AND THE WINNER IS .... OIL !!

By far and away, the big news for the year was oil.  The S&P 500 index's energy stocks posted a yearly return of +31.2% (despite losing some ground in the 4Q).  Supplies were tightening, China was consuming, and then the hurricanes hit -- a perfect storm.  Other sectors only managed to muddle along.  Financials and healthcare were up just over +6.0% while tech barely eked out a +1.0% gain.  The loser for the year was the consumer discretionary sector.  No surprise there as the rising fuel costs tightened belts.  (All returns are after dividends.)

Gold Leaf is an independent Registered Investment Advisor that buys stocks in cash positive companies with sustainable competitive advantages.  Gold Leaf provides objective investment management and protects client assets on the downside while participating in most of the market's upside.  On December 31st, portfolio attributes were:

Somanetics, a company providing brain monitoring devices used during surgery, returned over +100% for the year.  We have not added to positions in a while due to a run-up but believe the company is almost single handedly creating a new market.  Pharma Product Development, Inc., for the second year in a row, was one of our big winners for the year with a +50% return which included a special $1.00 dividend payment.  The company contracts to perform first and second phase drug trials.  Major pharmaceutical companies are discovering new uses for old compounds and have greatly expanded the number of clinical trials.  PPDI facilitates these trials.  All returns are after dividends.

Our chief disappointment was Patterson Companies which has discovered some lumpiness to the order flow of their high end dental machines.  Given the dynamics of the dental industry, however, we continue to buy the stock.  During the 4Q, we purchased two new companies.  One is a leading provider of rapid modeling equipment.  The firm manufactures a machine that builds 3D plastic models for industry; they hope the machines can become as ubiquitous as laser printers.  The second purchase was of a firm that makes a mini-pill camera that is swallowed to examine portions of the GI tract.

Gold Leaf does not provide legal, accounting, or tax advice.