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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (38600)	5/3/2011 1:14:40 PM
From: E_K_S	Read Replies (1) of 78747

Re: Black Hills Corporation (BKH) - (closed out 1/2 position) Pepco Holdings, Inc. (POM) (closed out position) NiSource Inc. (NI) (closed out position) finance.yahoo.com Digital Realty Trust Inc. (DLR) (started tracking position) Microsoft Corporation (MSFT) (doubled upped previous position) Closed out some utility holdings: POM bought 2/10 @ $15.92; NI 2/10 @ $14.84. Cut back 50% BKH - 5/2009 @ $19.00. All three companies are now selling at PE's that are historically high and forward PE's present no significant bargain. Dividend yields are falling now around 4% (except POM) and future growth prospects are small based on the 25%-75% price gains since my initial buy. I do not expect similar gains in the same time period going forward. To maintain my dividend income stream, I put 1/2 of the proceeds into MHRpD (yield around 8.5% paid monthly) and bought DLR and MSFT. Digital Realty Trust Inc. (DLR) is a REIT that owns data centers that supports the growing "cloud computing" virtual server applications. Company has pricing power and has raised it's dividend payout the last three years (more than doubled the dividend from 2008 levels). Their forward PE based on 12 analysts who cover the company is 13.96 which is quite low for this sector. This is a value/growth (GARP) opportunity w/ a 4.5% dividend kicker. finance.yahoo.com I also doubled upped on my Microsoft Corporation (MSFT) holding as they should be the beneficiary of many of the emerging technologies in smart phones, cloud computing and search. Their legacy software(s) should still maintain market share and they could get lucky w/ several of their ventures into next generation smart phone and cloud applications. Stock is cheap at 9.25 forward earnings. I expect the 2.5% dividend might even be raised as they have lots of cash and stock holders have come to expect a 3% dividend from the company. EKS FWIW also sold 1/2 position in LSI that I had since 10/98. 13 years and only a 32% gain is not very good. Split adjusted it was valued as high as $60.00/share in 2001 making a possible 4 bagger. Don't remember is I peeled any shares off back then but I did make some money writing some covered calls.

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