Summer 2007

Japan Tobacco is making strategic acquisitions, such as Gallaher in the UK, which is expected to enhance the company's size and profitability. The acquisition is seen as lucrative given their previous cash holdings earning low interest rates.

Imperial Tobacco is recognized for its excellent management and capital allocation strategies, having the largest market share in the UK and a history of smart acquisitions and stock buybacks.

Berkshire Hathaway has proven to be a great long-term investment, not only financially but also intellectually, as studying the company has improved investment thinking.

Footstar, Inc. emerged from bankruptcy with a large cash balance and no outstanding debt, making it an attractive investment opportunity. The company has significant net operating loss carry forwards that provide a tax shield for potential acquirers, and its proprietary brands, particularly Thom McAn, hold substantial value. The adjusted present value of the company under a liquidation scenario suggests a favorable risk-reward profile for investors.

Ainsworth operates in a highly cyclical industry that faces substantial overcapacity and deteriorating demand prospects. As a high-cost producer in a commodity industry, the company suffers from competitive disadvantages and is at risk of burning through its cash and availability in approximately one and a half years unless OSB pricing conditions improve dramatically.