Welcome to edition 30 of Suria Investment Newsletter (SINLetter), a free monthly investment newsletter. The objective of this newsletter is to provide you with unbiased initial research and basic facts about individual stocks and other financial instruments so that you can research them further before deciding to add them to your portfolio or not. If you are reading this and are not a subscriber, you can subscribe by going to www.sinletter.com/subscribe.aspx and you will start receiving this newsletter from next month. I have provided relevant links throughout this newsletter, but if you have any questions or comments, feel free to write to me.

Newsletter Sponsor:

This investment newsletter is sponsored by YenKenZen. YenKenZen is a website that offers independent reviews of the investment newsletter universe along with information about trading tools, books, blogs and other educational sources. I came across YenKenZen when I noticed this review of SINLetter on their website and have since then been frequently in touch with its founder. I believe the website offers a wealth of information to investors and encourage you to check it out.

Stock Contest Update:

The word "Raja" in India's national language Hindi means King and contestant Raja happens to be the king of the second stock contest for subscribers with a whopping gain of 74.72% in two weeks. You can check out his three picks and the rankings of the other contestants here. There are still two months left before the contest ends and it is still not too late to try and win one of the two prizes shown below. For all the details about this contest, check out the blog entry Two Contests, Three Months, Four Prizes.

First Prize:	Second Prize:

January Blog Entries:

Some of the projects I am currently working on are consuming most of my time and hence the delay in releasing this newsletter and the infrequent blog posts in January. If you do not subscribe to blog entries by email or in case you missed them, here are the two blog entries for January.

• Taking Profits in Monster Worldwide (MNST)
  
  
• Two Contests, Three Months, Four Prizes
  
  

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Portfolio Performance:

In the January 2008 newsletter, which was sent out just three weeks ago I said "Individual stocks within our portfolio have had some wild swings over the last two months with Suntech Power (STP) burning brighter and posting a gain of 215.62%. After doing some research on upcoming competitor Nanosolar's technology, I was almost inclined to take additional profits off the table but decided to hold off a little longer after analyzing Suntech's pipeline and expected growth rate." My hesitation in taking additional profits in Suntech (I sold over one third of the position in November) proved to be a costly mistake and was largely responsible for the model portfolio underperforming the Dow by a fraction of a percentage point in January. Suntech along with the rest of the solar sector, dropped more than 25% in the last three weeks, bringing down our gain from 215.62% to 110.76%.

Performance Metric	Dow	S&P 500	Nasdaq	SINLetter
January 2008	-4.63%	-6.12%	-9.89%	-5.17%
Since Inception (Aug 2005)	19.08%	11.59%	8.86%	107.89%

January marked the third straight month of declines for the major indices and the news was equally bleak for other markets around the world. The Indian stock market was hit especially hard with the BSE Sensex dropping 11.53% or more than 2000 points intraday to 16,951.50 on January 22nd due to concerns that the US economy is slowing down. Trading was suspended for an hour and the day ended with a loss of 1,408 points. The BSE sensex dropped an astounding 25% from its January 10th peak of 21,206.77. On January 7th, when I published the last newsletter I wrote "Given the 47.1% gain in the Bombay Stock Exchange Sensex in 2007, which followed a 46.7% gain in 2006, the market is extremely speculative at these levels. ... Most retail investors are momentum based investors and RISK is a four letter word that has long been forgotten. There is no doubt that the Indian economy is booming and that the Indian stock market may be in a secular bull market that may last many years but at its current levels I think a serious correction is not too far away."

This was the primary reason I did not add mining company Sterlite Industries India (SLT) to the portfolio but instead put it on the watch list. The stock had dropped 24% in the last three weeks of January before rebounding almost 5% on Friday but I am still a little nervous about adding it to the portfolio without a corresponding hedge in the form of a put option or by shorting an ETF. A true India ETF does not currently exist but there is hope in the near future as WisdomTree (WSDT.PK) plans to launch an India ETF in February. This will be an earnings-based broadly diversified ETF consisting of 150 local Indian stocks.

Speaking of WisdomTree, I was very tempted to add to my position when I saw the stock fall below $2.50 but given my general bearish outlook and a tendency not to average down on losing positions, I held back. The stock has since rebounded 40% along with the rest of the market. The company continues to execute on all cylinders by not only offering the first true Indian ETF as mentioned above but also filing to launch 12 currency ETFs, attempting to make inroads into the all important 401K retirement accounts and striking a deal with Bank of NY Mellon to create, co-brand and market ETFs. Unfortunately in this difficult market, assets under management or AUM have remained flat at $4 billion as of January 2008. It is going to be a wild ride from here to profitability for WisdomTree.

Another beaten down stock in our portfolio that has rebounded sharply in recent weeks is children's clothing retailer Gymboree (GYMB). While other retailers are struggling in this challenging retail environment, Gymboree not only increased its sales forecast but also bumped up its fourth quarter earnings outlook by 10 cents to a range of 88 to 90 cents per share. For the full year 2007, the company expects to earn between $2.64 and $2.66 per share giving it a 2007 P/E value of 14.65 using the mid-point of their earnings expectations. The stock appreciated 27% in January and while I think it is still undervalued, it could give up some of its recent gains if the market rally loses steam. The obvious way to hedge this position would be to buy put options on Gymboree or short one of the retail ETFs like HOLDRS Retail (RTH) or SPDR S&P Retail ETF (XRT). However if you feel that luxury retailers are likely to do much worse than regular retailers, another short option is the Global Luxury ETF (ROB), with its holdings like Louis Vuitton, Christain Dior, UBS, Credit Suisse, Porsche and BMW.

Gold continues its slow and steady march upwards, closing the month of January at $923.30 per troy ounce, a gain of $88.80 or 10.64% for the month. This has been the largest monthly increase in the price of Gold since April 2006.

Portfolio Readjustment:

Beyond adding Umpqua Holdings (UMPQ) to the watch list and the portfolio change I made at the end of January, I am not going to make any additional changes to the model portfolio in this newsletter. As opportunities arise, I will post them on the blog.

Umpqua Holdings: Can the free cookies last? (UMPQ)

Free internet terminals equipped with headsets for my music listening pleasure line the wall as I enter the building. Up ahead are comfortable designer sofas with Bloomberg playing on a flat screen TV and a choice of financial newspapers and magazines to pick from. As I turn the corner, a variety of free cookies laid out in a platter greet me. No, I did not just enter the ultra chic lounge of an international airline or my local library. I was in a branch of Portland, Oregon based Umpqua Bank to take care of some business. Named after the river that offers some of the best (read roughest) white water rafting in the state of Oregon, Umpqua bank has been the subject of numerous case studies for providing its customers with an "experience" they are not likely to forget and by calling its branches "stores". The New York Times calls Umpqua "Starbucks with tellers." The company has also made its way into Fortune magazine's "100 Best Companies To Work For" list two years in a row, rising from position 34 in 2007 to rank 13 in 2008.

While discussing the paperwork required to set up a business line of credit for my software consulting business, I asked the Vice President of the branch about the health of her company and her thoughts on their stock. She was obviously quite excited about how Umpqua bank was performing after a string of acquisitions in Washington state and Northern California and suggested that I talk to their CEO Ray Davis if I was interested in learning more about the company. Much to my surprise she explained that almost all their branches have a phone with a direct line to the CEO's office and he is very receptive to calls. This was almost nine months ago when the stock was trading at nearly $25/share and my bearish sentiments about the housing sector and financials kept me from even mentioning the stock on the SINLetter blog or the monthly newsletters.

Sifting through the hard hit financial sector a few weeks ago for gems in the rough, I once again looked up Umpqua bank and noticed that the stock had lost almost half its value in just a few short months. With a dividend yield of 5.7% and a stock price of under $13, I was very interested in the company and decided to listen to their fourth quarter conference call on Jan 24th, before making a decision to invest in the company. The stock had lost nearly half its value because investors expected Umpqua to announce terrible results and the company did not disappoint.

Fourth quarter earnings plunged 61% to $9.5 million from $24.5 million in the fourth quarter of 2006. For the full year 2007, earnings dropped 25% to $65.3 million. The provision for loan losses in the fourth quarter was $13.8 million, down 33% from Q3 but an additional provision of $4 million was added, increasing the total to $17.8 million. For the full year 2007, provision for loan losses stands at $86.1 million or 1.42% of loans outstanding. This number is much higher than one would expect from a company like Umpqua even in this challenging environment. However the company reassured investors that their Q4 performance was impacted by $5.1 million in litigation expense related to credit card issuer Visa and a $24.7 million relationship that was placed in non-accrual late in the quarter. This $24.7 million loan is on a commercial property and Umpqua anticipates no losses from this property. Umpqua's total loan portfolio is currently $6 billion with $3.4 billion in residential loans, $1.4 billion in commercial loans and $1.2 billion in construction loans.

On the bright side organic growth rate for deposits was 5%. Including recent acquisitions deposits increased 13%. Organic loan totals also grew by 5% with 10% of the growth coming from Oregon and Washington while loans in California dropped 3%. The company anticipates proceeds from Visa IPO in 2008 will more than offset the $5.1 million litigation liability it incurred in Q4 2007.

Two issues with financial stocks that are on investor's minds these days are the amount of subprime exposure and the safety of the dividend. Umpqua bank has no subprime exposure or stated income construction loans. In the words of their CEO Ray Davis, "The company has every intension of continuing our current dividend policy and anticipates no disruption of our cash dividends to shareholders". The company did not deviate from its standard underwriting practices during the housing bubble, has managers with an average of 30 years of experience and a CEO who built a 40 person bank into a company with over $8.3 billion in assets and a footprint that extends through much of the West Coast with 147 branches.

The company repurchased 4.01 million of its shares in 2007 at an average price of $23.73 per share. This repurchase was primarily done to offset the dilution from the all stock ($5.16 million shares were issues) acquisition of North Bay Bancorp in April 2007. Umpqua bank is still authorized to repurchase up to 1.54 million of its shares but has decided to suspend its buyback program and preserve capital. As you can see from the very interesting article by Allan Sloan called Buy high, sell low, suspending the buyback in this environment is a wise move.

My enthusiasm for Umpqua bank was very high as I was researching the stock two weeks ago and the price was under $13. With the recent 34% runup in the stock, the company appears fairly valued assuming single digit earnings growth in 2008. Despite being positioned in an area of the country that is expected to be the least affected by the housing bust, I believe achieving any growth at all in 2008 is going to be very challenging for Umpqua bank. I am going to add Umpqua Holdings to the watch list for now with the intension of starting a position if the price drops from these levels.

Every month we add featured stocks into a model portfolio started with a cash position of $100,000 on August 2, 2005. To keep calculations simple, trading costs and regular dividends are not included. Prices reflect the closing price as of the last trading day of the previous month (December 31, 2007 for the January 2008 newsletter).

Voluntary Disclosure: From the stocks that are currently in the model portfolio, I own shares of Canon (CAJ), PowerShares Water Resources (PHO), Barclays (BCS), Medifast (MED), Suntech Power (STP), Teva (TEVA), Alvarion (ALVR), WisdomTree (WSDT.PK), Unilever (UL), Gymboree (GYMB), BlockBuster (BBI) and Marcus (MCS).

DISCLAIMERS: