February 4, 2013
the
Prudent Speculator Established in March 1977 85 Argonaut, Suite 220 Aliso Viejo, California 92656 877.817.4394
Nothing like a plethora of front-page mainstream
newspaper stories on Saturday trumpeting the Dow Jones
Industrial Average closing above 14,000 for the first time
since 2007 to put the kibosh, at least tem-
porarily, on the 2013 rally. To be fair, sizable The investors chief
jumps in bond yields in Italy and Spain,
due to renewed political pressures in those problemand even
two countries, and a big drop in the euro
that sent European bourses skidding were his worst enemyis
the primary catalysts for the downturn on
Wall Street. And after an impressive end likely to be himself.
to 2012 and a stellar start to 2013, we cant
say that U.S. stocks were not overdue for a Benjamin Graham
bout of profit-taking.
Certainly, our optimistic long-term view is not dimin-
ished in the least by an inevitable pullback, especially as
fourth quarter corporate earnings reports have been a bit
stronger than expected. Bloomberg reports that with 268
of the S&P 500 companies having now announced results,
68.3% have posted positive Q4 earnings surprises, while
20.9% have trailed forecasts. Meanwhile, Standard &
Poors now projects that operating earnings for the S&P
500 will rise to $111.51 in 2013, up from $97.50 in 2012,
while corporate balance sheets remain flush with cash.
True, the handsome gains in equities over the last 13
months have reduced the level of undervaluation, but we
do not find the current P/E ratio of 15 times trailing earn-
ings on the S&P 500 to be excessive, given the record-low
interest rate environment. A yield today on the 10-year
U.S. Treasury of 1.96% doesnt provide much competition,
in our view, for a broadly diversified portfolio of underval-
ued stocks (happily, we do not have to own the S&P 500)
that yields over 2% and provides a hedge against inflation.
Whats more, the fact that the recent backup in interest
rates has caused some modest pain for bond market par-
ticipants is a good sign in the battle for investment dol-
lars. January saw substantial inflows into equity funds
(the best four-week span since 1996), after five years of net
outflows, but there is still a mountain of money in bonds,
some of which could eventually make its way into stocks.
We have also been encouraged that domestic econom-
ic statistics generally have been upbeat, at least relative
AFAM also offers wealth management services. To learn more, contact 888.994.6837 and visit alfrank.com
556
to expectations. Yes, the first estimate of Q4 U.S. GDP
growth came in at -0.1% due mainly to lower military
spending, but business and consumer spending was rela-
tively strong and most expect the headline
number to be revised upward, while the
report was overshadowed by several other
favorable economic data points.
For example, just in the last week, we
learned that home prices jumped 5.5%
in November and that orders for durable
goods rose 4.6% in December. And that was
all before Fridays slew of numbers that
saw auto sales soar by 14.2% last month,
a crucial manufacturing gauge climb to
the best reading since April, the University of Michigans
Consumer Sentiment index nudge up to 73.8 in January
from 72.9 the month prior and construction spending in-
crease by 0.9% in December. Also, the hotly anticipated
monthly labor department report proved to be a positive,
despite a bump up in the unemployment rate to 7.9%, as
employers added 157,000 jobs during January, while pay-
rolls for November and December were revised sharply
higher to 247,000 and 196,000, respectively.
Despite our enthusiasm for stocks, we have to admit to
being a tad concerned by the cover of this weekends Bar-
rons Magazine. The publication reminded, We told you
so in October, (not sure perpetually bearish lead Barrons
columnist Alan Abelson would agree) and alerted, Get
Ready for a Record on the Dow. On the other hand, it was
nice to read in todays Wall Street Journal that of the 1800
readers who responded since last August with their asset
allocation mixes the average exposure to U.S. stocks was
just 8%, versus 16% for bonds and cash, 32% for foreign
stocks and 44% for alternatives. Investors may say they
are more excited about stocks, but we hardly see a sea
change in what they are actually doing with their money!
Chief Investment Officer
Al Frank Asset Management (AFAM)
 Graphic Detail
Keeping the Faith

S trange as it may sound, we often earn our keep as

much with our stomachs as with our minds. We have
constantly admonished that the secret to success in stocks
To be sure, the fact that we are students of market his-
tory has helped us to maintain the steely nerves neces-
sary to successfully fend off the This Time is Different
has been to not get scared out of them, something that demons or the New Normal nightmares. Certainly, it is
seems obvious today with the Dow Jones Industrial Aver- never easy to steer the ship through stormy seas, but the
age having just climbed above the 14,000 level. Of course, numbers simply dont liethe kind of dividend-paying,
less than four years ago, the Dow had plummeted through value-priced stocks that we favor historically have en-
7,000 in early March 2009 and even the most seasoned of joyed superb long-term returns for those with the cour-
investor was ready to head for the hills. age and conviction to stick with them through thick and
Heres what we wrote in that months edition of The thin. As our founder Al Frank wrote in the first edition of
Prudent Speculator: We have never wavered in our cen- The Prudent Speculator almost 35 years ago, I learned
tral belief that those with a long-term investment time ho- that successful speculating is more a matter of character
rizon will be rewarded in the fullness of time for maintain- than mathematics, analysis or luck. Obviously, the latter
ing a broadly diversified portfolio of undervalued stocks. are required, but the great gains and losses seem to occur
This faith is based on history that shows that stocks have in consequence to individual psychology.
returned between 9% and 11% per annum going back to Al did plenty of homework in launching our value-
the end of 1925, despite the fact that the S&P 500 lost based strategy in 1977, but over the years the advances
ground in 24 of those years. We know that those perfor- in technology and the availability of data have allowed
mance figures may be difficult to believe, given that the us to fine-tune the approach. For example, our affection
major market averages are now trading at 12-year lows, for dividends was bolstered by the fact that the histori-
but those gains have come despite the Great Depression, cal data from Professors Eugene F. Fama and Kenneth R.
World War II, the Cuban Missile Crisis, the Kennedy As- French show that payers have generated the best returns
sassination, Watergate, runaway inflation and sky-high and have done so with lower volatility. Further, the Fama-
interest rates in the mid-70s and early-80s, the Crash of French data reveal that Value stocks (those trading for
87, Iraq 1, Long-Term Capital, 9/11 and Iraq 2. high Book Value to Market Value levels) also outperform.

DIVIDENDS & RETURNS SINCE 1927 MARKET CAPS & RETURNS SINCE 1927
Illustrating the value of dividends, the higher the yield, the better Showing the power of value investing, Large-Value stocks have
the long-term return. overcome the propensity for Small-Caps to outperform.

1m Top 30% Dividend Payers 100m

11.2% 14.8% Small Value
Hypothetical $100 invested on 06.30.27

Hypothetical $100 invested on 06.30.27

Middle 40% Dividend Payers 11.7% Large Value

10.3% 10m
100k 9.3% Large Growth
Low 30% Dividend Payers
8.6% Small Growth
8.9% 1m
Non-Dividend Payers
10k 8.4%
100k

10k
1k

1k
100
100

1 1
30 40 50 60 70 80 90 00 10 30 40 50 60 70 80 90 00 10
Indexed to 100 on 06.30.27. Through 12.31.12. Logarithmic scale. SOURCE: Al Frank using data from Professors Indexed to 100 on 06.30.27. Through 12.31.12. Logarithmic scale. SOURCE: Al Frank using data from Professors
Kenneth R. French and Eugene F. Fama Kenneth R. French and Eugene F. Fama
Graphic Detail continued

Our own real-world experience and number crunching bargains reside, but given the dramatic outperformance
confirm the Fama-French conclusions, but we did think of small- and mid-cap stocks since the start of the Millen-
it well worth our while to explore equity market returns nium, weve been favoring larger-cap names, a stance that
over the past 20 years (it is not so easy to find accurate his- we think is very much supported by valuation and risk
torical data) based on the combination of Market Caps and metrics. Still, the findings of our latest study make the
Dividends, especially as we know that Small-Cap stocks case that building out a portfolio of smaller-capitalization
have outperformed over the long term. We have always dividend-paying stocks for those willing to accept greater
been equal opportunity stock pickers, free to go where the volatility might be an endeavor worth undertaking!

MARKET CAPS & DIVIDENDS SINCE 1992 DIVIDENDS & VOLATILITY SINCE 1992
Our analysis of the Russell 1000 (Large) and Russell 2000 (Small) ...while the standard deviations (volatility) suggest that intrepid
over the past 20 years argues that dividends are the way to go... investors can indeed find higher returns with lower risk.

Small Non-Payers
3,162 13.7% Small Payers 40%
Small Payers
12.1% All Payers
Hypothetical $100 invested on 06.30.92

Large Non-Payers
10.5% Large Payers
35% Large Payers
9.6% Large Non-Payers
1,000 8.9% All Stocks

Average Standard Deviation of

30%

Trailing 36 Monthly Returns

7.3% All Non-Payers
6.6% Small Non-Payers
25%
316
20%

15%
100

10%

1 5%
95 00 05 10 95 00 05 10
From 06.30.92 through 12.31.12. Equal weighted returns. Logarithmic scale. SOURCE: Al Frank using data from
Thomson Reuters From 06.30.92 through 12.31.12. SOURCE: Al Frank using data from data from Bloomberg and Thomson Reuters

MARKET CAPS & RETURNS SINCE 1999 MARKET CAPS & VALUATIONS
The Lost Decade for large-caps (S&P 500) turned out to be just fine ...so bargains are now more plentiful among big companies and
for small- (S&P 600) and mid-caps (S&P 400)... stock picking is even more vital for those who like smaller stocks.

S&P 500 S&P 400 S&P 600

30
300 8.1% S&P 600
Hypothetical $100 invested on 12.31.99

8.0% S&P 400

25
250 1.7% S&P 500
Price to Earnings Ratio

20

200
15

150 10

100 5

0
re

50
r

ls
ls

ls

ls
sc

om
Ca

s
ia
gy
Sp

ria

ia

e
x

Di

00 05 10
iti
de

nc
er

er

ec
IT
th

st
ns

il
ns
In

En

na

at
du

l
al

Ut
Te
Co

M
Co

He
Fi

In

Indexed to 100 on 12.31.99. Through 12.31.12. SOURCE: Al Frank using data from Bloomberg Calendar year 2013 estimates. SOURCE: Al Frank via Standard & Poors Indices
 Recommended Stocks

I n this space, we list each month 40 of our most attrac-

tively priced recommended stocks. All trade for signifi-
cant discounts to our determination of long-term fair val-
have more stable earnings streams, more diversified busi-
nesses and stronger balance sheets. The natural corollary
is that riskier companies must offer far greater upside
ue and/or offer favorable risk/reward profiles. Note that, to warrant a recommendation. Further, as total return is
while we always seek substantial capital gains, we require how performance is ultimately judged, we explicitly fac-
lower appreciation potential for stocks that we deem to tor dividend payments into our analytical work.

Target Price Multiples EV/ Debt/ Div Mkt

Industry Group Ticker1 Company Price Price EPS Sales TBV2 EBITDA3 TE4 Yld Cap

Banks BBT BB&T 30.28 42.45 11.0 nmf 1.8 nmf nmf 3.0% 21,188
KEY KeyCorp 9.40 14.65 10.7 nmf 1.0 nmf nmf 2.1% 8,702
NYCB NY Community Bancorp 13.35 16.66 11.7 nmf 1.8 nmf nmf 7.5% 5,862
PNC PNC Financial Services 61.80 95.11 10.6 nmf 1.3 nmf nmf 2.6% 32,630
WFC Wells Fargo & Co 34.83 50.09 10.3 nmf 1.6 nmf nmf 2.9% 183,425
Capital Goods GD General Dynamics 66.30 95.86 10.1 0.7 nmf 17.2 nmf 3.1% 23,449
URS URS 41.48 70.01 9.7 0.3 nmf 6.8 nmf 1.9% 3,188
Commercial Services WM Waste Management 36.38 45.34 17.0 1.2 nmf 8.1 nmf 3.9% 16,877
Consumer Dur & App HAS Hasbro 37.37 47.87 14.0 1.2 7.8 8.1 226% 3.9% 4,855
Energy APA Apache 83.76 153.27 8.2 1.9 1.2 3.7 24% 0.8% 32,774
BHI Baker Hughes 44.72 73.42 13.9 0.9 1.8 6.5 36% 1.3% 19,661
DO Diamond Offshore Drilling 75.09 94.28 15.2 3.5 2.3 8.1 33% 4.7% 10,440
RDS/A Royal Dutch Shell PLC 70.52 110.99 6.7 0.4 0.9 4.9 17% 4.1% 222,346
TOT Total SA 54.29 84.03 7.5 0.5 1.6 3.4 38% 4.8% 128,446
Food & Staples Retailing NAFC Nash Finch Co 20.77 30.17 8.1 0.1 1.0 5.3 114% 3.5% 255
Food Bev & Tobacco ADM Archer-Daniels-Midland Co 28.53 48.17 13.1 0.2 1.1 10.3 37% 2.5% 18,789
Health Care Equip/Srvcs AET Aetna 48.23 79.80 9.3 0.5 4.2 4.8 104% 1.7% 16,133
CAH Cardinal Health 43.81 63.60 13.3 0.1 8.1 6.9 131% 2.5% 14,886
Insurance PRU Prudential Financial 57.88 95.13 9.0 nmf 0.7 nmf 66% 2.8% 26,972
Materials FCX Freeport-McMoRan 35.25 61.96 11.1 1.9 1.9 5.4 20% 3.5% 33,463
NEM Newmont Mining 42.96 78.41 11.4 2.1 1.6 6.6 28% 3.3% 21,400
Pharma/Biotech/Life Sci TMO Thermo Fisher Scientific 72.14 103.62 15.3 2.1 nmf 13.0 nmf 0.8% 25,986
Retailing KSS Kohls 46.29 76.20 10.6 0.6 1.7 5.2 68% 2.8% 10,647
SPLS Staples 13.49 23.45 10.0 0.4 3.5 5.0 61% 3.3% 9,087
Semis & Cap Equipment INTC Intel 21.04 29.60 9.4 2.0 3.0 4.2 37% 4.3% 104,695
MCHP Microchip Technology 33.45 41.11 20.4 4.6 5.9 13.8 32% 4.2% 6,510
NVDA NVIDIA 12.26 19.10 14.8 1.9 2.0 5.3 1% 2.4% 7,661
Software & Services ATVI Activision Blizzard 11.40 18.10 12.0 2.8 4.1 6.7 0% 1.6% 12,685
CA CA 24.82 35.99 10.9 2.4 nmf 5.5 nmf 4.0% 11,316
IBM Intl Business Machines 203.07 240.18 13.3 2.2 nmf 10.3 nmf 1.7% 229,455
MSFT Microsoft 27.45 37.67 10.7 3.2 4.2 6.2 20% 3.4% 229,928
Technology Hardware CSCO Cisco Systems 20.57 29.62 11.8 2.3 3.8 6.1 57% 2.7% 109,211
GLW Corning 12.00 21.30 9.3 2.2 0.8 6.2 11% 3.0% 17,734
IM Ingram Micro 18.18 32.30 9.6 0.1 0.8 4.4 9% 0.0% 2,730
Telecom Services NTT Nippon Telegraph 21.06 43.03 10.2 1.0 0.9 3.3 63% 3.9% 55,733
Transportation CSX CSX 22.03 30.14 12.3 1.9 2.5 7.0 101% 2.5% 22,721
NM Navios Maritime Holdings 3.74 5.36 12.5 0.6 0.5 8.4 195% 6.4% 383
NSC Norfolk Southern 68.87 98.46 12.8 2.0 2.2 7.4 86% 2.9% 21,628
Utilities CWT California Water Service 19.50 25.07 18.2 1.5 1.7 9.3 102% 3.2% 817
EXC Exelon 31.44 39.75 10.3 1.3 1.4 7.1 63% 6.7% 26,859
As of 01.31.13. N/A=Not applicable. nmf=Not meaningful. 1 =First-time recommendation. 2Tangible book value. 3Enterprise value-to-earnings before interest taxes depreciation and amortization. 4Tangible equity. SOURCE: Al Frank using
data from Bloomberg
 Portfolio Builder
Research Team Favorites
T he Prudent Speculator follows an approach to invest-
ing that focuses on broadly diversified investments
in undervalued stocks for their long-term apprecia-
tion potential. Does that mean we build portfolios of 20
stocks...30...? More like 50 and up. We like stocks. And we
like a lot of em. We dont rely nearly as much on how
many as we do in which, but we tend to invest in far
more names than most. This expansive diversification,
we find, potentially serves us well in two ways: we can
further minimize the risk of individual stock ownership,
while maximizing the likelihood of finding the truly big
winners among the undervalued masses.
As for the in which part, readers should know we dis-
criminate among potential investments primarily by their
relative valuation metrics and our assessments of stock-
specific risk. We buy only those stocks we find underval-
ued along several lines relative to their own trading his-
tory, those of their peers or that of the market in general.
The prices at which well buy and sell stocks incorporate
a range of fundamental risks (e.g. credit, customer and
competitive dynamic) that we believe the companies may
face over our normal 3-to-5-year investing time horizon.
Each month in this column, we suggest to readers a
group of ten stocks with which to populate portfolios. The
list could serve as a portfolio foundation for new inves-
tors or as a pick-list for folks already maintaining well-
diversified holdings. While other themes may be featured
over time, our ongoing consolidation program has created
opportunities (i.e. proceeds of sales) to simply add stocks
each month to our newsletter portfolios.
Note that we are in no way suggesting that these stocks
replace those featured in prior months as we will always
issue a Sales Alert should we choose to exit a position.
This Months Theme
Cash having again accumulated, we will buy $14,000 of
Royal Dutch in PruFolio and $10,000 of Cardinal Health
in Millennium Portfolio. In Buckingham Portfolio, we are
raising the regular position size to $5,000 and we will bring
up to that amount the ownership in Baker Hughes, Intel
and Thermo Fisher, while adding a new holding in Key-
Corp. In TPS Portfolio, the position size is being boosted
to $25,000, with this the target for additional purchases of
IBM, NVIDIA and NY Community Bancorp, as well as a
new buy of CSX Corp. We will transact on February 8.
NEWSLETTER PORTFOLIO PURCHASES
Target
Ticker Company Sector Price Price
BHI Baker Hughes Energy 44.72 73.42
CAH Cardinal Health Health Care 43.81 63.60
CSX CSX Corp Industrials 22.03 30.14
IBM IBM Information Technology 203.07 240.18
INTC Intel Information Technology 21.04 29.60
KEY KeyCorp Financials 9.40 14.65
NVDA NVIDIA Information Technology 12.26 19.10
NYCB NY Community Bancorp Financials 13.35 16.66
RDS/A Royal Dutch Shell Energy 70.52 110.99
TMO Thermo Fisher Scientific Health Care 72.14 103.62
As of 01.31.13. SOURCE: Al Frank using data from Bloomberg
Baker Hughes (BHI)
Baker Hughes provides a variety of oilfield services,
such as directional drilling, oilfield chemicals, drill bits
and electronic submersible pumping systems. It operates
in more than 90 countries serving oil majors, exploration
and production companies and national oil concerns. BHI
shares have been navigating choppy waters over the last
six months as the firm battled continued margin pressure
in North America. Still, the company posted Q4 net in-
come of $0.62 per share, versus estimates of $0.61, thanks
to relative strength in Europe, Africa and Russia. Though
we expect near-term headwinds to persist, we believe that
the North American market could trough during the year.
This attractively-priced stock offers a compelling oppor-
tunity to invest in the favorable long-term secular trends
in the global oilfield services space, as well as to capitalize
on recent cost-saving and productivity enhancement ef-
forts. We also favor Bakers long-term prospects in Russia,
Latin America and the Middle East.
Cardinal Health (CAH)
Cardinal Health is a leading distributor of pharmaceu-
ticals and medical supplies to pharmacies and hospitals.
Its operations include procurement, packaging, invento-
ry management and logistics services. Its largest custom-
ers are CVS Caremark and Walgreen. We believe that Car-
dinal has the opportunity to benefit from the continued
domestic demographic changes and the portion of GDP
that will be directed toward healthcare spending, indus-
Portfolio Builder continued
try innovation and its own international expansion initia-
tives. Additionally, we are optimistic about a few of the
companys recent acquisitions: Healthcare Solutions, an
oncology services firm; Kinray, a drug distributor serving
over 2,000 independent retail pharmacies in the NYC met-
ro area; and Yong Yu, a leading pharmaceutical distribu-
tor in China. We think these deals will provide material
contributions toward EPS growth over the coming years.
We also view CAHs free cash flow as solid, providing
management financial flexibility to invest in the business,
while still returning value to shareholders via dividends
and share repurchases. CAH shares currently trade with
a P/E multiple less than 13 and a dividend yield of 2.5%.
CSX Corp (CSX)
CSX is a global freight transportation company, mov-
ing cargo by railroad, intermodal, container and barge.
Principally operating in the eastern half of the United
States, CSX should benefit from a broad spectrum of mer-
chandise traffic and from relatively stable fuel surcharge
revenue. While the sector has suffered from weak domes-
tic coal shipment volume and associated soft pricing, we
maintain that CSX will be able to weather the storm and
believe that the worst of the coal challenges may be upon
us. CSX recently reported Q4 financial results which in-
cluded expectation-beating earnings per share of $0.43 on
revenue of $2.9 billion. The company is well-positioned
for long-term growth and continues to benefit from pric-
ing and productivity gains. We also like that CSX contin-
ues to cut costs, while the stock is attractively valued,
sporting a P/E ratio of 12 and a dividend yield of 2.5%.
Intl Business Machines (IBM)
IBM is a leading software systems and computer solu-
tions company with a global footprint. The company re-
leased fourth quarter results that spoke to its strong busi-
ness model, which actively targets sustainable cash flow
and profit. Impressively, IBM just closed its 10th straight
year of double-digit earnings growth and recognized $18.2
billion in free cash flow for 2012, which is $12 billion bet-
ter than a decade ago. Earnings topped expectations and
the company saw successful launches in high-end sys-
tems, while it began to reap rewards from its recent glob-
al growth initiatives. Looking to 2013, IBMs CFO, Mark
Loughridge, explained, We will continue to drive our key
plays and shift towards higher value content. Well contin-
ue to invest in the growth markets, which now represent
over 20% of total services revenue, and its where we see
the most opportunity for growthOur profit and margin
performance will continue to benefit from the work we
are doing with research and software to infuse more and
more IP into our offerings. Happily, stock repurchases
for 2012 topped $10 billion, reducing the share count by
4%, while $8.7 billion is still remaining in buyback autho-
rizations. While we see the potential for a soft business
environment in some parts of the world, namely Europe,
we believe the future looks bright with IBMs goal of $20
in EPS by 2015 still firmly on track.
Intel (INTC)
Intel, the leading global semiconductor manufacturer,
supplies advanced technology solutions for the comput-
ing industry. Its primary products include microproces-
sors, chipsets and motherboards. The fourth quarter
proved to be positive, though the company conceded that
a weak macroeconomic environment and soft PC demand
were noticeable headwinds for 2013. We expect to see con-
tinued growth in demand for advanced chips from Intel,
particularly for data centers and for Ultrabooks, both of
which require high performance and low power consump-
tion. According to Intel, the volume of notebooks shipped
that are less than an inch thin has risen 18 times in the
last year in the U.S. and seems likely to keep that pace
in the upcoming year. Such a forecast bodes well for the
company, we believe, given its sizeable edge in the mar-
ket. To date, none of Intels competitors have mastered
the space-saving and energy-efficient three-dimensional
transistor, nor do any appear to have it in the near-term
pipeline. Keeping step with Moores Law, the company is
set to launch its Haswell line of processors, which Intel
believes will make significant improvements upon the
previous generation of processors by adding new archi-
tecture, or coding language, thereby improving speed,
power usage and overall usability. We like that Intel has a
diversified revenue stream, low levels of debt, a competi-
tive assortment of products and a 4.3% dividend yield.
KeyCorp (KEY)
Cleveland-based KeyCorp is one of the nations largest
bank-based financial services companies with assets of
$89.2 billion. Key provides deposit, lending, cash manage-
ment and investment services to individuals and small
and mid-sized businesses in 14 states under the name
KeyBank National Association. Key also provides a broad
range of sophisticated corporate and investment banking
products, such as merger and acquisition advice, public
Portfolio Builder continued
and private debt and equity syndications and deriva-
tives to middle market companies in selected industries
throughout the U.S. under the KeyBanc Capital Markets
trade name. We continue to be encouraged by KEYs im-
proving credit quality, loan growth, increasing net inter-
est margin and commitment to meaningful cost cutting.
Additionally, approximately 40% of KEYs revenue comes
from fees, which should help the bank provide a more
consistent income stream going forward. KEY trades for
less than 11 times consensus earnings estimates and of-
fers holders a dividend yield of 2.1%.
NVIDIA (NVDA)
NVIDIA is a top-tier designer, developer and marketer
of three dimensional graphics processors for personal
computing. While a long-time leader in its industry, NVDA
announced its first venture into the portable hardware de-
vice market when it unveiled the Project Shield mobile
gaming platform at the Consumer Electronics Show last
month. In our view, the platform is unlikely to become
the next Playstation, but it should serve well as a proof
of concept device that the company will be able to use to
gain valuable data when designing its mobile chips. Addi-
tionally, NVIDIA recently released its Tegra 4 mobile pro-
cessor line, which boasts a quad-core CPU, reduced power
consumption and 72 graphics processing cores. While the
company may see a slow ramp as manufacturers get on
board with the Tegra 4 line (so far only Toshiba has signed
up), we believe that the performance superiority of the
chip will lure many, especially considering that the pro-
cessor runs faster than any offering from its competitors.
The companys inexpensive valuation and 2.4% dividend
yield offer an attractive entry point.
NY Community Bancorp (NYCB)
The holding company for New York Community Bank
and New York Commercial Bank, NYCB is a leading fi-
nancial institution with 274 branches in the New York/
New Jersey metropolitan region, as well as locations in
Ohio, Florida and Arizona. NYCB has assets of $44.1 bil-
lion, with a focus on multi-family loans (representing
68.2% of total loans) that emphasize apartment build-
ings featuring below-market rents. The banks efficiency
ratio consistently has ranked in the top tier of all banks
and thrifts. Q4 results saw the firm earn $0.28 per share,
slightly missing consensus estimates, but coming in bet-
ter than during the same period a year prior. The quarter
showed record loan production and a continued strength-
ening of asset quality, as non-performing loans shrank to
less than 0.67% of total assets. NYCB offers investors a
whopping 7.5% dividend yield and we contend that this
hefty payout, though large relative to its peers, is support-
ed by a relatively solid balance sheet (the bank exceeds
the requirements for classification as well-capitalized),
reducing the risk of a material reduction.
Royal Dutch Shell (RDS/A)
Royal Dutch Shell is engaged in the exploration, pro-
duction, refining and sale of petroleum products world-
wide. The company continues to see elevated levels of
volatility across its revenue sources, due in large part to
unstable geopolitical environments in many areas of the
world. Additionally, Alaska is proving to be more difficult
to drill than the company expected, forcing more project
delays in the last few months. Given the extreme ecosys-
tem sensitivity in the region, Shell and others must take
extra precautions to ensure there are no oil spills. Despite
the headwinds, management is working hard to keep the
momentum it has built up over the last few years via a
focused capital expenditure plan, which, in particular,
aims to extend the life of assets through innovative tech-
nologies and selectivity in exploration. We believe that
shareholders will benefit from the continued emphasis on
integrating natural gas, deepwater drilling and non-petro-
leum alternative fuels into a larger portion of total rev-
enue. We also like the sub-7 P/E ratio and the 4.1% yield.
Thermo Fisher Scientific (TMO)
Thermo, the largest and most diversified life sciences
company, supplies universities, laboratories and hospitals
with high-end analytical instruments and lab equipment.
TMO is an industry leader in nearly every product cat-
egory, including mass spectrometry equipment, reagents
and consumables. With customers looking to simplify
procurement, Thermos one stop shop strategy is an ap-
pealing choice and the company boasts the largest sales
force in the industry. TMO also has accelerated invest-
ment in emerging markets, as growing demand for food
safety, quality control testing and diagnostic devices pro-
vide growth opportunities. Q4 results were strong, with
earnings of $1.36 per share trumping the Streets $1.28
estimate. We believe TMO is attractively valued and are
positive on its leading positions throughout an $80 billion
market, consistent and heavy investments in research
and development, global growth opportunities, solid free
cash flow generation and strong balance sheet.
 NEWSLETTER PORTFOLIO PERFORMANCE
500
TPS
400
PRU
BUCK
300 MILL
Index
R3000
200
100
0 or completeness of third-party information presented herein.
03 04 05 06 07 08 09 10 11 12 13
Jan YTD 1-Year 3-Year 5-Year 10-Year
Newsletter Portfolios
Buckingham 6.72 6.72 14.48 14.93 -0.15 12.74
Millennium 6.52 6.52 15.83 14.45 4.16 11.54
PruFolio 6.55 6.55 17.94 17.82 5.72 13.57
TPS 6.72 6.72 18.01 15.99 4.28 15.65
Major Indexes
Russell 3000 5.49 5.49 16.90 14.58 4.44 8.55
S&P 500 5.18 5.18 16.78 14.13 3.97 7.92
Dow Jones Industrial Avg 5.91 5.91 12.75 14.28 4.76 8.30
Inception Since Index
Date Inception Return Index
Buckingham 01.21.03 11.98 8.16 Russell 3000
Millennium 12.31.99 8.56 2.74 Russell 3000 dicative of future results, which may in fact result in a loss. See
PruFolio 12.29.00 13.53 3.64 Russell 3000 prudentspeculator.com or contact AFAM at tps@alfrank.com for
TPS 03.10.77 18.47 11.14 S&P 5001
Since The Prudent Speculators launch in March 1977, its 1,772 stock recommendations
have returned, on average, an annualized 17.09%, not including dividends.
As of 01.31.13. All data are total returns, except for that of all recommended stocks, which excludes
dividends. Data for periods greater than one year are annualized. The Dow Jones Industrial Average (DJIA
or Dow) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but in-
cludes financials and other service-oriented companies. The Russell 3000 Index measure the performance
of the largest 3,000 U.S. companies. The Standard & Poors 500 Stock Index (S&P 500) is an unmanaged
index of 500 stocks that is generally representative of the performance of larger companies in the U.S.
1
The Russell 3000 Index lacks sufficient history to match that of Al Franks TPS Portfolio. We therefore
have shown the S&P 500 Index for comparison purposes. SOURCE: Al Frank using data from Bloomberg
TPS Portfolio is Al Franks actual investment portfolio. Though not presently leveraged, it has been so in
the past. Buckingham Portfolio is John Buckinghams actual investment portfolio. Though not presently
leveraged, it has been so in the past. Millennium Portfolio is unleveraged and hypothetical. PruFolio is
unleveraged and hypothetical.
All portfolio returns are calculated on a total return basis and reflect the reinvestment of dividends, if any,
margin leverage and margin interest charges, trading costs and subscription costs. There are inherent
limitations with in hypothetical or model portfolio results as the securities are not actually purchased or
sold. They may not reflect the impact, if any, of material market conditions which could have has an impact
on AFAMs decision making if the hypothetical portfolios were real. Hypothetical performance is shown
for illustrative purposes only and should not be interpreted as an indication of performance of any AFAM
portfolio. The use of leverage magnifies gains and losses and increases risk to a portfolio.
IMPORTANT DISCLOSURES
Nothing presented herein is, or is intended to constitute, specific
investment advice or marketing material. Information provided
reflects the views of Al Frank Asset Management (AFAM) as of
a particular time. Such views are subject to change at any point
and AFAM shall not be obligated to provide notice of any change.
Any securities information regarding holdings, allocations and
other characteristics are presented to illustrate examples of the
types of investments or allocations that AFAM may have bought
or pursued as of a particular date. It may not be representative
of any current or future investments or allocations and nothing
should be construed as a recommendation to follow any invest-
ment strategy or allocation. Any forward looking statements or
forecasts are based on assumptions and actual results are ex-
pected to vary from any such statements or forecasts. No reli-
ance should be placed on any such statements or forecasts when
making any investment decision. While AFAM has used reason-
able efforts to obtain information from reliable sources, we make
no representations or warranties as to the accuracy, reliability
No guarantee of investment performance is being provided and
no inference to the contrary should be made. There is a risk of
loss from an investment in securities. Past performance is not a
guarantee of future performance. Registration of an investment
adviser does not imply any certain level of skill or training.
AFAM is an Investment Adviser, registered with the SEC, is no-
tice filed in the State of CA and various other states, and serves
as editor to The Prudent Speculator and the weekly e-mail up-
dates; (TPS: ISSN 0743-0809). AFAM is sub-adviser to two propri-
etary mutual funds and serves as manager to separate managed
accounts. Many of the securities contained within this newslet-
ter mentioned are analyzed, recommended and transacted in by
AFAM and/or its associated persons for client and personal ac-
counts. It is also possible that AFAM and/or its associated per-
sons may take a position in a security that is inconsistent with
the recommendations provided in TPS or may purchase securi-
ties not mentioned in TPS without notice to its subscribers.
Past specific recommendations: Investment recommenda-
tions provided herein are subject to change at any time. Past
and current recommendations that are profitable are not in-
a list of all past specific investment recommendations. Perfor-
mance and characteristics of AFAM portfolios and securities are
subject to risks and uncertainties. The stocks selected for listing
and discussion in the newsletter were based on proprietary ana-
lytical work performed by AFAM, and not based on performance,
meaning that they are chosen irrespective of profits or losses.
The securities presented do not represent all of the securities
bought, sold or recommended.
Privacy: TPS periodically rents its mailing list to unaffiliated
third-parties. Telephone marketing is prohibited. Subscribers
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should contact TPS by e-mailing tps@alfrank.com.
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scriptions are not assignable. For subscribing, please contact us
at tps@alfrank.com or call 877.817.4394.
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