Lyondell Chemical (ticker: LYO) is a very cheap stock with lots of free cash flow and an investor friendly management.

Sears Holdings (SHLD) is a way to get exposure to the hedge-fund experience of Eddie Lampert [Edward Lampert is chairman of Sears] without paying hedge-fund fees. He has proven himself to be an excellent manager.

Air France-KLM (AKH) is a great player in a strong group. It looks inexpensive even though the stock had doubled last year. The reason is that there was a lot of bad news in airlines and the prices were depressed. Bad news in oil prices is already discounted, [and] higher fares and occupancy are still having an impact. Air France is competitive in the industry so the earnings are strong, and looking at the forward fundamentals of the company, we think the stock price could go higher. It sells at 12 times earnings, and analysts are upgrading.

We don't own a lot of financials in our strategy because they don't work that well quantitatively. [GRT's financial sector exposure is mainly through Berkshire Hathaway, insurers and some savings and loans.

We don't own a lot of financials in our strategy because they don't work that well quantitatively. [GRT's financial sector exposure is mainly through Berkshire Hathaway, insurers and some savings and loans.

Alcoa (AA) and Biogen Idec (BIIB) are cheap on industry-relative forward earnings per share and price-to-book. Alcoa is the leader in alumina production. There's currently little excess world capacity in its markets and the outlook for revenue growth and earnings is very good.

Alcoa (AA) and Biogen Idec (BIIB) are cheap on industry-relative forward earnings per share and price-to-book. Biogen Idec has positive financial momentum, strong historical growth and is highly profitable.

Short Position: Zoltek (ZOLT) makes carbon fiber. Some of their products are being used in windmill blades. If you accept the fact that carbon fiber is a commodity, the producer is hyped up by alternate energy analysts at over 40 times fiscal 2007 [earnings estimate]. The multiples are too high.