MF Global Ltd. (MF)

maxprofit pick. Outperform.

A series of fortunate events over the last year or so has provided patient, opportunistic investors looking beyond the next twelve months with an opportunity to purchase an unimpaired franchise at a gigantic discount to intrinsic value. These events include...

A 150m loss by a "rogue" trader trading wheat futures, fears concerning the refinancing of a 1.4B bridge loan, an interest rate squeeze that ended up costing MF roughly $18M pre tax, and last but not least the markets shoot first, ask questions later attitude regarding all things financial. Taken together, the events listed above culminated in MF's common equity being driven down to a fraction of its tangible book value.

Now that these concerns have abated and it has become clear that MF's normalized earnings power remains intact, investor's have an opportunity to earn a few hundred percent as the smoke clears and MF returns to a more appropriate valuation. With a TBV of $8, and earnings power over the next few years of at least $1...an $8 to $12 price target represents what I believe to be conservative multiples to those values and hence a decent estimate of intrinsic value.

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WHO-Man was to come up with a list of stocks that would pass this simple test: If you were to look at the list in July 2004, you'd say about each entry: "Boy, I wish I'd have bought that five years ago, and I'd sure be willing to hold it for another five years."

When I decided to put together this more-aggressive version of the blue chips in my 50 Best Stocks in the World portfolio, I asked for help from readers in finding the 50 best blue chips of 2004. About 2,500 people cast ABOUT 12,000 votes for the original Future 50. In the first four years of this portfolio I also asked for help in my annual revisions of the portfolio. The final list was a combination of my own picks and those that scored well in the reader surveys. In the last three years, in an effort to improve returns and reduce volatility, I've taken over the annual drops and adds. For better or worse, the portfolio is now pretty much my work. The membership of this portfolio is updated annually: the last time on July 25, 2007, my

B-DAY.

Inclusion in this portfolio indicates that I believe this stock is a good long-term investment. It is, however, not a recommendation to buy the stock at its current price. On a schedule that is ideally quarterly but is in practice much more erratic, I note up to 10 stocks that are Best Buys for new money at the time of the update. At the time of the last update, I made seven buy recommendations. For the 12 months that ended July 19, 2007, the Future Fantastic 50 portfolio gained 31% versus a gain of 26% for the S&P 500, ($INX) and 25% for the Nasdaq Composite, ($COMPX). For the fourth year in row this portfolio beat both the Nasdaq and the S&P. For the 12 months that ended July 17, 2006, the Future Fantastic 50 portfolio gained 6.2%, well ahead of -2.8% loss for the NASDAQ Composite and the 3.1% gain for the S&P. For the 12 months that ended in July 2005, it was a 21.8% gain for the Future 50, 12.3% for the Nasdaq and 10.5% for the S&P 500. In 2004, the numbers were 12.9% for the Future 50, 10.2% for the Nasdaq and 11.1% for the S&P 500. For the eight years since the start of the Future 50 portfolio in July 1999 -- just a year before the bear market hit in March 2000 -- it is now up 12%. That's a substantially better than the 3% return in the Nasdaq, but trails the 17% return on the S&P 500. This portfolio is clearly volatile, and these stocks are best suited for aggressive investors and even then should be owned as the edge surrounding a more conservative growth core.

7/24/07 Price

Since 7/24/07

Affymetrix Inc AFFX 24.35 10.43 -0.09 -57.17%

Alvarion Ltd Buy ALVR 10.67 6.50 0.11 -39.08%

TD Ameritrade Holding Corp AMTD 18.54 19.06 -0.40 2.80%

Analog Devices Inc ADI 36.80 31.65 -0.18 -13.99%

BALLARD POWER SYSTEMS INC BLDP 4.82 3.59 0.06 -25.52%

Carbo Ceramics Inc CRR 41.35 52.84 1.00 27.79%

Capital One Financial Ord Shs COF 75.36 42.87 0.07 -43.11%

CANADIAN NATURAL RESOURCES LTD Buy CNQ 69.36 85.59 -0.25 23.40%

Central European Distribution Corp CEDC 37.95 70.37 -2.45 85.43%

CME Group Inc CME 549.00 306.50 unch -44.17%

ChoicePoint Inc CPS 42.40 47.95 -0.02 13.09%

Chiquita Brands International Inc CQB 17.41 14.91 -0.04 -14.36%

DaVita Inc Buy DVA 52.85 53.14 0.11 0.55%

Devon Energy Corp DVN 77.56 98.57 1.06 27.09%

EOG Resources Inc EOG 70.28 106.39 1.77 51.38%

Embraer-Empresa Brasileira de Aeronautica ADR Each represent Buy ERJ 46.03 28.42 -0.87 -38.26%

E Trade Finance Ord Shs ETFC 20.89 3.66 -0.04 -82.48%

First Marblehead Corp FMD 36.01 2.28 0.13 -93.67%

Fuelcell Energy Ord Shs FCEL 7.58 7.75 -0.08 2.24%

First Solar Inc FSLR 107.16 279.27 0.85 160.61%

Gamesa Corporacion Tecnologica SA GCTAF 42.00 49.75 -0.75 18.45%

IMS Health Inc RX 29.66 21.84 0.10 -26.37%

Infosys Technologies Ltd INFY 52.06 38.42 -1.32 -26.20%

Itron Inc ITRI 81.92 92.30 0.74 12.67%

Lan Airlines ADR Rep 1 Ord Shs LFL 16.58 10.51 0.11 -36.62%

Level 3 Communications Inc LVLT 5.82 2.92 -0.03 -49.83%

L-3 Communications Holdings Inc LLL 100.30 92.06 3.04 -8.22%

Maxwell Technologies Inc Buy MXWL 14.31 13.08 0.09 -8.60%

Medtronic Inc MDT 51.71 53.43 -0.67 3.33%

NAVTEQ Corp NVT 55.00 77.97 unch 41.76%

Oshkosh Corp OSK 58.73 18.11 -0.68 -69.16%

Plum Creek Timber Co Inc PCL 40.90 46.07 0.66 12.64%

PMC-Sierra Inc PMCS 8.32 7.88 -0.05 -5.29%

Portfolio Recovery Associates Inc PRAA 61.28 41.07 -0.02 -32.98%

QLogic Corp QLGC 16.96 16.60 -0.12 -2.12%

RF Micro Devices Ord Shs RFMD 6.48 3.21 0.05 -50.46%

SiRF Technology Hldgs Inc Buy sIRF 23.49 4.37 0.02 -81.40%

Suntech Power Holdings ADR Reptg One Ord Shs STP 40.80 36.24 -0.34 -11.18%

Skywest Inc SKYW 22.98 13.46 -0.28 -41.43%

SUNCOR ENERGY INC SU 46.00 54.62 0.51 18.75%

Symantec Corp SYMC 19.54 19.14 0.04 -2.05%

TALISMAN ENERGY INC TLM 19.37 18.71 0.29 -3.41%

Tejon Ranch Corp Buy TRC 41.39 31.15 -0.80 -24.74%

Total System Services Inc TSS 29.49 23.01 0.13 -21.97%

Trimble Navigation Ltd TRMB 32.87 32.55 0.23 -0.97%

Wind River Systems Inc WIND 10.25 11.59 0.13 13.07%

World Fuel Services Corp INT 42.96 22.23 0.07 -48.25%

Xilinx Ord Shs XLNX 26.58 24.36 0.42 -8.35%

Zebra Technologies Corp ZBRA 40.34 31.71 -0.51 -21.39%

Zoltek Companies Inc ZOLT 47.63 22.19 -1.08 -53.41%

Portfolio Performance -11.42%

S&P 500 INDEX -16.57%

NASDAQ COMPOSITE -13.53%

NOW, ITS TIME FOR OIL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

ANYTHING TO DO WIITH AMERICAN OIL MEANS MONEY FOR YOU AND AMERICA.

MY PORTFOLIO WILL MAKE MILLIONS FOR ME AND YOU. OIL OIL OIL OIL OIL OIL OIL OIL OIL OIL OIL.

ANY AMERICAN CO. NAMED ACCORDINGLY WILL DO GREAT THINGS.

IE: AT&T, BANK OF AMERICA, AMERITRADE, ETC...

financial that is strong in futures. bottom fishing time.

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Commodity brokers to the world. Commodity markets are going to be heating up.

308

Expected ipo price of 36-38.

priced at $30.

Trading at $26 on day 2.

Not sure what kind of nasty short hedge fund or conglomerate is pounding the financial IPOs...but it presents an opportunity.

MF has had its trouble no doubt, with a rogue trader and the general financial sector troubles, but at this point the stock is oversold. Should trend upwards by fall.

This pick based on browsing through Hottest 30 days performers on Caps, and cherry picking the best of the best performers. It's worked in the past and I hope it works today

Another victim of skiddishness for financials. Working the back roon for derivative transactions means this company will see no shortage of business in the years to come.

Once the rumors stop flying this will recover nicely.

I wish I could have picked this up today. The drop started on the rogue trader loss. However, the drop was WAY worse than the loss. So here I am...I could cut my losses, cut my losses and re-up, or just hold it. I'll hold since we're not talking about real money.

Every once in a while you come across a stock like MF. Stock is simply punished by bad timing of a rogue trader and the collapse of BSC. Been riding the recovery since $5 and won't stop until it sees $20 by 2nd quarter when the rogue trader issue is put behind it and traders realize BSC has no bearing or connection to MF.

Another trader scandal. Fundamentals still good. Should bounce back nicely.

i don't think our president is carring as much impack as his fool think..........USA or GLOBAL

If you think about it, brokerage is a business that should tend toward monopoly, b/c of the economies of scale available in the business. Just take in-house crossing trades as one example of why this should be the case.

MF Global is a leader in certain markets and will likely stay in that position despite the rocky past few months. In the next year, business will rebound and continue its rapid growth.

There are obviously two competing pieces here. The first is a good story about the rational deployment of capital within the economy. Futures trading is part of the rationalization of the overall market environment. This ground is so amazingly untapped its really hard to quantify. But exponential growth could continue unabated for decades, which is why a lot of the really smart hedge funds have been buying up the exchange stocks despite their ridiculously expensive valuations. Take as an example of this premise, the SWA purchase of fuel hedges. They've been lauded for this step. (Someone please tell me what they are doing now.) And note that this move should stabilize their earnings and hence reduce their cost of capital and market their debt and equity allocations more efficient. (Not that it has yet, but theoretically it should.) But this same effect is writ large all across the economy.

The flip side of this that this almost entirely unregulated market is full of some unknown amount of sh$t. As everyone is now aware, counterparty risk is enormous and absolutely impossible to estimate to any meaningful level of accuracy. (Despite whatever Buffett may have told you at his last annual meeting, he and no else either really has a clue what BRKs counterparty risk is right now.)

While I am skeptical of this highly leveraged business b/c of the fallacy of the VAR model to capture true risk, it is highly unlikely that they'll be bit in ass before I need to find some more space to pick some new stock or the other. And the company is in any easy bounce back call.

ready to go

BANKING SERVICES SHOULD DO WELL AFTER THE MEMORY OF OUR NEAR DEATH BRUSH WITH THE R WORD HAS FADED INTO OBLIVION ( AFTER THE ELECTION WE'LL SEE SMILES)

20 day breakout