Disclosures

Important Disclosures

 Copyright © 2008, GARP Research & Securities Co. All rights reserved.

GARP Research & Securities Co. (“GARP Research”) is an independent research firm whose core business is equity research for institutional clients. GARP Research is a dually registered broker dealer & investment adviser, a member organization of FINRA & SIPC, and an accredited member of the Investorside Research Association. GARP Research and its affiliates (Weedflower sm, Inc. and GARP Capital, LLC.) are under common ownership and control. Weedflower sm, Inc., a registered investment advisory firm, manages money in separate accounts. One of these accounts is the Gaineswood Fund, LP. GARP Capital, LLC is the general partner for the Gaineswood Fund, LP.

Material Conflicts of Interest

GARP Research and its affiliates do not hold positions that exceed 1% or make a market in any class of securities of the subject company.

Our salespeople, affiliated investment advisers, and other professionals, excluding research analysts, can provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed in our research reports, and may make investment decisions that are inconsistent with the recommendations or views expressed in our research reports.

The table below lists all holdings of GARP-rated stocks by GARP Research analysts and/or their household members. Outside of this disclosed ownership, the analysts are not aware of any other material conflicts of interest.

 

Analyst Ownership in GARP Recommended Securities
Analyst Ownership
Brett Carson Cosi, ICON Plc., International Rectifier, PPD Inc., Synopsys, Sangamo, Flextronics
Seth Dadds Ameritrade, Cree, E*TRADE, Illumina
Rob Furlong Analog Devices, Cosi, Flextronics, Sangamo, Taser International
Alastair Mackay None
George Sakellaris Gevity HR, Cree, EW Scripps, Scripps Networks Interactive, International Rectifier, Sangamo, Cosi, Macrovision Solutions

Meanings of Ratings

GARP Research rates companies as BUY, NEUTRAL, and AVOID (SELL). The rating methodology permits richer valuations when faster rates of earnings growth are expected (see “Ratings Matrix” table below). BUY rated stocks generally have a combined “Growth Score” and “Value Score” of less than six, NEUTRAL between six and nine, and AVOID rated stocks nine or more. Another important consideration in determining the rating is whether the underlying company possesses characteristics consistent with the investment philosophy of GARP Research. This includes an assessment of quality (through competitive analysis and current or projected return on invested capital) and control of risk (determined by technical and quantitative factors). Ratings may also take into account growth beyond terminus years.

Ratings Matrix

Earnings Growth*

Growth Score

Out-Year P/E**

Value Score

>17%

1

<10x

1

14-17%

2

10-12x

2

12-14%

3

12-14x

3

9-12%

4

14-16x

4

<9%

5

>16x

5

*Annualized earnings growth over a two to four year time horizon.

**Out-year P/E is determined by the current price divided by our diluted EPS estimate two- to four-years forward.

Distribution of Ratings

The percentage of BUY, NEUTRAL, and SELL ratings on May 29, 2008 was 69%, 30%, and 1%, respectively. The percentage of BUY, NEUTRAL, and SELL for subject companies for whom GARP Research has provided investment banking services in the past 12 months is 0%. GARP Research and its affiliates do not conduct corporate finance activities.

General Risks

Some of the general risk factors that pertain to forecasts included in our research are as follows:

  • changes in industry fundamentals with respect to customer demand or product/service pricing could adversely impact expected revenues and earnings,
  • issues relating to major competitors, customers, suppliers and new product expectations could change investor attitudes toward the sector or this stock,
  • unforeseen developments with respect to the management, financial condition or accounting policies or practices could alter the prospective valuation, or
  • external factors that affect global and/or regional economies, interest rates, exchange rates or major segments of the economy could alter investor confidence and investment prospects.

There may be instances when fundamental, technical, and quantitative opinions may not be in concert with our research publications.

 

Other Disclosures

This research is for clients only. The information contained herein has been obtained from sources believed reliable but is not necessarily complete and accuracy is not guaranteed. Opinions expressed are subject to change without notice and do not constitute solicitation of orders. We, our affiliates, and any officer, director or stockholder or any member of their families do not accept responsibility or liability for any direct, indirect, special, consequential or other losses or damages of whatsoever kind arising out of our research publications.  The information in our reports is for information purposes only and is not intended to provide tax, legal or investment advice. You should not rely on any material contained in our reports and should seek independent advice wherever necessary. Any decisions you make based upon any information contained in our reports or otherwise are your sole responsibility. Past performance is not indicative of future results. Additional information on recommended securities is available upon request at (410) 764-1300.

 

Dissemination of Research

Our research publications are available via our web site http://www.garpresearch.com. Institutional clients may also receive our research via Thomson First Call, Reuters Multex, Bloomberg, Capital IQ, Factset, and Research Direct. All of our research is made widely available at the same time to all GARP clients entitled to our research.

The information provided herein may be displayed and printed for your personal, noncommercial use only. You may not reproduce, retransmit, distribute, disseminate, sell, publish, broadcast or circulate the information to anyone, without the express written consent of GARP Research.

The Investorside Research Association certifies its members have no investment banking conflicts.

 

 Analyst Certification

All of the views expressed in the report accurately reflect the personal views of the research analyst about any and all of the subject companies. No part of the compensation of the research analyst named herein was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst in this report. Neither the research analyst nor a member of the analyst’s household serves as an officer, director or advisory board member of any company mentioned in the report.