A Survey of Investment Activity, 2009.

• The Fairholme Fund was named Morningstar's "Mutual Fund of the Decade" for the domestic class. I'm very happy and I think it was a shoo-in for the award. It has outperformed almost everything else out there - emerging markets, energy, sector-rotation strategies, etc... And the most extraordinary thing about the fund is that it doesn't require macroeconomic bets. The fund outperforms both because of and despite an aversion to guessing future trends. The only trend the fund plays is the trend that durable, cash-generating businesses bought at attractive prices will outperform the market as a whole. Although I hope we never find out, I am strongly confident that it will prove to be one of the most durable funds in the mutual fund universe if true disaster (i.e. dirty bomb in a U.S. city, severe inflation) one day strikes.
  

• Clear Choice Health Plans received a buyout offer for $26/share. At the time, it was trading for less than $10/share, which is approximately the price I paid for it. I am fortunate that my investment mentality had been enlightened at that point by a not-irrelevant bit of wisdom from Charlie Munger: that if you know what you are doing, then when a great opportunity is identified, a person should commit a significant amount of money to it - regardless of what may be small (but real) risks - and that action will meaningfully improve the financial results of one's lifetime.

• Wellcare Health Plans went on a tear after March, recovering approximately 500% from its low. I believe that it still has significant upside, given that they carry approximately $30 in cash - net of reserves - on their balance sheet. This is not a risky proposition, either; they are trading for 9x free cash flow in an industry with significant growth prospects (or perhaps they will simply be bought during this secular acquisition phase). Indeed, unlocking the value of the cash is quite a contingent upside possibility, not the necessary thesis.

• KSW installs HVAC systems in New York City, so their business fell off a cliff when building activity went into free-fall. Now their backlog has reached near-record levels again and the stock price hasn't recovered. Another story of cash obscuring earnings power. This one was trading for $21m when I bought it, with $14m in cash net of all liabilities. Basically, they were trading for 2x their 2007 earnings number once you backed out the cash. The point of the cash buildup is uncertain (as well as the conditions for it to cease), but the company could probably pay out $10m in cash, the P/E ratio would plummet, and the price would come right back to where it was once people figured out what was happening. Expecting a significant return unless building activity double-dips, and the huge amount of cash limits downside, making the risk/reward profile on this one excellent. (another stock with a similar story and even more cash as a % of market cap is EnviroStar)
  

• Manhattan Bridge Capital makes short-term loans to businesses, secured by inventory, real estate, etc... They are profitable, but the business is trading for 50% of book value, which is primarily comprised of cash and notes receivable. Management's record so far is strong in the arena of lending. Let's see if they can convince investors that the company is worth a premium to book - that would achieve a 100%+ return in stock price.

• I am investing approximately 25% of my cash into a local real estate venture. The base scenario provides me good diversification and a decent return thanks to the power of the most secure type of leverage - real estate mortgages. There are several factors that could provide significant upside, and the diversification effect extends to the exemplary inflation protection that real estate provides.