Gator Small Cap Portfolio
Manager's Commentary
September 30, 2009

The Gator Small Cap Portfolio(GSC) had mediocre performance during the 3rd quarter of 2009.  GSC returned 13.11% versus a gain of 18.89% for the Russell 2000 index during the same time period.  The performance was driven by our higher quality companies lagging higher risk stocks during the market recovery.  

Transactions

9/17/09 - Purchased Raymond James Financial -  We purchased Raymond James at $22.76.  We believe the current environment presents Raymond James a unique opportunity to grow its core business at a low cost as brokers look to leave the major wirehouses.  The main issue at RJF is the credit quality at their new bank subsidiary.  Based on our anlytical work of the loan quality data, we believe the credit quality may not be as bad as we had previously estimated.

9/17/09 - Sold Vantage Drilling - We sold Vantage Drilling $1.62 because we disagreed with management's decision to issue stock to fund the new deliveries.  We did not like the dilution the newly issued stock presented.

9/22/09 - Purchased Allied Capital -We purchased Allied Capital at $3.39 after we learned that they were starting to think about deploying new capital.  We had believed the stock was priced for some degree of financial distress.  If the management is considering deploying new capital, we believe that is strong sign that they've dealth with their financial issues and can take advantage of the attractive current environment.

9/22/09 - Purchased Form Factor - We purchased FormFactor at $24.62 as we come to admire their business model.  We also expect a recovery in the semiconductor market which should benefit the company's business.

9/22/09 - Sold Neutral Tandem -We sold Neutral Tandem at $21.93 as we learned about new entrants into their markets.  We very much like the company's business model and may revisit our ownership position after studying the potential competitive threats.

9/22/09 - Sold Riskmetrics - We sold Riskmetrics at $14.45 as we became concerned about the company's customer base facing severe headwinds and shrinking budgets.

9/22/09 - Sold MSCI Inc - We sold MSCI at $27.83 for the same reasons as we sold Riskmetrics.

Stocks Driving Performance

Bringham Exploration was up 159% during the quarter as credit market conditions eased. The company was able to secure additional financiang to allow it to continue its drilling program on promising acerage in North Dakota.

DineEquity declined 21% during the quarter after disappointing earnings were reported.

eHealth declined 18% during the quarter on a disappointing earnings release in July.