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Putting Cash to Work

Taking advantage of the market weakness to add shares to a pair of attractively valued model portfolio positions.
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The Russell 2000, the benchmark for the model portfolio, is staring at a 2% decline for the second straight day. As it stands, it would mark the fourth decline for the index in the past five sessions.

We're going to use this weakness to put some more cash to work in the market. After you receive this alert, we will purchase 200 shares of Kopin (KOPN) and 100 shares of Omnova Solutions (OMN) for the model portfolio.

Despite fears that the economic recovery is stalling, we believe both of these names are attractively valued as the broader stock market averages move back toward the middle of the recent trading range.

At $3.00, Kopin is trading at less than 2x cash. The company is consistently profitable and should see its military orders continue to grow in the second half of the year. This buy gives us a total of 1,950 shares, and this holding now makes up 5% of the model portfolio.

This trade marks the second time we've bought Omnova since May, which is currently trading around $7.35, and gives the specialty chemicals producer a value of less than 8x expected full-year earnings. We expect the company to post strong quarterly results in late September. In the meantime, this purchase gives us a total of 450 shares, and this position now comprises 2.8% of the model portfolio.

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