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Lemley Yarling Management Co
15624 Lemley Drive
Soldiers Grove, Wi 54655
Bud: 312-925-5248       Kathy: 630-323-8422

Mesirow Financial has merged its clearing operations with RBC Clearing Corp. RBC is a wholly owned subsidiary of Royal Bank of Canada, the fifth largest bank in North America. http://www.rbccorrespondentservices.com/index.htm  As a result all of Lemley Yarling Co trades will be cleared through RBC beginning March 2. Clients should have received a package of forms from RBC that need to be completed and signed and returned in the return envelope to Kathy at our Hinsdale Office. If clients have any questions they should call Kathy at 1-800 793-3665 – 8AM to 3PM CT Monday through Friday. The change should be seamless except for the need to set up a new account/password to view accounts online at a new website called Investor Select. There will be a 15 to 25 day lag for the online accounts to be viewable and that should be the only interruption.


February 24, 2012

Model Portfolio Value As of 24 February 2012

$ 607,568


Comment on Model Portfolio activity

We are now all cash having sold Walgreen and Ford warrants on Wednesday.
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February 21, 2012

Model Portfolio Value As of 21 February 2012

$ 607,962


Comment on Model Portfolio activity

The DJIA passed through 13000 on the upside and we sold Nokia, Deutsch Telekom and AT&T. We still own Walgreen and Ford warrants both of which we plan to hold. A correction is still in our cards and we will wait for it to occur- from whatever level – before we recommit.
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February 17, 2012

Model Portfolio Value As of 17 February 2012

$ 608,956


Comment on Model Portfolio activity

We raised more cash this week and sold/took profits in GE, Cisco, Huntington Bank, American Eagle, Ford common, Hewlett Packard, and Chico’s. We also sold the GM warrants because the position- upon reflection- was too large and our exposure to autos is well taken care of by our Ford warrants. We expect that markets to eventually move higher but a correction of 10% would not surprise us and after the 25% move off the October 3 bottom a rest- if not more- is certainly warranted.
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February 10, 2012

Model Portfolio Value As of 10 February 2012

$ 605,018


Comment on Model Portfolio activity

We sold The Hartford, Morgan Stanley, Nvdia and Dell during the week. We also added a few shares of Nokia and more GM “A” and “B” warrants.

Morgan Stanley and The Hartford both reported decent numbers and we used the pop in both to realize profits and raise cash in accounts. To maintain financial exposure with less individual risk (but also less reward) we placed the Hartford money in the SPDR Financial ETF (XLF).

Nvdia and Dell earnings come next week and we would rather be out than in for them and so we sold for profits.

We were in an out of BankAmerica for a scratch.

We sold Alcatel Lucent on Friday when it popped on earnings. We won’t be back.

Bullish sentiment is increasing and even Perma-Bear Nouriel Roubini is suggesting higher stock prices. Hopefully he is right but for now the markets need and may get a pause or retrenchment.

Markets tanked Friday over Greek bailout worries. The U. S. gave $180 billion to one company to save the system in 2008 and now traders and talking heads are worrying about whether Greece will get $180 billion. Germany should just write a check but having meetings all over Europe and giving interviews and looking worried is much more fun. For comparison, the GDP of California is 7 times that of Greece. California is still working through its financial problems with smoke and mirrors but the financial press yawns. Georgia, North Carolina, Michigan and Massachusetts individually have a greater GDP than Greece and some have their own fiscal problems. Actually Michigan will have a surplus this year after predictions of gloom. Finances in Greece are important to Greeks. The rest of the world –not so much- but traders need to trade and news folks need bad news to attract viewers. And the beat goes on.

The Economic numbers have been positive with February Employment Reporting 250,000 net new employed in January and just yesterday weekly new jobless claims reportedly dropped to 355,000. We think the economy will continue to recover but as the markets rise we will be moving money from more volatile to less volatile stocks. The Ford and GM warrants give us enough volatility.
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February 3, 2012

Model Portfolio Value As of 3 February 2012

$ 606,923


February 1, 2012

Model Portfolio Value As of 1 February 2012

$ 587,690


Comment on Model Portfolio activity

Royal Bank of Canada

 http://www.rbccorrespondentservices.com/partner/aboutus/cid-110578.html

Through Royal Bank of Canada (RBC) — one of North America’s largest and healthiest financial institutions — RBC Correspondent Services offers the strength and stability you require in a financial partner. Royal Bank of Canada’s credit ratings are among the highest of all financial institutions: S&P: AA-(positive); Moody’s: Aa1; Fitch: AA; DBRS: AA (as of August 26, 2011). RBC is ranked the safest bank in Canada and the safest in North America for the second year in a row (Global Finance, October 2010 and 2011). Based on market cap, RBC is the 11th largest bank in the world and the fifth largest in North America. (Bloomberg as of September 8, 2011). RBC employs more than 74,000 full-and part-time employees who serve more than 15 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 53 other countries. RBC’s financial strength, sound risk management policies, strong balance sheet and diversified business mix have enabled it to withstand many of the market shocks and pressures.
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We took our 30% profit in BankAmerica and placed part of the proceeds in the General Motors B warrant which give the right to buy GM stock as $18.33 through July 9, 2019.
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Morgan Stanley, owner of the world’s largest brokerage, was upgraded to a “buy” rating by Goldman Sachs Group Inc.  analysts who said the firm may benefit from improvement in the trading environment.

Morgan Stanley was raised from “neutral” and placed on the “conviction list” of top recommendations, the analysts, led by Richard Ramsden, wrote 1/29 in a note to investors.

They also said the shares may rise to $23 in 12 months, 24 percent above the closing price on Jan. 27.

Morgan Stanley posted the only increase in trading revenue excluding accounting gains among the five largest Wall Street banks in 2011, making progress toward Chairman and Chief Executive Officer James Gorman’s goal of boosting market share. The New York-based firm had per-share losses in two of the past three quarters as it took charges to eliminate swap contracts purchased from MBIA Inc. (MBI) and to convert Mitsubishi UFJ Financial Group Inc.’s preferred stake to common shares.

Revenue from Morgan Stanley’s investment banking and trading division will probably rise 13 percent in 2012, excluding one-time items, to $17.4 billion as credit spreads tighten and activity levels increase from a “cyclically depressed” second half of 2011, the analysts estimated. Profitability in that unit may benefit from cost-cutting and lower deferred compensation expenses, they wrote.

The “key concern” for Morgan Stanley is retaining top talent after it reduced compensation and increased deferrals for last year, the Goldman Sachs analysts wrote. The firm cut pay for senior bankers and traders by an average of 20 percent to 30 percent and capped immediate cash bonuses at $125,000, according to people briefed on the plans.

The company will also benefit from lower integration costs at its Morgan Stanley Smith Barney retail brokerage, a joint venture with Citigroup Inc. with more than 17,000 advisers, the analysts said. Morgan Stanley will likely receive approval from regulators to buy an additional 14 percent stake in May, increasing ownership to 65 percent, a purchase that will probably cost $2.7 billion, they wrote.

Morgan Stanley rose 1 cent to $18.57 at 10:10 a.m. in New York trading. The shares have gained 23 percent this year, after dropping 44 percent in 2011.  

http://www.bloomberg.com/news/2012-01-30/morgan-stanley-upgraded-to-conviction-buy-by-goldman-sachs.html?cmpid=yhoo
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http://www.worldometers.info/
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Website Information

For those folks who have accounts with us, you may now go to: https://eview.mesirowfinancial.com and fill out the account information and view your accounts online. If you have trouble filling out the form, or in getting online, call and we will help you with the process. NASD regulations require the eview site to be secure. Thus your password must be changed every ninety days. You will be prompted to make this change when needed.

For information on Mesirow SIPC and Excess SIPC protection SIPCmesirow.pdf.

For those clients of LY& Co and other interested persons the Quarterly Report on the routing of customer orders under SEC Rule11Ac1-6.
For Quarter Ending 09/30/2002 For Quarter Ending 12/31/2002 For Quarter Ending 03/31/2003
For Quarter Ending 06/30/2003 For Quarter Ending 09/30/2003 For Quarter Ending 12/31/2003
For Quarter Ending 03/31/2004

All future SEC Rule11Ac1-6 Quarterly reports may be found by visiting the diclosures at LY& Co Clearing Broker Mesirow Financial at: http://www.tta.thomson.com/reports/1-6/msro/.


Annual offer to present clients of Lemley Yarling Management Co. Under Rule 204-3 of the SEC Advisors Act, we are pleased to offer to send to you our updated Form ADV, Part II for your perusal. If any present client would like a copy, please don't hesitate to write, e-mail, or call us.

A list of all recommendations made by Lemley Yarling Management Co. for the preceding one-year period is available upon request.


Summary of Business Continuity Plan

15624 Lemley Drive, Soldiers Grove, Wi 54655 312-925-5248
The factual statements herein have been taken from sources we believe to be reliable but such statements are made without any representation as to accuracy or completeness or otherwise. From time to time the Lemley Letter, or one or more of its officers or employees, may buy and sell as agent the securities referred to herein or options relating thereto, and may have a long or short position in such securities or options. This report should not be construed as a solicitation or offer of the purchase or sale of securities. Prices shown are approximate. Past performance is no indication of future performance.