Investment Recap Second Quarter 2007

The stock market experienced a broad rally during the second quarter and we performed materially better than the 6.2% gain in the S&P500. While worries continue over high oil prices, weakness in the housing market and problems with sub prime credit, the offsetting good news centered around liquidity and good earnings. Takeover and merger news continue to play a role and we benefited from the buyout news within our portfolio. Simply stated, private equity capital and corporate merger news has been instrumental in propelling stock prices higher. For example, a week ago the announcement that Hilton Hotels is to be purchased by Blackstone Group caused other hotel chains like Starwood and Wydham (owned by our clients) to move up in sympathy.
Our assets under management are at an all time high of $400 million (with less than 100 client relationships). Our “All-cap core” approach has been tested in a variety of market conditions and has proven itself. We are now finding ourselves getting “discovered” by the consultant community. To our loyal clients and friends, we pledge to control our growth so as to continue to deliver excellent results and service without diluting our efforts. As you know, we added senior people to our staff a year ago and we are now raising our account minimums for new business. We promise not to add an executive chef, nor to get a swelled head from our success. (The market teaches humility almost every day.)