Portfolio Update January 31, 2017 Jeffrey Lorden Investment Management Academy

Current Holding: Flexsteel Industries (FLXS) Long 500 shares Cost basis of $43.3045 Purchased on 11/5/2015 Recommendation given by Michael Migut & Ari Lazar Gave Fair Value of $56.58 Currently trading at $51.20 Current Holding: Flexsteel Industries (FLXS)

Value Investing Might be asking: why only 1 holding? “The stock market is a no-called-strike game. You don’t have to swing at everything – you can wait for your pitch” – Warren Buffett “It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price” – Buffett Value investors wait for a great company, selling for a decent margin of safety to the estimated fair value Don’t swing at GOOD pitches, wait for the GREAT ones! Value Investing

Ben Graham’s Mr. Market Actual Business Cycles (good year, bad year) Market Price (over- and under-optimism) Ben Graham’s Mr. Market

"Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market.“ – Ben Graham Ben Graham

Manufactures and sells wooden & upholstered furniture Market Cap: $419 million (small-cap) Sells entirely within US 2 Segments: Residential & Commercial Products include sofas, tables, desks, rockers, chairs, etc… For entire pitch, see: https://www.business.illinois.edu/finance/rcmp/IMA- Research.aspx?Cat=Portfolio Flexsteel Overview Source: Bloomberg

Performance Source: Yahoo!Finance

Company News Why the huge dip in October 2016? (lost 19%) Reported 1Q Earnings Lowered guidance for CapEx Revenue was down 11.4% year over year Forecasted weak demand EPS was down year over year Why the quick recovery? (spiked 45% in month following election) Trump rally Expecting fiscal policies will boost growth Company News Source: Bloomberg

Company News Why the recent decline? Over-optimism? Correction to more reasonable levels? Lost 8% since 1/25/2017 Will report 2Q results ending 12/31/2016 on February 2,2017 (after market closes) Expect some volatility as FLXS has been volatile around earnings Someone else quick update? Company News Source: Bloomberg

Performance As of 1/23/2017… FLXS S&P 500 Russell 2000 Price Return: 23.04% Total Return (including dividends): 25.49% Annualized Return: 20.47% S&P 500 Total Return: 10.63% Russell 2000 Total Return: 15.14% Performance Source: Bloomberg

Keys to Success (At Time of Pitch) Source: Bloomberg

Keys to Success (At Time of Pitch) Source: Bloomberg

Keys to Success (At Time of Pitch) Source: Bloomberg