After performing his quarterly review of the Model Shadow Stock Portfolio, Jim Cloonan made the following changes:

Sells:

• L.S. Starrett (SCX) was sold after reporting negative quarterly earnings while on earnings probation. The company had been on probation since its fourth-quarter 2016 earnings announcement, when its trailing earnings turned negative. Since then, the company had reported positive quarterly earnings even though its trailing earnings remained negative. The company’s third-quarter 2017 earnings were negative, while its trailing earnings were still negative.


• TravelCenters of America (TA) was sold after violating its earnings probation for a second consecutive quarter. The company’s trailing earnings turned negative following its first quarter of 2017, and its second-quarter earnings were also negative while trailing earnings were still negative.

Buys:

• CPI Aerostructures, Inc. (CVU)

Continue to Hold:

• Ultra Clean Holdings (UCTT) currently has a price-to-book value ratio above 3.0, which is three times the maximum level for consideration for the Model Shadow Stock Portfolio. However, it was not sold from the portfolio because there are no additional qualifying stocks to replace it with [CPI Aerostructures (CVU) and Salem Media Group (SALM), a current Shadow Stock holding, are currently the only qualifying stocks].

We will provide additional information in the June Model Portfolio Update, which will be emailed on June 15. (AAII.com will also be updated to reflect these changes on June 15.) Jim Cloonan will discuss his buys and sells in his column in the July AAII Journal.