ONWARD & UPWARD

Within the S&P 500 index's sectors, the Q's advances were evenly distributed: consumer staples +5.6%, energy +5.2%, utilities +5.1%, telco +5.0%, financials +4.8%.  The declines though were mixed.  After several quarters of out-performance, tech retreated -2.3% and basic materials were down -1.7%.  All returns are after dividends.

Gold Leaf is a lower-risk firm that buys large cap stocks when they are out of favor.  Its goal is to protect client assets on the downside while participating in most of the market's upside.  On March 31st, portfolio attributes were:

Service Corp. International is the country's largest funeral home operator.  In the 1990's, the company overloaded on debt through pricey acquisitions thereby impairing the stock.  With new management and the shedding of foreign operations, debt has been trimmed.  The stock rose +39% in the Q.  Scottish Annuity is a life reinsurance company that was trading close to book value upon purchase.  It gained +16% for the Q.  Topps, the baseball card and candy maker, posted sluggish sales; it retreated -7%.  Our three largest holdings are Pfizer, Lab Corp. of America, and KeyCorp.  All returns are after dividends.

We originally purchased JC Penney because the value of its Eckerd drugstore chain was not reflected in the stock price.  Now that Eckerd is to be sold for $4.5 billion and JC Penney is up, we have sold.  In the Q, we initiated positions in a rural retailer as well as a contract research organization for the major pharmaceutical companies.  Gold Leaf continues to search for undervalued companies with sustainable competitive advantages and free cash flows that generate long term value for our clients.