Gator Small Cap Portfolio
Manager's Commentary
June 30, 2010

The Gator Small Cap Portfolio(GSC) lagged during the 2nd quarter of 2010.  GSC declined 14.25% versus a loss of 10.19% for the Russell 2000 index during the same time period. 

Transactions

4/1/10 - Tandem Neutral -  We purchased TNDM at $16.25.  The stock had declined 30% since we sold it last Fall.  The business generates a high amount of free cash flow and the valuation is compelling.  We believe the company has a defensible competitive position.

4/1/10 - Brink's Home Security - We sold CFL at $42.58.  The company had agreed to be acquired.

6/25/10 - Affiliated Mangers Group - We purchased AMG at $67.06.  We purchased the shares at 10x 2011 EPS estimates.  AMG is a great business with cash earnings consistently reinvested in the business for superior earnings growth.  AMG has recently made several good acquisitions add to earnings in the coming quarters.

6/25/10 - GLG Partners - We sold GLG Partners at $4.35 after the company agreed to be acquired.

 

Stocks Driving Performance

Tivo was down 59% during the quarter as an appeals Court gave Dish Network a surprising review of an earlier court judgement that Tivo had won.  We believe that Tivo will ultimately prevail and begin earning royalty fees from Dish Network and possibly other satellite and cable TV proviers.

InterOil declined 31% after delays in well results concerned investors.  We continue to believe that InterOil sits on a world-class oil and gas deposit. 

First Industrial declined 37% as investors shunned higher volatility financial stocks during the quarter.