LATEST UPDATE

6/22/06

Cabot Benjamin Graham Value Letter Update

Market Update

The US stock market continued to decline during the first 2 weeks of June before reaching a low point on June 14. We should not be surprised at the decline: the indices increased steadily from October 2005 to May 2006. The S&P 500 Index gained 13.6% from October to May. As of June 14, the S&P has declined 8.1% from its May peak. Thus far, the correction is quite normal. The stock market is now oversold and offers some good buying opportunities. High quality stocks are holding up very well. The current bull market started 3.5 years ago, but many high quality stocks have increased little despite reasonable earnings growth. "Blue-chip" stocks have become clearly undervalued.

The Mid-Month Update for June includes complete updates for all of my buy and sell recommendations. The hold recommendation summaries contain abbreviated information that includes current prices, Minimum Sell Prices, and latest earnings reports. If you would like to receive more information on any of my recommendations, please send your request to roy@benjamingraham.net

The Classic Benjamin Graham Value Model

There are no new sell recommendations since you received your June issue.

Buy Recommendations -- Classic Benjamin Graham Value Model

The following stocks are currently recommended for purchase at or below their Maximum Buy Prices: BGG, BMHC, BG, COP, and RS. We advise investors against buying Classic Benjamin Graham Value Model stocks at prices higher than our recommended Maximum Buy Prices.

For each of the following summaries, we present the company name, the ticker symbol, the most recent stock price (close of business on 6/21/06), and the Minimum Sell Price.

Briggs & Stratton (BGG: $30.87) Min Sell Price = $49.68
BGG is the world's largest manufacturer of small engines used in lawn and garden equipment and portable generators. Demand for lawn and garden equipment is expected to remain weak during the next few quarters. But demand for portable generators is very strong following the active hurricane seasons of the past 2 years. EPS were down 2% for the quarter ended 3/31/06, but we expect a turnaround with EPS advancing 15% during the next 12 months. BGG shares are undervalued at 11.4 times current EPS with a 2.5% dividend yield. Buy BGG at $32.96 or below.

Building Materials Holding (BMHC: $27.62) Min Sell Price = $47.90
BMHC is one of the largest providers of home construction services and building components in the US. Recent acquisitions and excellent inventory control are assisting current growth. Sales jumped by 39% in 2005, while EPS more than doubled. We expect homebuilding to slow considerably in 2006. But BMHC will continue to prosper because of new acquisitions, product expansion, and superior customer service. BMHC shares have declined from $49 to $27 because of investors' fears that the housing boom will decelerate quickly. We believe that homebuilding will moderate in 2006, but that BMHC's sales and earnings will continue to grow. BMHC shares are a bargain at 5.6 times current earnings per share (EPS). The dividend yield is 1.5%. Buy BMHC at $27.25 or below.

Bunge, Ltd. (BG: $53.06) Min Sell Price = $83.60
BG is one of the world's leading agribusiness, fertilizer, and food products producers. The company is the largest processor of soybeans in North and South America and the largest oilseed processor and seller of vegetable oil in the world. BG recently announced a joint venture to build an ethanol refinery in Mississippi to produce ethanol from sugar cane to be used in fuel. BG already produces soybean products for biodiesel fuel in Brazil where the country has mandated that soybean oil must be included in diesel fuel in the future. Bunge is doubling its soybean production in China. And in the US, cereal makers are switching to BG's soy oil to eliminate trans fat in breakfast cereals. EPS for 2005 were unchanged from 2004 because droughts caused added volatility to commodity prices. We forecast that EPS will surge in the second half of 2006 and into 2007. BG is an exciting company and the shares sell at just 12.5 times current earnings per share (EPS). The dividend was recently increased by $.01 to $.16 and now yields 1.2%. Buy BG at $57.60 or below.

ConocoPhillips (COP: $59.85) Min Sell Price = $96.96
This leading integrated oil and natural gas producer derives 70% of revenues from the US but operates in more than 40 countries. COP is increasing exploration programs and expanding refineries. The expansion will add substantial revenue and earnings during the next several years. The company reported first quarter EPS of $2.34 compared to $1.77 a year ago, in line with our estimate. COP shares sell at a very reasonable 6.0 times current EPS with a dividend yield of 2.4%. Buy at $64.99 or below.

Reliance Steel (RS: $72.62) Min Sell Price = $154.18
RS is a leading metals service center to the nonresidential construction and aerospace industries. RS buys large quantities of various metals and either distributes the metals in smaller quantities or performs first-stage metal processing services before selling to end users. RS has experienced rapid growth in recent years by acquiring undervalued companies in the highly fragmented service center industry. RS is enjoying strong demand for its products from the commercial construction and aerospace industries. RS reported EPS of $2.14 for the quarter ended 3/31/06 compared to $1.41 a year ago, $.14 better than our estimate. The recent decline in RS shares provides an excellent buying opportunity. RS will split its stock 2-for-1 on July 19. Buy at $86.16 or below.

Hold Recommendations -- Classic Benjamin Graham Value Model

The following stocks have previously appeared in the Classic Benjamin Graham Value Model and are recommended to be held until their share prices reach their Minimum Sell Prices. We have included the latest quarterly earnings per share (EPS) results in the summaries below.

AEGON NV (AEG: $16.36) Min Sell Price = $21.95
Reported $.46 for the quarter ended 3/31/06 compared to $.55 a year ago, slightly below our estimate. Hold AEG.

Centex Corp. (CTX: $48.99) Min Sell Price = $90.70
Sales and earnings are slowing for this leading homebuilder. CTX still has a sizeable backlog of homes under construction but orders for new homes are eroding. We expect EPS to fall from $9.67 for the fiscal year ending 3/31/06 to $7.25 next year. CTX shares sell at 6.6 times forward EPS and the dividend provides a yield of 0.3%. We have lowered our opinion of CTX from Buy to weak Hold.

CharterMac Corp. (CHC: $18.35) Min Sell Price = $24.00
Reported EPS of $.23 for the quarter ended 3/31/06 compared to $.25 a year ago, $.04 below our estimate. We are lowering our forecast for 2006 by $.10 to $1.90. We have lowered our opinion for CHC from Buy to Hold. CHC shares sell at 9.2 times current EPS and the increased dividend provides a generous 9.3% yield. Hold CHC.

CSS Industries (CSS: $27.50) Min Sell Price = $35.09
We have lowered our forecast EPS of $2.30 to $2.00 for the fiscal year ending 3/31/06 based on new guidance from CSS management. We have also lowered our opinion for CSS from Buy to Hold. The current P/E ratio for CSS is 12.3 and the dividend yield is 1.8%. Hold CSS.

First American Corp. (FAF: $41.47) Min Sell Price = $59.07
Reported $.71 for the quarter ended 3/31/06 compared to $.84 a year ago. We have raised our 2006 EPS estimate by $.15 to $4.22. Hold FAF.

LandAmerica (LFG: $61.74) Min Sell Price = $81.74
Reported $1.14 for the quarter ended 3/31/06 compared to $1.68 a year ago, $.06 below our estimate. We have raised our 2006 EPS estimate by $.60 to $7.50. Hold LFG.

M/I Homes (MHO: $30.69) Min Sell Price = $66.75
Reported $1.14 for the quarter ended 3/31/06 compared to $1.16 a year ago, $.36 below our estimate. We have lowered our 2005 EPS estimate by $.35 to $7.00. Hold MHO.

Magna International (MGA: $71.61) Min Sell Price = $94.92
Reported $1.83 for the quarter ended 3/31/06 compared to $1.68 a year ago, $.03 more than our estimate. We have raised our 2006 EPS estimate by $.05 to $7.20. Hold MGA.

MBIA, Inc. (MBI: $58.10) Min Sell Price = $72.72
Reported $1.46 for the quarter ended 3/31/06 compared to $1.52 a year ago, $.06 more than our estimate. Hold MBI.

MGIC Investment (MTG: $64.73) Min Sell Price = $93.67
Reported $1.87 for the quarter ended 3/31/06 compared to $1.89 a year ago, $.25 more than our estimate. Hold MTG.

Old Republic International (ORI: $20.90) Min Sell Price = $27.08
Reported $.49 for the quarter ended 3/31/06 compared to $.47 a year ago, below our estimate by $.01. Hold ORI.

Overseas Shipholding (OSG: $57.30) Min Sell Price = $86.40
OSG earnings per share for the first quarter were $3.32 compared to $4.18 a year ago, $.08 less than our estimate. We have lowered our forecast for 2006 EPS by $.65 to $8.00. Hold OSG.

PMI Group (PMI: $44.09) Min Sell Price = $60.87
Reported $1.10 for the quarter ended 3/31/06 compared to $1.00 a year ago, matching our estimate. Hold PMI.

R & G Financial (RGF: $8.04) Min Sell Price = $18.00
RGF announced that the company will not pay dividends until further notice. We believe that better news lies ahead, but keep in mind that RGF shares are now considered speculative because of the company's accounting problems. RGF also stated that it expects to report earnings for 2004 and 2005 before the end of the summer, which should lift the doubt overhanging the stock. Hold RGF.

Radian Group (RDN: $60.13) Min Sell Price = $84.94
Reported EPS of $1.96 for the quarter ended 3/31/06 compared to $1.23 a year ago, $.53 above our estimate. We have raised our 2006 EPS estimate by $.20 to $6.05. Hold RDN.

Repsol-YPF ADR (REP: $26.43) Min Sell Price = $38.31
REP's Central and South American operations are subject to local political problems. We forecast EPS of $3.45 for 2006 compared to $3.60 in 2005. REP shares sell at 7.6 times EPS and yield 2.5%. We have lowered our opinion for REP from Buy to Hold based on heightened political risks in South America, notably Bolivia. Hold REP.

Scottish Re Group (SCT: $17.13) Min Sell Price = $31.10
EPS dropped to $.25 in the first quarter from $.60 a year ago. The decline was caused by an extraordinary number of large claims during the period. We believe that SCT's setback is temporary and expect growth to resume before the end of 2006. We have lowered our EPS estimate for 2006 by $.25 to $2.45. SCT pays a small dividend, yielding 1.0%. We have lowered our opinion of SCT from Buy to Hold.

Werner Enterprises (WERN: $19.78) Min Sell Price = $26.81
Reported EPS of $.27 for the quarter ended 3/31/06 compared to $.25 a year ago, in line with our estimate. We have lowered our opinion for WERN from Buy to Hold based on valuation concerns. WERN raised its dividend to $.045 from $.04 recently. Hold WERN.

The Wise Owl Model

Sell Recommendations -- Wise Owl Model
BP PLC ADR (BP) dropped out of the 250 Highest Ranked Wise Owl Stocks listing and therefore is recommended to be SOLD. See details below.

This Month's Buy Recommendations -- Wise Owl Model

The following ten stocks are currently recommended for purchase in the Wise Owl Model at or below their Maximum Buy Prices: BBBY, GE, GS, HD, JNJ, NBR, ORCL, TOT, UPS, and WMT. Other stocks that are rated Buy but are not included in this month's Wise Owl Model are: AMGN, APOL, COF, CSCO, CL, FISV, HDI, ITW, NKE, and SYK. We advise investors against buying Wise Owl buy recommendations at prices higher than our Maximum Buy Prices.

For each of the following summaries, we present the company name, the ticker symbol, the most recent stock price (close of business on 6/21/06), and the Minimum Sell Price.

Amgen, Inc. (AMGN: $65.56) Min Sell Price = $103.82
This leading biotechnology company's earnings growth is accelerating. AMGN management recently announced that they will acquire Abgenix for $2.2 billion. We expect rapid growth from the sales of existing drugs, the introduction of exciting new drugs, and the new acquisition. AMGN earnings increased by 23% in the first quarter and will increase by 23% in 2006. The shares sell at a very reasonable 16.7 times forward EPS. We are changing our opinion back to Buy to take advantage of the recent dip in the price. Buy at $63.25 or below.

Apollo Group (APOL: $52.73) Min Sell Price = $84.31
This leading provider of adult educational programs, including University of Phoenix, warned that revenues and earnings will be below estimates because of a slowdown in new student enrollments and increased competition from other adult education providers. EPS for the quarter ended 5/31/06 were $.77 compared to $.77 a year ago. Expenses increased because Apollo spent more money on advertising. The increase in advertising will not lead to better results until later this year. Our EPS forecast for the fiscal year ending 8/31/06 is $2.60 and for 8/31/07 is $3.00. The current weakness in the stock provides an excellent opportunity to buy APOL at $52.92 or below.

Bed Bath & Beyond (BBBY: $36.92) Min Sell Price = $59.19
Retailer of quality domestic merchandise is outperforming the competition. BBBY will continue to buy back its shares and aggressively expand in the US and into Canada. BBBY reported EPS of $.35 for the quarter ended 5/31/06 compared to $.33 a year ago. Same store sales were up a respectable 4.9% for the quarter. Our EPS forecast for the fiscal year ending 2/28/07 is $2.17 compared to $1.92 for 2/28/06. The shares sell at 16.0 times forward EPS. Buy at $35.52 or below.

Capital One Financial (COF: $85.13) Min Sell Price = $119.45
COF is one of the largest issuers of MasterCard and Visa credit cards in the world. COF has been able to create rapid growth by effective advertising to gain new accounts and by using innovative software to track customer credit card use. COF is augmenting its credit card growth with the acquisitions of Hibernia Bank and North Fork Bancorp. The acquisitions will help COF diversify into other consumer lending and banking services and increase COF's customer base. COF reported an increase in EPS for the first quarter to $2.40 from $1.99 a year ago and $.40 ahead of our estimate. COF shares sell at just 10.3 times forward EPS. Buy at $79.76 or below.

Cisco Systems (CSCO: $20.07) Min Sell Price = $29.39
CSCO is a leading maker and seller of router and switching products for computer networks. CSCO acquired Scientific-Atlanta for $5.3 billion. The acquisition will enable CSCO to offer voice, video, and data transmission capabilities. EPS growth will likely moderate through the end of 2006 as CSCO integrates Scientific-Atlanta and other acquisitions. CSCO shares sell at a modest 16.6 times forward EPS. We have changed our opinion back to Buy and raised our Max Buy price to $19.96. Buy at $19.96 or below.

Colgate-Palmolive (CL: $60.34) Min Sell Price = $73.60
Leading consumer products company is undergoing a major restructuring to reduce costs and to increase research and marketing. Earnings are much improved due to the restructuring and to recent product price increases. EPS increased to $.68 in the first quarter, $.02 ahead of our estimate. We forecast an EPS gain of 15% for 2006. CL recently increased its quarterly dividend from $.29 to $.32. Buy CL at $57.40 or below.

Fiserv, Inc. (FISV: $44.91) Min Sell Price = $63.30
This provider of information management systems to the financial industry has made several recent acquisitions and added new products and technologies. In addition, FISV has won several large contracts recently and is experiencing strong growth in all of its businesses in the US and overseas. EPS growth will likely continue at a steady 15% pace during the next 3 years. FISV shares sell at 16.5 times forward EPS. Buy at $42.59 or below.

General Electric (GE: $33.67) Min Sell Price = $48.37
The nation's largest and most diversified industrial company is profiting from management's concentration on higher-margin, higher-growth businesses. GE sold its insurance business and is restructuring all of its remaining six businesses. GE reported first quarter EPS of $.39 compared to $.34 a year ago, in line with our forecast. We expect EPS to increase by 15% in 2006. GE raised its dividend by $.03 to $.25 per quarter recently. The shares sell at just 15.9 times forward EPS. Buy at $35.19 or below.

Goldman Sachs Group (GS: $149.83) Min Sell Price = $191.57
GS is a leading global investment banking and securities company with annual revenues of $50 billion. GS is benefiting from expansion into new global markets such as China. It is also gaining higher fees from mergers and acquisitions. The company has a strong balance sheet and plans to buy back 10% of its common stock in 2006. EPS increased by 26% in 2005 and will likely increase by 50% in 2006. The company has a strong management team that is creating above average growth in all of the company's business sectors. GS is well diversified and can weather a cyclical downturn. Shares have increased substantially during the past year, but we are confident that further gains will occur. Shares sell at just 8.5 times forward EPS. Buy at $145.97 or below.

Harley-Davidson (HDI: $53.87) Min Sell Price = $79.98
Leading maker of heavyweight motorcycles has lowered inventories at its dealers and is now poised to move full speed ahead. HDI reported first quarter EPS of $.86 compared to $.77 a year ago and $.01 less than expected. Delayed product introductions will cause a temporary slowdown in sales during the summer months. HDI increased its quarterly dividend from $.16 to $.18 per share. Shares sell at just 13.3 times forward EPS. The current weakness in the stock presents an excellent buying opportunity to buy a high quality company at a very reasonable price. Buy at $52.50 or below.

Home Depot (HD: $36.66) Min Sell Price = $76.62
Leading home improvement retailer is benefiting from management's aggressive push to renovate stores, add products, and improve service. The company has acquired Hughes Supply for $3.2 billion and will acquire Cox Lumber as part of a move to strengthen its sales to professional builders. The shares sell at only 11.2 times forward earnings and the quarterly dividend was recently increased from $.10 to $.15 per share. EPS increased by a better-than-expected 22% for the quarter ended 4/30/06. We believe that the slowdown in homebuilding will have little effect on HD. Buy at $50.35 or below.

Illinois Tool Works (ITW: $47.93) Min Sell Price = $66.67
Diversified manufacturer is benefiting from an improved industrial sector and from its foreign operations. ITW beat our EPS estimate again in the first quarter with EPS of $1.29 compared to $1.06 a year ago. EPS growth will likely continue at a 15% pace during the next 2 to 3 years. The shares sell at 15.0 times forward EPS. We have changed our rating for ITW from Hold to Buy based on the recent decline in price. ITW recently split its stock 2-for-1. Buy ITW at $45.59 or below.

Johnson & Johnson (JNJ: $61.79) Min Sell Price = $85.32
World's largest diversified health care company's sales and earnings have slowed somewhat as a result of drug patent expirations and competitive pressures. Although JNJ's acquisition of Guidant Corp. did not materialize, we believe that JNJ will continue to aggressively pursue other acquisitions. JNJ has a very strong balance sheet with $17 billion of cash. Earnings for the first quarter increased by 2%, in line with our estimate. We believe that EPS growth will continue at the 5 to 10% level but will increase when JNJ can acquire a rapidly growing company. Shares sell at just 16.0 times forward EPS. Buy at $61.82 or below.

Nabors Industries (NBR: $31.80) Min Sell Price = $54.02
NBR is the world's largest land drilling contractor with 1,600 drilling rigs. We believe that the current oil and gas drilling cycle will continue for at least the next 2 to 3 years. EPS doubled in the first quarter and will likely increase by 60% or more in 2006. NBR shares sell at just 7.6 times forward EPS. NBR has a strong balance sheet with lots of cash. NBR recently split its stock 2 for 1. We believe the recent price decline presents an excellent buying opportunity for investors. Buy NBR at $35.85 or below.

Nike, Inc. 'B' (NKE: $82.75) Min Sell Price = $113.87
Nike is the world's leading designer and marketer of footwear, apparel, and accessories for athletic and leisurely activities. NKE acquired Converse, Inc. two years ago, which provided a big boost to revenues and earnings. NKE sales in China are expected to triple to $1 billion during the next 3 years. Earnings per share increased by 23% for the quarter ended 2/28/06 and will increase by 20% for the fiscal year ending 5/31/06, but will slow somewhat during the 5/31/07 fiscal year. Nike sells at only 14.8 times forward earnings. Buy at $80.98 or below.

Oracle Corp. (ORCL: $14.53) Min Sell Price = $24.85
ORCL is the world's largest developer, manufacturer, and seller of information management software designed to integrate and automate business information and procedures. ORCL has produced remarkably steady revenue and earnings growth despite the volatility of the computer software business. Revenue and earnings growth will accelerate due to the acquisitions of Peoplesoft and Siebel Systems. ORCL recently signed several very large contracts, which will bolster results further. Several exciting new products are underway. We forecast EPS growth of 15 to 20% for the next 3 years. ORCL now presents an excellent opportunity to buy a computer software company with well-defined growth prospects at only 15.2 times forward EPS. Buy at $15.78 or below.

Stryker Corp. (SYK: $44.82) Min Sell Price = $72.52
Leading maker of orthopedic implants, including hip and knee replacements, is experiencing a slight slowdown in growth. SYK reported EPS growth of 17% for the first quarter and will likely increase EPS by 15% in 2006 and by 20% in 2007. The company is currently facing stiff competition and pricing constraints, but exciting new product introductions will help offset lower profit margins. SYK shares sell at 20.3 times forward EPS. Buy at $43.98 or below.

TOTAL SA (TOT: $61.43) Min Sell Price = $88.91
Major French oil and gas producer is benefiting from current high energy prices. We expect energy prices to remain high throughout 2006. TOT has several exciting new projects that will start producing oil and natural gas during the next 2 years. TOT reported EPS of $1.74 for the first quarter, $.09 ahead of our estimate. EPS will likely increase by 5 to 10% in 2006 or more if oil prices increase substantially. The shares sell at 8.2 times forward EPS with a dividend yield of 2.6%. TOT recently split its stock 2-for-1 and distributed 1 share of Arkema SA (TOT's chemical division) to shareholders for each 20 TOT shares held. We recommend selling your Arkema (ARKAY) shares now. Buy TOT at or below $70.39.

United Parcel Service (UPS: $80.30) Min Sell Price = $104.97
UPS is the world's largest package delivery carrier. Management is investing heavily in new technology that will simplify and optimize package sorting and delivery. UPS has introduced new services and products including next-day express. International revenues are accelerating in Europe and Asia. We believe that international growth will continue at a rapid pace as world trade becomes commonplace. EPS increased by 14% in the first quarter. Price increases and international operations will help EPS to grow by 15% in 2006. UPS recently increased its quarterly dividend from $.33 to $.38. Buy UPS at $78.99 or below.

Wal-Mart Stores (WMT: $48.90) Min Sell Price = $74.75
WMT is the world's largest retailer with store locations in many countries. The company's venture into groceries is a big success, which has led to a rapid expansion of the company's supercenter format. EPS gained a better than expected 12.5% for the quarter ended 4/30/06. We expect EPS increases of 10 to 12% during the next 2 years. WMT management announced the signing of a joint venture in China with plans to open hundreds of stores in central China. WMT increased its dividend from $.15 to $.1675 recently. We have changed our opinion for WMT from Hold to Buy based on the current low price of the stock. Buy at $49.77 or below.

Hold Recommendations -- Wise Owl Model

The following stocks have previously appeared in the Wise Owl Model and are recommended to be held until their share prices reach their Minimum Sell Prices. We have included the latest quarterly earnings per share (EPS) results in the summaries below.

Affiliated Computer (ACS: $48.99) Min Sell Price = $86.78
ACS outsources a full range of information technology services. The company continues to add new business to its commercial unit, but its government business has become weak. We are lowering our EPS estimate again for the year ending 6/30/06 to $3.05 per share and for the following year to $3.45. The shares sell at 14.0 times forward (next 12 months) EPS. The transition out of government business is causing a temporary slowdown in earnings. EPS for the quarter ended 3/31/06 were $.62 compared to $.81 a year ago and $.12 below our estimate. We have changed our recommendation for ACS from Buy to Hold.

AFLAC, Inc. (AFL: $46.08) Min Sell Price = $66.63
Reported $.72 for the quarter ended 3/31/06 compared to $.66 a year ago, beating our estimate by $.03. Hold AFL.

American International Group (AIG: $59.82) Min Sell Price = $108.40
Reported $1.29 for the quarter ended 3/31/06 compared to $1.21 a year ago, in line with our estimate. AIG increased its quarterly dividend by 10% to $.165. Hold AIG.

BP plc ADR (BP: $67.01) SELL
BP is the third largest publicly owned oil company in the world. BP dropped out of the 250 Highest Ranked Wise Owl Stocks listing and therefore is recommended to be sold. BP was first recommended in our April 2005 issue at $65.27 and gained 3.8%. SELL BP.

Commerce Bancorp NJ (CBH: $34.61) Min Sell Price = $49.23
Reported $.41 for the quarter ended 3/31/06 compared to $.45 a year ago, below our estimate by $.01. We are lowering our estimate of 2006 EPS by $.15 to $1.65. Hold CBH.

CVS Corp. (CVS: $29.76) Min Sell Price = $35.69
Reported $.39 for the quarter ended 3/31/06 compared to $.35 a year ago, in line with our estimate. Hold CVS.

Danaher Corp. (DHR: $64.04) Min Sell Price = $82.86
Reported $.67 for the quarter ended 3/31/06 compared to $.58 a year ago, in line with our estimate. Hold DHR.

Dell, Inc. (DELL: $24.08) Min Sell Price = $44.65
The world's largest manufacturer and seller of desktop and notebook computers is diversifying its product line and expanding into new international markets. DELL's EPS fell from $.37 to $.33 in the quarter ended 4/30/06. The company warned that growth will slow somewhat in 2006 to less than 10% and accelerate thereafter. We are lowering our EPS forecast for the fiscal year ending 1/31/07 by $.20 to $1.40. We are also lowering our opinion for DELL from Buy to Hold.

First Data (FDC: $45.21) Min Sell Price = $58.12
Reported $.49 for the quarter ended 3/31/06 compared to $.50 a year ago, below our estimate by $.01. FDC announced plans to spin off its $4 billion Western Union business in a tax-free distribution of stock to shareholders. Hold FDC.

Health Management Associates (HMA: $20.67) Min Sell Price = $39.37
Reported $.37 for the quarter ended 3/31/06 compared to $.40 a year ago, below our estimate by $.01. HMA announced that it has acquired 3 hospitals, which will facilitate higher growth in 2006. Hold HMA.

Lennar Corp. (LEN: $44.84) Min Sell Price = $79.38
Reported $1.58 for the quarter ended 2/28/06 compared to $1.17 a year ago, beat our estimate by $.10. Sales and EPS both increased 35%. We are lowering our EPS forecast for the year ending 11/30/06 by an additional $1.15 to $7.75 per share because of the slowdown in homebuilding. LEN is a weak Hold.

PACCAR, Inc. (PCAR: $79.50) Min Sell Price = $97.21
Reported $2.02 for the quarter ended 3/31/06 compared to $1.56 a year ago, $.28 better than our estimate. Hold PCAR.

Pacific Sunwear (PSUN: $19.06) Min Sell Price = $39.36
Announced that May same store sales declined 2.6% compared to an increase of 14.0% for April. PSUN is renovating stores and adding footwear and other accessories to bolster sales. EPS decreased for the quarter ended 4/30/06 from $.23 to $.16 as expected. We forecast that EPS will increase by less than 10% for the year ending 1/31/07 but accelerate to 15% for the year ending 1/31/07. The shares sell at just 10.7 times forward EPS. We lowered our opinion for PSUN from Buy to Hold because of lower earnings. Hold PSUN.

Paychex, Inc. (PAYX: $39.45) Min Sell Price = $53.67
Reported $.30 for the quarter ended 2/28/06 compared to $.24 a year ago, in line with our estimate. Hold PAYX.

SEI Corp. (SEIC: $44.41) Min Sell Price = $59.69
Reported $.54 for the quarter ended 3/31/06 compared to $.42 a year ago, beat our estimate by $.06. We are raising our 2006 EPS estimate by $.14 to $2.24 per share. SEIC recently raised its semi-annual dividend by $.11 to $.12. Hold SEIC.

Total System Services (TSS: $18.93) Min Sell Price = $30.43
Reported $.26 for the quarter ended 3/31/06 compared to $.23 a year ago, in line with our estimate. TSS recently raised its dividend by $.01 to $.07 per quarter. Hold TSS.

Walgreen Co. (WAG: $43.80) Min Sell Price = $60.41
Reported $.51 for the quarter ended 2/28/06 compared to $.47 a year ago, below our estimate by $.02. Hold WAG.

Wrigley (WM) Jr. (WWY: $45.30) Min Sell Price = $60.87
Reported $.42 for the quarter ended 3/31/06 compared to $.46 a year ago, below our estimate by $.02. WWY recently split its stock on a 5-for-4 basis. Hold WWY.

My portfolio allocation recommendation remains the same for June. I recommend the following: (1) Allocate 55% of your portfolio to Wise Owl Model buy recommendations; (2) Allocate 30% of your portfolio to Classic Benjamin Graham Value Model buy recommendations; and (3) Allocate 15% of your portfolio to Special Feature section buy recommendations. If you choose to find additional stocks from the 250 Highest Ranked Wise Owl Stocks section on pages 9 through 12, we strongly encourage you to conduct additional research to determine your stock's potential. If you would like to receive my current opinion on any of the stocks in the Models, Special Features, or 250 list, please send me an email. I will provide you with a stock summary and my current opinion. And it's free!

That's all for now. Look for your July issue of the Cabot Benjamin Graham Value Letter on July 6th. Our Special Feature in July will contain our Midyear Forecast for the stock market and the US economy. I believe that the stock market and economy are at critical junctures. My Midyear Forecast will be clear and concise - I'm sure you'll find it poignant! And as always, we're waiting to hear from you. Drop us an email with your questions and comments.



Cordially,

J. Royden Ward
Author, Cabot Benjamin Graham Value Letter