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Sunday, 1 January 2006
New ***PODCAST*** for St. Jude Medical (STJ) Weekend Portfolio Trading Analysis
Hello Friends! Here is the LINK for my ***PODCAST*** on St. Jude Medical (STJ) my weekend trading portfolio review.

Bob


Posted by bobsadviceforstocks at 3:47 PM CST | Post Comment | View Comments (1) | Permalink
Saturday, 31 December 2005
"Looking Back One Year" A review of stock picks from the week of October 18, 2004





Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

Besides looking at my actual trading portfolio, as I did in my previous post, I also like to review the stock picks that I discuss on this blog. Stocks, that for the most part, I do not and have never actually owned. But it is from this larger list of stocks and the techniques involved in their selection, that I actually pick stocks for my own portfolio.

Please remember that in practice I sell my losing stocks quickly and completely and my gaining stocks slowly and partially. This will affect performance considerably. For this discussion, I always assume a "buy and hold" approach, which does manage to give me an idea about how the stocks have generally been performing.


During the week of October 18, 2004, I only discussed one stock, Diagnostic Products (DP), which I reviewed on Stock Picks Bob's Advice on October 18, 2004, when it was trading at $42.18. DP closed at $48.55, on December 30, 2005, up $6.37 or 15.1% since posting.

On October 24, 2005, Diagnostic Products announced 3rd quarter 2005 results. Sales for the quarter ended September 30, 2005, grew 7% to $116.3 million from the same quarter in 2004. Earnings for the quarter came in at $17.1 million or $.56/diluted share, up from $16.5 million or $.55/diluted share the prior year. The company showed growth year-over-year, but it certainly appeared to be a bit anemic.

Since this was the only stock discussed on the blog that week, the performance of the stock picks was the performance of DP which was a gain of 15.1%. Thanks so much for stopping by and visiting! If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob



Posted by bobsadviceforstocks at 6:00 PM CST | Post Comment | Permalink
"Weekend Trading Portfolio Analysis" St Jude Medical (STJ)
Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

It's the weekend, and in fact, it's the New Year's Eve weekend! Time for partying and for resolutions. I know there are many things I can do to improve myself this upcoming year. I hope that we all are able to fulfill our own resolutions and find good health and happiness in 2006!

This year I have been using the weekend as a time to take a look at my actual holdings in my trading portfolio. I do this to share with you what I actually own, in addition to the many stocks I like to discuss. And it is also gives me a chance to review my holdings in a more analytic fashion than I might otherwise be doing.

St Jude Medical (STJ) is a special stock for me especially in regards to this blog. On May 12, 2003, I made my very first post on this stock website and discussed St Jude Medical. This is what I wrote:
May 12, 2003 St Jude Medical
This is one I picked up today. STJ is the stock symbol. I do not as I write and publish this own any shares. Am thinking about suggesting this to my stock club. Company had a great day today with a nice move on the upside. Last Quarter was good and the past five years have been steady growth. Closed at $55.30 up $2.92. So the daily momentum helped it make the list.
I "Revisited" St Jude (STJ) on April 20, 2005, when STJ was trading at $39.67.

I currently own 180 shares of St Jude Medical (STJ) which were acquired 10/15/03 with a cost basis of $28.90. STJ closed on 12/30/05 at a price of $50.20, for a gain of $21.30 or 73.7% since my original purchase. As is my strategy, I have sold portions of my STJ position as the stock appreciated, selling 30 shares on 1/28/04 at a price of $69.84 (STJ had a 2:1 split on 11/23/04). I sold 60 shares of STJ on 7/20/05 at $46.54. These shares were sold at the 30% and 60% appreciation levels. My next sale will either be back at the 30% level on the downside or at 90% appreciation, when I plan on selling 1/6th of my existing position.

So how is St Jude doing right today? Let's take another look at this stock and see what we can find out.

First, according to the Yahoo "Profile" on St Jude, the company
"...engages in the development, manufacture, and distribution of cardiovascular medical devices for the cardiac rhythm management (CRM), cardiac surgery (CS), and cardiology and vascular access (C/VA) therapy areas worldwide. It offers a range of CRM products, such as bradycardia pacemaker systems, tachycardia implantable cardioverter defibrillator systems, and electrophysiology catheters; various CS products, including mechanical and tissue heart valves, valve repair products, and epicardial ablation systems; and C/VA products,that include vascular closure devices, angiography catheters, guidewires, and hemostasis introducers."
And what about the latest quarterly result? On October 17, 2005, St. Jude reported 3rd quarter 2005 results. Net sales came in at $738 million, up 28% from $578 million the prior year. Net earnings for the quarter came in at $168 million, or $.44/diluted share up from $91 million or $.25/diluted share in the same quarter in 2004. This was a solid quarter imho for St. Jude.

What about the Morningstar.com information? Does that still look encouraging?

Reviewing the Morningstar.com "5-Yr Restated" financials on STJ, we can see a beautiful picture of revenue growth from $1.2 billion in 2000 to $2.7 billion in the trailing twelve months (TTM).

Earnings during this time have grown uninterrupted from $.38/share in 2000 to $1.36/share in the TTM. Free cash flow has also grown steadily from $355 million in 2002 to $568 million in the TTM.

The balance sheet shows that STJ has $712.5 million in cash, enough to cover all of the $682.4 million in current liabilities and some of the $243 million in long-term liabilities. In addition to the cash, STJ has $1.3 billion in other current assets, meaning that there is over $1 billion in excess of current assets after covering both the current and long-term liabilities combined. This is a solid balance sheet imho.

And what about a chart? Reviewing the "Point & Figure" chart on STJ from Stockcharts.com, we can see a beautiful chart!


The stock moved strongly higher between March, 2001, when the stock bottomed at around $11.50, then hit resistance around $20 in May, 2002. The stock consolidated until December, 2003, when it broke through resistance at around $18 and has moved steadily higher since.

In summary, St. Jude Medical has been a strong stock in my trading portfolio. I was fortunate to buy shares in October, 2003, prior to the latest strong price move higher. I have sold portions of this stock twice as the stock appreciated in value, and am close to a third sale. The latest earnings report is solid, and the Morningstar.com "5-Yr Restated" page also is very strong. To top it off, the chart looks bullish if a bit over-extended.

Anyhow, that's St. Jude! I don't see any reason to sell off the remaining shares and shall be waiting for the stock to either appreciate to another sale point, or backtrack to a sale point on the downside. The price action will determine my future strategy with this company.

Thanks again for stopping by! If you have any questions or comments, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com. Happy New Year! everyone!

Bob



Posted by bobsadviceforstocks at 4:25 PM CST | Post Comment | Permalink
Thursday, 29 December 2005
New ***PODCAST*** for Tutorial on Selling Short: A Reader Inquires
Hello Friends! This is the ***PODCAST*** for the Tutorial on Selling Short.

Please email me at bobsadviceforstocks@lycos.com if you have any questions or comments.

Bob


Posted by bobsadviceforstocks at 8:52 PM CST | Post Comment | Permalink
A Reader Writes "Could you give us a tutorial on shorts?"
Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

Prudy, who goes by the name of Ydurp on Xanga, wrote me a nice comment and included a question. I want to comment on what she wrote and open up this discussion on short interest, and when to sell stock once again. Her comments:
Hi, Bob. I just listened to the Podcast and was pleased to hear my name. Well, it was backwards but it was me. Hey, I think I finally got it; the rationale behind your system. Two things drove it home. The first was your mention of greed:) And I have to say it's been all about greed for me. The second was your attitude about the long haul, how you were okay following the stock all the way up and then back down to your selling point because you had already taken your profits. Hmmmm, I finally got it: a kinder, gentler trader.

As always, I am grateful for your help. I have another question and it is about shorts. I watched Mad Money last night and the guy he interviewed was talking about shorts. I gathered people were betting on a stock's failure but the conversation was geared toward stocks that were good companies that didn't stay down. The focus, and this is where they lost me, was when the stock started to pick up. Could you give us a tutorial on shorts? Is it the same as puts and holds?
First of all, thank you for writing Prudy! And I thought your name was ydurp :).

Let me comment first on what you wrote about selling. I do believe that we all need to get over our "greed" in dealing with stock performance. When a stock appreciates, it is a happy moment for us. We feel vindicated by our decision to buy the shares. In face we feel "smarter" than the next guy. Heck, I love that feeling. In the same way, I hate to have that feeling of loss, literally, when a stock declines.

In my perspective, feelings quite interfere with our rational management of our stocks. When a stock moves higher, we either want to buy some more shares and really make a lot of money, or we want to sell the whole thing and cash in on the jackpot. Have you ever felt that way?

I think it is far more rational to sell a small portion of a stock that has moved higher, and leave the rest to appreciate some more if that is what the shares are going to do. Sort of like picking the ripe oranges off a tree (I just visited my brother in California who has a great set of navel orange trees....is that spelling correct?)

I sort of explain it like the guy that goes to Vegas to gamble at the slots. He (perhaps me..) arrives at the casino with a roll of quarters in his right pocket. He doesn't want to put all of his winnings right back into the machine, so he puts his winnings in his left pocket, only allowing himself to gamble with the right pocket quarters. I try to do the same when investing. Sort of keep selling off the gains, while leaving the original investment on the table. Do you follow?

As far as the "long haul" is concerned, I don't really know how long that will be. Sometimes I have a stock holding for only a day. Others I have held for years. It depends on how the stock performs. Not on how I feel about the company :).

In other words, if the stock doesn't hit any sale points to unload all of the shares (on "bad news"), then I shall continue to own at least a portion of my original investment.

Now let me review once again when I sell a stock on "bad news". First of all if there really is some bad news....like fraud, or product problems, or accounting irregularities, I might just unload my entire position on the spot regardless of the price movement. I always leave myself that out.

Otherwise, after purchasing a stock, I only let it decline 8% before unloading my position completely. If the stock goes past 8% on the loss, well I unload it as soon as I find out :). My son says I should be doing things more automatically. Once again, he is correct, and you might want to set up some automatic sales of stock; I continue to monitor this manually.

Other cases: if I have sold a portion of a holding once on "good news", that is, I sold 1/6 of my position at the first sale point which for me is at a 30% gain, then instead of letting the stock drop to an 8% loss, I sell if it retraces back to the original purchase price, the "break-even" point.

If I have sold a stock more than once, for example if I have sold a stock three times with the latest sale point at a 90% appreciation level, I allow the stock price to only retrace back to 1/2 of the highest appreciation level....in this case, letting it drop back to where I had a 45% gain, and then I would sell ALL of my remaining shares.

O.K....now to your question about shorts.

Short sellers do the opposite of what all of average folk do in regards to stocks. That is they actually SELL the stock FIRST and plan on BUYING the stock LATER to COVER their "SHORT SALE".

Do you follow? I don't sell stocks short, but will not rule out ever doing it in the future. Basically, when an investor or speculator buys a stock first, we are gambling on the possibility that the stock will APPRECIATE in value, so that we can sell the stock and pocket the difference. That is, we make money when the stock price goes UP.

Short-sellers do the opposite. Basically, they ask a broker to BORROW the shares from another account and SELL them. They pledge their own assets against this sale, promising to buy the shares back for the account that is missing the shares at a future date. Meanwhile, they are liable for any dividends the stock might be paying to the investor that has had his shares sold (unbeknownst to him or her :)). A short-seller who SELLS a stock FIRST and plans to BUY the shares LATER is gambling that the stock price is actually going to DECLINE. Since the short-seller could therefore buy the stocks back CHEAPER, he or she could thus pocket the difference and PROFIT from a stock's DECLINE.




Grandad's Bluff Post Card from the 1940's

One of the big downsides to short-selling is that the potential losses of a short-seller are INFINITE! That is if you sell a $5 stock short (you are "short" the sale because you sold it and didn't have any of you own to do so!), you could lose an infinite amount of money as the stock can climb as high as the moon! However, if you BUY a stock at $5, the maximum amount you can lose is just the purchase price (everything lol). But a short seller can lose a MULTIPLE of his investment. That is, if he short-sells a stock at $5 and it goes to $15, and he buys it back at that price, he has lost $10/share....more than the $5 original sale price.

I hope you follow :).

In my own evaluations, I often point out the "short ratio". This is a figure that I glean from Yahoo on the "Key Statistics" pages of each stock. This short-interest, which is usually several weeks old, tells me the number of days of average trading volume it would take for all of the shares that have been sold "short" to be covered. That is, if the short-sellers had to all buy back shares to return them to the original owners, the days worth of volume required. This is calculated by knowing the average trading volume of a stock and the number of total shares that have been sold short.

Personally, I use a three day cut-off for significance. This is an arbitrary cut-off that I set up in my reviews; I just needed some figure to distinguish what seemed to be a lot from a little in the number of days, the short ratio. I infer a bullish indicator from a lot of shares sold short. It is possible that the short sellers know something bad about the stock, which will result in the decline of the stock price. But in the face of good news, like a solid earnings report, or a new contract, etc., knowing that there are a lot of shares "pre-sold" so to speak, is imho, a bullish indicator that they might need to rush to cover to prevent their losses from mounting as the stock price moves higher.

When there are a lot of short-sellers out there, and the stock price moves higher, a "panic" might develop as all of the short-sellers rush to the exits. Which for them, means searching for shares to BUY to cover their pre-sold shares. This is called a SQUEEZE....and that is why I think it is bullish.

Anyhow, that was a pretty long-winded answer. I hope that was helpful. Please remember that I am truly an amateur, so my answer is from that perspective. If you or anyone else has questions or comments, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob






Posted by bobsadviceforstocks at 5:24 PM CST | Post Comment | Permalink
Wednesday, 28 December 2005
New ***PODCAST*** for Reliv International (RELV)
Hello Friends! Here is the ***LINK*** to the ***PODCAST*** on Reliv International (RELV). Thanks for visiting!

Bob


Posted by bobsadviceforstocks at 12:16 AM CST | Post Comment | Permalink
Tuesday, 27 December 2005
December 27, 2005 Reliv International Inc. (RELV)
Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

Looking through the list of top % gainers on the NASDAQ today, I came across Reliv International (RELV) which closed at $15.29, up $1.73 or 12.76% on the day, in the face of a very weak Dow and NASDAQ market. I do not own any shares of RELV nor do I have any options.

According to the Yahoo "Profile" on Reliv International, the company
"...through its subsidiaries, engages in the development, manufacture, and marketing of proprietary nutritional products worldwide. The company’s products include nutritional supplements, weight management products, functional foods, sports nutrition and a line of skin care products. Its nutritional supplements include vitamins, minerals, dietary supplements, herbs, and compounds. The functional foods are products designed to influence specific functions of the body. The company’s products are distributed through a network marketing system."
On November 2, 2005, RELV reported 3rd quarter 2005 results. Net sales worldwide grew 18% to $28.6 million for the quarter ended September 30, 2005, up from $24.17 million in the same quarter last year. Net income increased 32% to $1.67 million or $.10/diluted share, up from $1.26 million or $.07/diluted share in the third quarter 2004 period.

How about longer-term? Examining the Morningstar.com "5-Yr Restated" financials on RELV, we can see that except for a dip in revenue from $61.3 million in 2000 to $52.9 million in 2001, revenues have steadily increased to $111.5 million in the trailing twelve months (TTM). Earnings have also improved from a loss of $(.06)/share in 2000 to $.42/share in the TTM.

Free cash flow has been positive and increasing with $4 million in 2002 and $10 million in the TTM.

The balance sheet also looks solid with $4.9 million in cash and $8.9 million in other current assets, enough to pay off the current liabilities of $10.8 million and pretty much also cover the $3.4 million in long-term liabilities.

What about some valuation numbers? Taking a look at the Yahoo "Key Statistics" on RELV, we see that this is a small cap stock with a market capitalization of only $238.77 million. The trailing p/e is a bit rich at 36.67, but the forward p/e (fye 31-Dec-06) is better at 26.82. I suspect that this is such a small stock that there isn't a PEG listed in Yahoo!

Looking at valuation from a Price/Sales perspective, we find that RELV is moderately valued with a Price/Sales ratio of 1.9. Topping the list in the "Drugs Wholesale" industrial group according to the Fidelity.com eResearch website is First Horizon Pharmaceutical (FHRX) with a Price/Sales ratio of 3.9. This is followed by Axcan Pharma (AXCA) at 2.9, Reliv (RELV) at 1.9, Cardinal Health (CAH) at 0.4, Amerisource Bergen (ABC) at 0.2 and McKesson (MCK) also at 0.2.

Going back to Yahoo for some additional numbers on this company, we can see that there are only 15.62 million shares outstanding. As of 11/20/05 there were 360,740 shares out short representing 3.90% of the float or 10.4 trading days of volume for this relatively thinly traded company. The company pays a small dividend of $.08 yielding 0.60%. The company last split its stock on 11/14/03 when they declared a 5:4 split.

What about a chart? Reviewing a "Point & Figure" chart on RELV from Stockcharts.com:



We can see what looks like a gorgeous chart with the stock moving steadily higher from a low of $.63 in September, 2001, to a high of $16 where the stock is trading now. The graph looks strong and I don't see any evidence of the stock 'breaking-down'!

So in summary, in the face of a weak market today Reliv International (RELV) moved strongly higher. The last quarter was solid, Morningstar.com looks great with growing free cash flow, a solid balance sheet, and steady revenue growth. The P/E is a bit rich, no PEG is reported and the Price/Sales ratio is moderate. In addition, there are a lot of shares out short on this stock. Finally the chart looks very strong.

Thus, this is an interesting stock pick for the blog. I have some reservations about the reliance on network marketing to advance sales of a company, but RELV appears to be handling this quite well. I am not in the market for a stock as I write, but this would be a stock I would be looking at if I were!

Thanks again for visiting. If you have any comments or questions, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob









Posted by bobsadviceforstocks at 11:17 PM CST | Post Comment | Permalink
Sunday, 25 December 2005
"Weekend Trading Portfolio Analysis" Starbucks (SBUX)
Hello Friends! Thanks so much for stopping by and visiting my bloc, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

Before proceeding, I would like to will all of you the Merriest of Christmasses, and the Happiest of Hanukkahs! May you have a wonderful day with family and friends and share the true spirit of these holidays!

One of the things I am trying to do on this blog is to share with you my actual holdings in my trading account and keep you up to date on my actions and thoughts involved in managing my portfolio. I have had the most disciplined trading history since I started doing this as all of my readers are 'witnesses' to my actions, and I feel accountable to you! A few months ago, I started reviewing my holdings, going alphabetically through my list which now stands at 20 positions. Last week I reviewed SRA (SRX) and this weekend I would like to review my holdings and trades in Starbucks (SBUX) one of the longest-held stocks in my portfolio.

I first acqired Starbucks (SBUX) in my trading account on January 24, 2003, about four months before I even started blogging here! My cost basis is at $11.40/share which is an adjusted purchase price as SBUX recently split 2:1 on 10/24/05. SBUX closed at $30.56 on 12/22/05, and thus my current holding of 59 shares has an unrealized gain of $19.16 or 168.1%.

If you are a regular reader of this blog, you will know that my strategy of portfolio management includes selling losing stocks quickly at small losses and selling my gaining stocks slowly and partially at targeted gains which currently stand at 30, 60, 90, 120, 180, 240, etc. Thus, I haved been selling portions of my Starbucks stock already: 25 shares 9/8/03, 15 shares 1/23/04, 15 shares 6/18/04, 10 shares 12/3/04, and 11 shares 12/5/05. These shares were sold at the 30, 60, 90, 120, and 180% gain levels. I have reduced my current sales amount from 25% of a holding to 16% of a holding, as stocks like Starbucks which have been sold multiple times are starting to diminish in size!

Thus on the upside, my next sales point would be at a 240% gain or 3.4 x $11.40 = $38.76. My sale on the downside, barring any news that would lead me to unload my shares earlier (some fundamental information that I would deem to be significant enough to intervent), would be at a 90% gain level...allowing my holding to retrace 50% of the highest targeted sale at a gain....or 1.9 x $11.40 = $21.66.

Anyhow, let's take a little bit of a closer look at this company:

According to the Yahoo "Profile" on Starbucks, the company
"...engages in purchasing, roasting, and selling whole bean coffees worldwide. The company also sells brewed coffees, espresso beverages, cold blended beverages, food items, teas, branded coffee drinks, a line of ice creams, and a line of compact discs through its retail stores. In addition, its stores offer pastries, sodas, juices, games, and seasonal novelty items, as well as coffee-related accessories and equipment, such as coffee grinders, coffeemakers, coffee filters, storage containers, travel tumblers, and mugs."
On November 17, 2005, Starbucks (SBUX) announced 4th quarter 2005 results. Consolidated net revenue increased 20% to $6.4 billion and net earnings grew 27% to $494 million. Comparable store sales grew 8% in the quarter. This was a solid earnings report.

When looking at a retail stock like Starbucks (SBUX), one thing I always like to check is the latest "same store sales reports" which for some companies are released on the first Thursday of the month. On December 1, 2005, SBUX reported same store sales numbers for November, 2005. Same store sales grew 7% outpacing the 3.9% estimated by analysts. Total revenue for the month grew 22% with 354 new outlets in the United States and abroad in the last eight weeks! Total stores now stand at 10,595.

And what does the chart look like? Taking a look at the "Point & Figure" Chart from Stockcharts.com:



We can see that the stock has been slowly appreciating between 2000 and 2003 and then in May, 2003, really exploded to the upside. The stock looks quite strong to me!

Anyhow, that's another of my holdings to share. My biggest mistake has been to sell too much of this stock and not to buy enough of an initial position. I shall be selling smaller portions (1/6) as the stock hits price targets on the upside.

Thanks again for spending time visiting with me. If you have any questions or comments, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Bob


Posted by bobsadviceforstocks at 3:17 PM CST | Post Comment | View Comments (5) | Permalink
"Looking Back One Year" A review of stock picks from the week of October 11, 2004






Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.

During the week of October 11, 2004, I made a single stock selection, Dorel Industries (DIIB), which was picked for Stock Picks Bob's Advice on October 15, 2004, when it was trading at $28.24. I do not own any shares nor do I have any options on this stock.

DIIB closed at $23.89 on 12/23/05, for a loss of $(4.35) or (15.4)%.

On November 2, 2005, Dorel Industries reported 3rd quarter 2005 results. Revenue for the quarter declined (2.4)% to $423.3 million from $433.8 million in the same quarter the prior year. Earnings also declined to $19.8 million or $.60/share, down from $28 million or $.85/share the prior year. These numbers missed expectations for revenue ($436.1 million expected) as well as earnings ($.66/share expected).

So how did I do that week? Well, since I only selected one stock as a "pick" my performance was the loss of (15.4)% which was the performance of the only stock, Dorel Industries (DIIB).

Thanks again for stopping by! If you have any questions or comments, please feel free to leave them on the blog or email me at bobsadviceforstocks@lycos.com.

Happy Holidays everyone!

Bob


Posted by bobsadviceforstocks at 1:57 AM CST | Post Comment | Permalink
Wednesday, 21 December 2005
New ***PODCAST*** for Western Digital (WDC)
Hello Friends! This is the LINK for the ***PODCAST*** on Western Digital (WDC).

Thanks so much for visiting!

Bob


Posted by bobsadviceforstocks at 10:06 PM CST | Post Comment | Permalink

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