 5x average daily volume. (*) "True surprise" is my term to describe a company news item that ignites heavy buying and that was not preceded by a short-term runup in the stock price (i.e. not preceded by rumor). + Breakout: The price movement on Oct 28 was a breakout from a 3-month trading range. We bought (this time) about a month after the breakout, but at a price that was just fractionally higher than the Oct 28 close. + Recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +21%, +19%, +8%, and, as cited above, +8%. + Future sales growth looks even stronger: Next year's sales are expected to be up some 23%. + Re-emergence into profitability after 3 years of losses: Here are the quarterly EPS figures for the last eight quarters: Dec 02 vs Dec 01: (15c) vs (67c) Mar 03 vs Mar 02: (24c) vs (58c) Jun 03 vs Jun 02: (12c) vs (53c) Sep 03 vs Sep 02: 10c vs (31c) + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2003 is (22c), up from (27c) 90 days ago; and the consensus estimate for 2004 is 76c, up from 59c 90 days ago. + Valuation: 26 times next year's estimated earnings is a modest multiple for a company which is just crossing over into profitability. + History of earnings surprises: This company has reported earnings at least 3c ahead of estimates in three of the past four quarters. + The company's industry group ("Elec - Semiconductor Mfg") continues to be a market-leading group. It is now ranked #9 out of 197 groups for 3-month price performance by Investor's Business Daily. ****************************** Bought ENH ****************************** Endurance Specialty Holdings (ENH) Net buy price in managed accounts(*)... $31.04 Yesterday's close (Nov 25)............. $31.04 Net change (based on net buy price).... -$0.00 Today's volume as of 9:42am ET ........ 1,000 ($0.0 million) Average daily volume................... 80,000 ($2.5 million) This year's earnings-per-share......... $3.44 (est) Next year's earnings-per-share......... $3.99 (est) P/E using next year's earnings......... 7.8 (est) Earnings growth rate, next 5 years..... 12.0% per year (est) (*) The "Net buy price" is the total net purchase cost after commissions for all managed accounts divided by the total number of shares. On Wed Nov 26, I bought ENH. Endurance Specialty Holdings Ltd (www.endurancebermuda.com) writes specialty lines of commercial property and casualty insurance and reinsurance. Here's why I bought this stock: + Near-Breakout: The stock is close to breaking out of a 6-month trading range. + Excellent recent sales growth: Here are the quarterly year-to-year sales growth rates from the last four quarters, in chronological order: +999%, +818%, +259%, and, most recently, for the quarter ended Sep 30, +178% to $356 million. + Excellent recent earnings-per-share growth: Here are the quarterly EPS figures for the last eight quarters: Dec 02 vs Dec 01: 69c vs 1c Mar 03 vs Mar 02: 86c vs 5c Jun 03 vs Jun 02: 99c vs 52c Sep 03 vs Sep 02: 83c vs 48c + Rising estimates: According to recent data from First Call, the consensus earnings estimate for 2003 is $3.44, up from $3.26 90 days ago; and the consensus estimate for 2004 is $3.99, up from $3.90 90 days ago. + Valuation: At 8 times /\next year's estimated earnings and a projected 5-year annualized earnings growth rate of 12%, the stock is attractively priced. + History of earnings surprises: This company has reported earnings at least 11c ahead of estimates in each of the past three quarters. The above items were so compelling that I chose to buy the stock in spite of the following negative factor: - The company's industry group ("Insurance - Property/Casualty/Title") has fallen over the past three months in relative strength, according to data from Investor's Business Daily. *********************** Subscription Information *********************** Welcome to The Deen's List(TM), a new e-mail stock newsletter from Deen Capital Management, Inc. My intention is to inform you as quickly as is practical regarding my stock market moves. When I buy or sell a stock, first I take care of client accounts, then I buy/sell for my personal account(s), and then, third, I send out this newsletter. Your feedback is welcome. Send e-mail to deenslist@deencapital.com. To subscribe or unsubscribe, include the word "subscribe" or "unsubscribe" in the Subject line. This newsletter is free to managed account clients. For a limited time, it is also free to all interested parties. **************************** Privacy Policy **************************** Your personal information, including your e-mail address, will be held in confidence by Deen Capital Management, Inc. We will not share it with or sell it to others. ************************ IMPORTANT DISCLAIMERS ************************* * All stocks discussed in The Deen's List(TM) involve a high degree of risk. It should not be assumed that any stock discussed in The Deen's List(TM) or purchased by Deen Capital Management, Inc. will be profitable. * Past performance is not necessarily indicative of future results. * The information contained herein has been compiled from sources deemed to be reliable; however, we are not responsible for its accuracy or completeness. ************************************************************************ Ken Deen Deen Capital Management, Inc. PO Box 30925 Santa Barbara, CA 93130 (805) 682-1870 deenslist@deencapital.com Copyright (C) 2003 Deen Capital Management, Inc.