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The Model Shadow Stock Portfolio is up 55.6% year-to-date compared to 29.0% for the S&P 500 index, as measured by the Vanguard 500 Index fund (VFINX). Figure 1 shows the year-to-date returns as of November 30, 2013, as well as annual returns for one-, three- and 10-year periods.

This has been an exceptional year, and if the Model Shadow Stock Portfolio stays at this level it will be the third-best year in its 21-year history. As you can see in Table 3, the years 2003 and 2009 were both up over 70%.

Many pundits keep predicting a pullback. It may happen, but the market increase has about doubled since the dire predictions began.

We had been running a chart in this column showing the number of first-pass qualifying stocks at my quarterly review. If the number of stocks passing my initial screen each quarter had any predictive value, the market would have fallen six months ago, since very few stocks have been qualifying. Like most possible predictors of future market direction, it has not shown any meaningful guidance. Therefore, we are no longer showing historical figures here in chart form, although we may mention the number of qualifiers when discussing purchases.

Unusual Activity

There have been only a couple of times in 20 years where dramatic news came out right after a stock was purchased for the portfolio and before the purchase was reported to you. This time, it was Fab Universal Corp. (FU). The situation with Fab Universal involved a report of unexpected high earnings for the quarter with very positive predictions for the future. This drove the stock price up dramatically from $4.25 to an intraday high of $11.25. Shortly afterward, short sellers challenged the figures, emphasized the extreme dilution coming, and questioned the validity of the sales. (You can go online to SeekingAlpha.com for the details.) The stock price had dropped to $5.50 by the time we sent out an emergency notice to sell on November 20, and a few days later it stopped trading.

Figure 1. Model Shadow Stock Portfolio vs. Benchmark (Through 11/30/2013)

By the time we indicated our purchase, the stock had increased so much that its price-to-book-value ratio was far above 0.80; based on our rules, it should not have been purchased. If you purchased it on the way down when it qualified again (based on questionable data), I hope our emergency sell message got to you. If it did not, I would recommend selling it when you can, as we did in the actual portfolio.

The story of Fab Universal does present an opportunity to review two guidelines.

First, when we announce a purchase, enough AAII members may try to buy the stock that it moves the price up. This tends to even out and a little patience is usually rewarded. But as pointed out in the portfolio rules, you should not buy the stock if the price-to-book-value ratio goes higher than 0.80 (if there is a shortage of eligible stocks or you already have some of the stock, it is acceptable buy at a price-to-book-value ratio as high as 0.90). You can check the current price-to-book-value ratio in the Actual Portfolio table at the Model Shadow Stock Portfolio page on AAII.com, where the figures are updated in real time (go to www.aaii.com/model-portfolios/portfolio).

Table 1. The Model Shadow Stock Portfolio

	Current Price	52- Week High Low		Market Cap	P/E Ratio	P/B Ratio	Div Yield
Company (Ticker)	($)	($)	($)	($ Mil)	(X)	(X)	(%)	Notes
Alamo Group, Inc. (ALG)	58.71	58.95	31.15	709.2	20.9	2.08	0.5
Alpha and Omega Semicon (AOSL)	7.75	9.30	6.64	199.2	nmf	0.70	0.0	earnings probation (2013 Q4)
CSS Industries Inc. (CSS)	31.14	31.94	20.11	288.9	15.7	1.17	1.9
Ducommun Incorporated (DCO)	25.34	30.98	14.32	273.2	15.7	1.13	0.0
Ennis, Inc. (EBF)	18.54	19.59	13.92	486.1	15.3	1.29	3.8
Five Star Quality Care (FVE)*	4.93	6.87	4.44	238.0	18.3	0.77	0.0	qualifed as of 11/30/2013
Flexsteel Industries (FLXS)	27.66	28.10	18.56	198.6	14.6	1.28	2.2
Gilat Satellite Networks (GILT)	4.45	6.20	4.37	187.0	nmf	0.79	0.0	earnings probation (2013 Q3)
Hardinge Inc. (HDNG)	15.49	16.88	9.27	184.1	15.6	1.07	0.5
Hooker Furniture Corp. (HOFT)	17.08	18.31	13.33	183.7	18.6	1.38	2.3
International Shipholding (ISH)	28.31	32.12	15.95	205.2	12.8	0.71	3.5	qualifed as of 11/30/2013
Key Tronic Corporation (KTCC)	10.52	12.28	8.95	110.8	10.8	1.15	0.0
Kimball International (KBALB)	14.89	15.02	8.48	449.1	23.6	1.38	1.3
LMI Aerospace, Inc. (LMIA)	12.69	23.20	10.81	163.1	16.9	0.76	0.0	qualifed as of 11/30/2013
Marlin Business Services (MRLN)	24.85	28.64	15.46	323.2	21.1	1.70	1.8
Medical Action Industries (MDCI)	8.60	10.07	2.53	141.0	nmf	1.46	0.0
Mitcham Industries (MIND)	17.50	18.41	11.51	224.7	30.2	1.27	0.0
Olympic Steel, Inc. (ZEUS)	28.07	31.68	18.10	307.7	nmf	1.04	0.3
PC Connection, Inc. (PCCC)	21.73	22.34	10.00	568.7	16.6	1.78	0.0
PCM Inc. (PCMI)	9.50	11.96	5.66	111.2	13.2	0.89	0.0
RCM Technologies (RCMT)	6.46	6.97	5.00	79.9	17.5	1.27	0.0
Renewable Energy Group (REGI)	11.37	16.50	5.42	414.5	2.9	0.70	0.0
REX American Resources (REX)	32.74	41.00	17.12	267.4	57.4	1.05	0.0
Rocky Brands Inc. (RCKY)	15.24	19.97	12.56	114.6	10.8	0.90	2.6
Salem Communications (SALM)	8.99	10.14	4.97	224.0	nmf	1.14	2.4	earnings probation (2013 Q1)
Shoe Carnival, Inc. (SCVL)	28.93	29.00	18.80	592.8	19.2	1.88	0.8
Standard Motor Products (SMP)	34.72	39.99	19.03	802.3	16.1	2.30	1.3
TravelCenters of America (TA)	10.63	12.50	4.18	314.3	18.3	0.79	0.0
VOXX International (VOXX)	17.84	18.00	6.21	433.2	14.0	0.96	0.0
Willis Lease Finance (WLFC)	18.23	18.24	11.70	153.7	18.2	0.74	0.0
*Company is new to the portfolio as of 12/2/2013.
Source: AAII’s Stock Investor Pro/Thomson Reuters. Data as of November 30, 2013.

Explanation of Notes

Approaching Size Limit: Stocks are sold if their market capitalization goes above three times the initial maximum criterion. The current market capitalization maximum for initial screening is $300 million. Stocks are marked “approaching size limit” if their current market cap exceeds 2½ times the initial criterion, or $750 million.

Approaching Value Limit: Stocks are sold once their price-to-book-value ratio goes above three times the initial criterion. The current initial price-to-book ceiling is 0.80. Stocks are marked “approaching value limit” if their current price-to-book-value ratio exceeds 2½ times the initial criterion, or 2.00.

Earnings Probation: If the last 12 months’ earnings from continuing operations are negative, the stock is put on probation; if a subsequent quarter has negative earnings prior to 12-month earnings becoming positive, the stock is sold. The date within the parentheses lists the fiscal quarter during which the company first reported negative trailing 12-month earnings.

Qualified as of: Stock still qualified as a buy when the screen was run with current data. Stocks that don’t currently qualify as a buy are held until they meet one of the sell rules.

Second, you should also check the news about the stock to make sure a negative earnings or other disqualifying report did not come out between our purchase date and the date when you are buying. Yahoo! Finance (finance.yahoo.com) or your broker’s website will list such news items. News can push the stock price up or down. If the stock is violating one of the buy rules, do not buy it. If it is not clear what the impact of the news item (tender offer, class-action lawsuit, etc.) will be, avoid the stock. Bad things will occasionally happen, but they tend to be offset by unexpected good things and a diversified portfolio reduces shocks significantly.

Rule Change

Due to the impact that the bull market is having on the overall market capitalization of stocks, we are increasing the maximum market cap buy criterion to $300 million.

This raises our selling point to $900 million (three times the initial maximum) and our warning level to $750 million (two and a half times the initial maximum).

Portfolio Changes

Table 1 shows the current holdings in the Model Stock Portfolio.

We sold Fab Universal on an emergency basis due to uncertainty about the validity of their data. In the past, we have eliminated Chinese stocks; in the future, we will eliminate U.S.-based companies whose main business is in China as well.

Table 2. Fourth-Quarter 2013 Transactions

Company	Reason
Buy
Five Star Quality Care, Inc. (FVE)

Purchased Additional Shares With Excess Cash
LMI Aerospace, Inc. (LMIA)

Sell
Addus Homecare Corp. (ADUS)	exceeded value limit
Fab Universal Corp. (FU)	allegations of fraud & corporate misconduct

We also sold Addus Homecare Corp. (ADUS) because it went over the price-to-book limit of 2.40 (three times the initial criterion of 0.80) and is no longer a value stock.

We bought Five Star Quality Care Inc. (FVE) and added to our holding of LMI Aerospace Inc. (LMIA), which still qualified, because we had excess funds and did not have enough cash to buy a full position in September when it was initially added to the portfolio.

Because of the increase in the permissible market cap to $300 million, (raising the sell requirement to $900 million), we did not have to sell Standard Motor Products (SMP) this month.

Changes are summarized in Table 2.

Looking Ahead

As of this writing, we now know President Obama’s choice for Federal Reserve chairman, and the first reduction in quantitative easing (the Fed’s bond-buying program) was announced just before we went to press. Many gurus believe the stock market will weaken with the tapering of quantitative easing because of investors switching from stocks to bonds. Given that continued tapering will depend on a strengthening economy, any hit to the stock market should be short-lived, particularly if earnings continue to be strong.

The election cycle indicator has been so far off the mark lately that I hesitate to even mention it, but the second year in the cycle (2014) has historically been slightly below the overall average at 11.5%. However, 2013 would have been up only 6.7% based on the first-year election cycle average since 1935, so I wouldn’t take the cycle indicator too seriously.

Table 3. Model Shadow Stock Portfolio

	Average Annual Return (%)			Cumulative Value of $10,000 ($)
	Model	Vanguard	Vanguard	Model	Vanguard	Vanguard
	Shadow	500	Small Cap	Shadow	500	Small Cap
	Stock	Index	Index	Stock	Index	Index
Year	Portfolio	(VFINX)	(NAESX)	Portfolio	(VFINX)	(NAESX)
1993	32.3	9.9	18.7	13,230	10,989	11,870
1994	2.0	1.2	-0.5	13,492	11,118	11,810
1995	20.7	37.4	28.7	16,291	15,282	15,204
1996	22.3	22.9	18.1	19,927	18,775	17,959
1997	44.3	33.2	24.6	28,756	25,010	22,375
1998	-8.9	28.6	-2.6	26,188	32,168	21,790
1999	0.0	21.1	23.1	26,187	38,945	26,831
2000	-7.7	-9.1	-2.7	24,163	35,418	26,116
2001	21.4	-12.0	3.1	29,325	31,160	26,926
2002	10.8	-22.1	-20.0	32,506	24,259	21,535
2003	73.1	28.5	45.6	56,268	31,174	31,360
2004	43.7	10.8	19.9	80,843	34,530	37,587
2005	17.9	4.8	7.4	95,353	36,180	40,376
2006	29.4	15.6	15.6	123,363	41,832	46,687
2007	-1.8	5.4	1.2	121,166	44,083	47,227
2008	-50.8	-37.0	-36.0	59,582	27,764	30,217
2009	72.3	26.5	36.1	102,665	35,120	41,130
2010	45.4	14.9	27.7	149,238	40,358	52,529
2011	6.3	2.0	-2.8	158,701	41,155	51,067
2012	33.3	15.8	18.0	211,588	47,666	60,274
YTD	55.6	29.0	34.2	329,136	61,467	80,887
Since Incep	18.2	9.1	10.5	329,136	61,467	80,887

The next column on the Model Shadow Stock Portfolio will be in the April AAII Journal. In the meantime, you can follow updates at AAII.com and through the AAII Model Portfolios Update email (sign up at www.aaii.com/email).

Model Shadow Stock Portfolio Rules

Purchase and Sales Rules

Stock purchases must meet these criteria:

No bulletin board or pink sheet stocks will be purchased.
Price-to-book-value ratio must be less than 0.80. If the price-to-book-value ratio moved up a bit since the stock was included in the portfolio, it is still OK to purchase the stock unless this ratio goes above 0.90. (Figure will change gradually with changes in overall market values.)
Market capitalization must be between $30 million and $300 million. (Figure will change gradually with changes in overall market values.)
The firm’s last quarter and last 12 months’ earnings from continuing operations must be positive.
No financial stocks or limited partnerships will be purchased.
No stocks on foreign exchanges or ADRs will be purchased because of different accounting and/or withholding tax on dividends.
The share price must be greater than $4.
In order to reduce trading by avoiding stocks that are forever marginal, any stock that was sold within two years will not be rebought.
Note second item under Stock Order Guidance concerning spreads when buying shares.
Price-to-sales ratio must be less than 1.2. (Figure may change gradually with changes in overall market values.)
Eliminate any company that failed to file a 10-Q (quarterly) report in the last six months.

Stocks are sold if any of the following occur:

If last 12 months’ earnings from continuing operations are negative, the stock is put on probation; if a subsequent quarter has negative earnings prior to 12-month earnings from continuing operations becoming positive, the stock is sold.
The stock’s price-to-book-value ratio goes above three times the initial criterion.
Market capitalization goes above three times the initial maximum criterion.

Stock Order Guidance

These rules are for general guidance. Your own experience, market conditions and the size of the position will impact your own decisions. The results in the model portfolio were obtained while sometimes paying more.
Market orders are not used. Instead, if the quoted bid-ask spread is less than 2% (ask price minus bid price, divided by ask price), place a limit order at the ask price for a buy and at the bid price for a sell. If the bid-ask spread is more than 2%, try to place a limit order between the bid and ask prices to keep transaction costs low. If necessary, build a position gradually. With low commissions, it is often better to place partial orders than to try to establish a large position all at once. Be patient.
The average daily dollar volume should be at least four times the amount needed for your position. This will ensure liquidity to get in and out of the position, even if you need to grow the position gradually and sell gradually. This will result in a varying number of qualifying stocks for each investor.
For NASDAQ stocks, it appears to be better to use day orders. If the order is not filled, it is placed again with a slight adjustment. For NYSE and Amex stocks, good-till-canceled (GTC) orders are used to keep a place in line in the specialists’ books. If the market isn’t close to the desired price, the price is adjusted in a few days with a new GTC order.
If price changes cause a stock to become ineligible (due to changes in price-to-book-value ratio or market capitalization) when only part of the order has been filled, stocks already purchased are kept but the balance of the order is canceled.

Management Rules

Equal dollar amounts are invested in each stock initially.
Decisions are made only at the end of each quarter. In order to react to the majority of earnings reports as soon as possible, quarterly reviews are made in February, May, August, and November.
Best judgment is used for tenders or mergers, but all criteria must be obeyed.
At the end of a quarter, if receipts from stocks sold exceed requirements for new purchases, the excess receipts—up to 5% of the portfolio’s value—are kept in cash until the next quarter. If the excess receipts are greater than 5% of the total portfolio value, the amount above 5% is distributed to smaller holdings that still qualify as buys. Efficient quantities are purchased: If over 10% of the portfolio is in cash, the price-to-book-value ratio can be moved up, but never over 0.90.
At the end of a quarter, if receipts from stock sales are insufficient to buy all newly qualifying stocks, purchases are made in order of lowest bid/ask spreads.
Note that if you are managing your own portfolio, it should consist of at least 10 stocks. If you are developing the portfolio gradually, you can do it stock by stock, but don’t put more than 10% of your funds in each additional stock. More than 20 stocks is not needed until the portfolio exceeds $1 million.

Happy New Year!

Discussion

William Horsfall from NY posted over 12 years ago:

Jim Cloonan certainly deserves the accolades he received at the November meeting. The Shadow Stock Screen alone justifies a lifetime membership in AAII

Joseph Hoffman from TN posted over 12 years ago:

I have been unable to sell my shares of FAB Universal. Trading has stopped. I'm ready to move on and put it behind me. But there is no trading. How do I get out?

Charles Rotblut from IL posted over 12 years ago:

Hi Joseph, Unfortunately, no information that I am aware of has been issued about when the trading will resume on the stock. You can try contacting FAB Universal's investor relations department or its transfer agent. Contact information can be found at http://www.fabuniversal.com/investor-contact/. -Charles

Jeff Goodwin from CA posted over 12 years ago:

How do you view the 10Q changes FVE filed last month? jg

Joel Gitnick from NJ posted over 12 years ago:

Check out this website for class action info on Fab Universal. http://www.rosenlegal.com/cases-221.html

Richard Dimattia from NJ posted over 12 years ago:

I also own shares of Fab Universal and was wondering what the next move should be. Join the class action suit or wait for trading to resume and dump it at at 45% loss. Any thoughts?

William Ford from IN posted over 12 years ago:

When AAII purchases a stock to put in the Shadow Stock Model Portfolio it usually takes two weeks for us to find out about it. Why can't AAII notify its members (sooner) a day after the purchase ??? By the time we find out it has gone up significantly.

Bill R. Vickery from NM posted over 12 years ago:

I would also like an answer to the same question as William Ford (time lag of notification of new stock purchase). The Dividend Portfolio seems to be much more member friendly in that regard.

Bill R. Vickery from NM posted over 12 years ago:

Are there other members with same concerns regarding two previous posts?

Nicholas Caringi from FL posted over 12 years ago:

I would think that an E-mail to AAII clients on new stock addition could be sent out in nano_seconds and would be greatly appreciated.

Charles Rotblut from IL posted over 12 years ago:

Updates to the Model Shadow Stock portfolio are posted to AAII.com on the 15th of each calendar month. A monthly email with updated return information and notification about new transactions is also available. Stocks are added once a quarter, if a transaction occurs. While a stock may rise between the time it is added to the portfolio and the time a transaction is announced during a bull market, a stock may fall during a down or a flat market between the time it is added and the transaction is announced. Subscribers to Stock Investor Pro have access to the Shadow Stock Portfolio screen, which allows them to see an updated list of passing companies on a weekly basis. -Charles

Fred Coffinger from AZ posted over 12 years ago:

Does AAII want to share whether or not they will join any of the many class action lawsuits, and, if so, which one? The deadline seems to be Jan 17, 2014. Thanks.

Harvey Ganz from CA posted over 12 years ago:

How did FVE ever get onto the shadow stock portfolio? From the 10-K report, Earnings Per share for the last year are less than for both the preceding two years. A review of the 8-K reports of 12/19 2013 and 11/27/13 indicates that all prior financial reports are unreliable and that they don't have good financial controls. Why would I buy this stock?

Edward Schaul from OK posted over 12 years ago:

You write in this issue, "we sent out an emergency notice to sell on November 20, and a few days later it stopped trading." regarding the FAB debacle. How was that notice delivered? I'm thinking of setting up a shadow stock portfilio. I'm an experienced investor, and would like to know if that emergency notice was sent out by email or just how it was delivered to your readers.

Charles Rotblut from IL posted over 12 years ago:

Edward, A note was sent out via email and posted on AAII.com. You can sign up for the Model Portfolio Updates here .

Edward Schaul from OK posted over 12 years ago:

Thanks, Charles, I will sign up right now. Appreciate the help.

James Cloonan from IL posted over 12 years ago:

Regarding FVE It passed all requirements on 12/2/13 when purchased. It has since gone up 18% and would not qualify because p/b now not available and would likely be too high. The problems with past financial reports seem to indicate improved restatements. It was profitable 0n 12/2 on a quarterly and annual basis. Things do change from time I buy and time you find out. You can do the analysis yourself on an ongoing basis buy your selections might be different sometimes if their are multiple qualifying stocks. James Cloonan

Ken Jones from FL posted over 12 years ago:

Ya, I'm stuck with FU, which seems to be appropriately named.

Bill Rusk from Ohio posted over 12 years ago:

Do "passing" Shadow Stock companies pass all the rules, including ADR's & foreign exchanges? Some of those on the passing list look like Chinese companies to me.

Vaughan from NZ posted over 12 years ago:

Can someone let me know what the premise is behind using 0.8 or 0.9 price to book value? Is this set with reference to the general market (i.e. companies with P/BV in the bottom 20%)or is it a figure considered 'good value'? Why not use 1.0 or even 1.5? Thanks all

James Mate from OH posted over 12 years ago:

Regarding changes in the model shadow stock portfolio, if we got the information 2 weeks sooner, the market would move against us 2 weeks sooner. These stocks are so thinly traded that AAII can move markets when they announce buy and sell decisions. It's then up to us to decide whether to act when we receive the info, already having had the market move against us, or to wait a while, hoping the price will revert to the norm. They can't do everything for us. As long as they are the ones who lead, and we are the ones who follow, a good argument can be made that we cannot duplicate their results. After all I've been through, if I ever make any money at this game, I'll be thankful.

Carol Krausz from IL posted over 12 years ago:

what is happening with VOXX?

James Mate from OH posted over 12 years ago:

With regard to VOXX, it's probably earnings related. Though they beat estimates on earnings per share, management lowered sales guidance. Nothing horrible. I took it as an opportunity to add a few shares, even though AAII has a restriction on it.

Richard Orwoll from NC posted over 12 years ago:

Is the Shadow Stock Portfolio intended to be a realistic example of the results an AAII member can expect to experience by following the trades executed by AAII? If so, I would suggest that AAII notify members of the intention to execute a trade before the actual execution. This would expose the Shadow Stock Portfolio to the same challenges as the rest of us.

S Burrill from MI posted over 12 years ago:

I concur with Bill Vickery. Does AAII have adequate staff to handle ssuch issues as this?

James Mate from OH posted over 12 years ago:

Richard - That's an interesting notion, that AAII announce its intention before the actual execution. But it can't be done. The AAII membership may have so great an impact on the price of a stock, and on one of the variables in the purchase rules (such as price-book value ratio), that the stock no longer satisfies the rules and can't be purchased by AAII. See Mr. Cloonan's note above "Regarding FVE...Things do change from the time I buy and the time you find out. You can do the analysis yourself. Your buy selections might be different." Leaders lead. I don't want them to abdicate that role. The model shadow stock portfolio is meant to be just that - a model. They've always encouraged us to think on our own. The question then becomes whether we can capture enough of the gains so that following the portfolio is more profitable than acting on our own. I am hopeful that we can.

Richard Orwoll from NC posted over 12 years ago:

James - I agree with much of what you say. Indeed there could be times when the Shadow Stock Portfolio (SSP) would not be able to obey the rules and purchase a recommended stock. This is the same situation encountered by a typical AAII member following the AAII selections. This brings me back to the question of whether the model portfolio is intended to give us a realistic estimate of the results a typical investor following the SSP recommendations would obtain. I would be interested in seeing the performance of an SSP without the tail wind of advanced purchase. The fact that the AAII SSP might not be able to buy one of its own recommendations does not bother me; that makes it a better estimate of the results to be expected by AAII members. If the SSP is not intended to be an example of typical results, I’m not sure what it is – perhaps a limiting value on the high side of performance.

Charles Rotblut from IL posted over 12 years ago:

Our Stock Investor Pro screening program has a Shadow Stock screen built into it. This screen gives you a weekly update of the passing stocks. Though you may end up selecting different stocks than appear in the actual portfolio, those of you concerned about the delay of when transactions are announced will have access to a more frequently updated list of potential buy candidates.

Fred Coffinger from AZ posted over 12 years ago:

Well, it's been a week since I asked if AAII planned to join any of the many class action lawsuits against FU and no response. I'm surprised, and a bit miffed at your silence. Seems to me like you could at least answer the question. As I read it, the drop dead date to join one of them is 1-17-14. This is the 14th. Time is running out. Hopefully you will see fit to respond. Thanks.

James Merritt from OR posted over 12 years ago:

Is there any chance FU will recover? Or is it clear that this was a fraud? It may affect tax deductions for worthless securities and is important. With trading stopped the loss occurred in 2013 I think. If deducted then any recovery would be income. I got the notice, but couldn't act on it so am holding the shares in digust.

Charles Rotblut from IL posted over 12 years ago:

Fred, We (AAII) did not realize a loss in FAB Universal and will not be joining the lawsuits. I suggest reading the press releases from the law firms carefully. I saw three saying the January 17, 2014 deadline is to be a lead plaintiff. The law firms are seeking some one with a large financial stake in the stock. -Charles

Fred Coffinger from AZ posted over 12 years ago:

Thank you very much.

J Stensvold from MN posted over 12 years ago:

I have found it easy to run the Shadow Stock Screen and build my own portfolio. The rules are pretty straight forward and I find that I can do the research in just a few hours each quarter. My portfolio is not identical to the AAII portfolio but contains most of the same companies. By doing the research myself, I am not waiting for the announcement of the purchases. FAB Universal was one of the companies that showed up when I did my screen. Fortunately, I had a similar experience with a US company doing business in China in 2012, that was accused of fraudulent accounting. I got out of that with a 30% loss and vowed never to buy a company whose sole business was in China. I was also suspicious that the stock symbol of FU was a warning!!

Harry Ploss from TX posted over 12 years ago:

Shadow Stock returns and Beta really picked up since 2002. Returns were pretty mediocre from 1993-2002. Is that largely a Small stock effect or was there a change in risk profile of the shadow portfolio??

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