Grisanti Brown & Partners LLC Summary of Investments

As of June 30, 2011

Below are the companies that we own and the reasons we own them. We use two different methodologies to identify "value". One is cash flow at a discount, which focuses on earnings or other measures of cash flow that the company will produce in the future to justify a higher price. A second value feature we look for is assets at a discount. Here we try to identify those companies whose current assets are worth more than their share price. This places less emphasis on future growth and more on current value. Over our 12 year history, we have achieved some excellent returns from both categories. Along with a brief description of each investment thesis, we identify the category (cash flow at a discount or assets at a discount) for each investment.

Abbott Laboratories (ABT)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$52.62	Cash Flow at a Discount	$4.60	$4.96	11.0	20.1	14.0	December-10	$81.8

Abbott Laboratories is a multi-sector healthcare provider. While ABT's largest source of revenue is pharmaceuticals (where Abbott has among the fastest growing revenues of any large drug company), it is also an important player in medical equipment (stents), nutrition products (baby formula), and testing products (blood testing equipment). Unlike many competitors, Abbott is growing its earnings by approximately 10% this year and we project it to do the same in 2012. Also, its largest selling products have patent protection until at least 2016. ABT is selling at 11 times earnings, and when we bought it (less than a year ago) it was selling at its lowest price-earnings ratio in at least 22 years (as far back as our records go). Further, compared to the S&P 500's valuation, again, it is at a record low. This investment complements the more economically sensitive stocks in the portfolio. The risks to Abbott come primarily from its reliance on one drug, Humira, which treats rheumatoid arthritis and Crohn's disease. The drug accounts for about a third of Abbott's profits and continues to grow at more than 10% per year. It requires an injection, but Pfizer is in stage III testing with an oral competitor. We believe this will take years to gain market traction, as Humira has a long safety profile and millions of loyal users. Finally, we like Abbott because it has a product profile very much like Johnson & Johnson (some healthcare products, some medical devices and some branded pharmaceuticals), but it sells for about a 30% lower valuation.

Air Products (APD)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$95.58	Cash Flow at a Discount	$5.93	$6.65	15.2	19.0	17.5	June-10	$20.3

Air Products is a leading seller of industrial gases like argon, helium, nitrogen, oxygen and hydrogen to customers around the globe. Its end-markets are diverse, ranging from food packaging and healthcare to glass and metals manufacturing. Additionally, nearly 60% of APD's sales are derived outside the US. We like this business because it produces strong and predictable cash flows owing to its long-term customer contracts. Additionally, APD is in a secularly growing field that is also benefitting from a cyclical recovery. We added APD to the portfolio in June 2010 after the stock fell as a result of APD's hostile offer to acquire rival, Airgas. Shares have recovered since then (up 43% since initial purchase) and the company has removed its offer. Despite the run-up in price, we believe there is still upside in APD with the stock trading at about 15x forward EPS versus its historical 19x multiple.

BP PLC (BP)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$44.29	Cash Flow at a Discount	$7.50	$7.82	5.9	11.0	11.0	August-10	$139.8

We added BP to the portfolio in August 2010 as the spewing oil well was finally capped in the Gulf of Mexico. Nearly a year later, the stock's total return has been 16%. While we would have hoped the stock price would have more quickly reflected our long-term outlook, we still believe the shares have substantial upside, trading at 5.9x forward earnings versus peers trading at close to twice that multiple. We realize that this investment is not without risks, but to summarize a lot of research: (1) the stock is down almost 25% since the April 2010 oil spill, even though liabilities will be stretched out over many years, (2) the environmental damage appears to be considerably less than was feared, (3) BP has obtained attractive prices for several foreign assets, increasing the total value of its remaining energy portfolio. Finally, BP has restored its dividend, which is now 3.9%. These factors combine to give us a significant margin of comfort.

Dell Inc. (DELL)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$16.67	Cash Flow at a Discount	$1.95	$1.90	8.7	29.4	13.0	March-10	$31.4

Dell is the second largest maker of personal computers and servers in the United States. Since purchasing Perot Systems in September 2009, Dell has also provided technology consulting services. It was a technology darling in the 1990s, rising from (split-adjusted) 10 cents per share to almost $60 by 2000, when it sold for nearly 100 times earnings. The last decade has brought many changes to the market, not the least to Dell. Stand-alone PC makers have suffered, and Dell is no exception. The stock fell from $60 to $13.75 per share, where we made our initial investment. The economic downturn led to corporations deferring technology spending in 2008 and 2009, but now a corporate upgrade cycle is underway and it should disproportionately benefit the company. That's because the majority of Dell's profits are made with PC sales to corporations, where spending on equipment and software fell to a 40-year-low relative to GDP during the recession. The corporate market is more important to Dell than to any of its peers, so this cycle is driving hardware share gains for Dell for the first time in years. At 8.7 times next year's earnings we think the stock is undervalued and warrants a 13x multiple (historical forward P/E of 29x). Dell's margins continue to improve and the company is capable of earning $2-3 per share.

General Electric (GE)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$18.86	Cash Flow at a Discount	$1.38	$1.67	12.4	20.7	15.0	March-11	$200.0

As one of the largest companies in the world, GE is a household name. However, if you were to ask a group of people what GE actually does, you would likely get a wide range of opinions. The Energy Infrastructure business includes products such as gas turbines and generators for power plants and wind turbines and solar technology as part of a renewable energy program. Energy also contains the oil & gas unit, which provides drilling and production systems, equipment for floating production platforms, compressors, turbines, high pressure reactors, and industrial power generation. The Technology Infrastructure business includes a broad array of aviation, healthcare, and transportation products and services. GE Capital is the diversified financial services unit. Finally, the company holds a 49% stake in NBC Universal LLC; Comcast holds the controlling 51% interest. We have liked this conglomerate for some time and it has always been well-managed, but until 2008, it had been too expensive to own, and, until recently, too much uncertainty surrounded GE Capital. However, GE has shifted its focus from financial services to infrastructure and now targets approximately 2/3 of total sales from the core business. Furthermore, we believe that GE Capital is at an inflection point with losses continuing to decrease. We took advantage of a market overreaction following the Japanese nuclear disaster to build our position; the stock dropped more than 10% from its February highs despite nuclear power-related sales making up an immaterial portion of GE's business. With roughly a 3% dividend yield, an improving financial unit, and macro conditions in the middle of a long business cycle, GE is well-positioned for the ongoing global economic recovery.

General Motors (GM)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$30.36	Cash Flow at a Discount	$4.02	$5.15	6.7	6.2	10.0	March-11	$47.4

We purchased shares of General Motors in the first quarter. GM has languished since emerging from Chapter 11 last year and is now selling below its $33 IPO price. We feel that the market fails to appreciate GM's greatly improved balance sheet and strong cash flow generating potential. The company has reduced its brands from 8 to 4, largely eliminating overcapacity in North America. The company is well-positioned to grow in Asia and its European operations are on the mend. Liabilities have been reduced by over $16 billion including an $11 billion reduction in automotive debt as well as a $4.7 billion improvement in pension funding. Liquidity is very strong with $33.5 billion of automotive cash and only $4.5 billion of debt. With a competitive cost structure and agreements with labor unions to more efficiently manage people and facilities, we expect the company to generate EPS of $5-6 in 2012. Assuming a multiple of 8-10X suggests the shares would be worth $45-50. Importantly we expect the company to generate free cash flow of approximately $4-6 billion which could be returned to shareholders via dividends or share buybacks. GM is a new company that is trading at a low valuation because investors remember the "Old GM" – we believe this has created an investment opportunity.

Goldman Sachs (GS)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$133.09	Cash Flow at a Discount	$13.62	$18.04	8.5	12.2	10.0	December-08	$68.9
	Assets at a Discount (P/B)	2011E BVPS	2012E BVPS	1-Year Forward P/B	15-Year Avg. P/E	GBP Target Multiple
		$154.00	$172.00	0.8	2.1	1.5

It's hard for us to think of a company that has a larger discrepancy between the quality of its assets (which includes its personnel) and its image in the marketplace than Goldman Sachs. Despite substantial headline risk, Goldman Sachs remains a well-capitalized and dynamic financial services firm. It continues to be considered among the best in the business for M&A, debt and equity underwriting, and many other capital markets businesses whereas much of its peer group has been decimated. The potential impact of regulatory reform has created negative sentiment that we believe obscures the full value of the franchise. Goldman Sachs now trades at tangible book value, whereas it has historically traded at an average of nearly twice this valuation. What that means is that you could buy the entire company, close its doors and sell all its assets (and with a financial services firm, that's a relative easy exercise, as many of its assets are typically liquid securities), and you would net the current share price. In other words, the market is putting zero value on the ongoing ability of Goldman Sachs to make money in the future. We initially purchased the stock in the teeth of the financial crisis (December 2008) at $76 a share. We trimmed our position at $182, and now in recent weeks we have repurchased a full position in the $130s. Despite regulatory constraints facing the entire industry, we believe that GS should trade above book value given the company's attractive fundamentals and great business model and franchise value. Additionally, we expect a lower risk Goldman to generate an ROE of about 15%; the company had returned 20-30% when it was substantially more leveraged. This management team has a strong record at figuring out how to operate in a variety of financial environments, and we think they will be able to succeed in the future.

International Paper (IP)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$29.82	Cash Flow at a Discount	$2.99	$3.44	9.3	30.0	15.0	January-11	$13.0

Our interest in International Paper was sparked by several factors. First, we like consolidating industries because they tend to instill pricing discipline and supply controls. Second, IP is now the number one and number two producer of US containerboard and uncoated free sheet (i.e., office paper) respectively. In 1997, the top five US containerboard producers controlled 42% of capacity. Today, that number has grown to 74%. Also, the industry permanently closed about 3.0 million tons of capacity (7.5%) since 2007. International Paper has 27% of worldwide containerboard capacity and has paper operations in Europe and Asia. Since 2006, the company has undergone a major transformation – selling noncore assets, cutting costs, and focusing the business on increasing returns on investment capital. Since acquiring Weyerhaeuser's containerboard business in 2008, International Paper has paid down debt and pension expense, dramatically increased margins, and increased its dividend back to pre-recession levels. The company is well-positioned to increase earnings over the next several years as box demand grows and pricing improves. We believe IP can earn over $4.00 per share and sell at 12X or approximately $48 per share in 2013. Additionally, IP has more than doubled its dividend since Q4'10 and now yields 3.5%. Subsequent to our purchase, IP announced an offer to buy Temple Inland for $30.60 per share in an all-cash transaction. Temple, the 4th largest US containerboard producer with 11% of capacity, has rejected the offer. Conceptually, we like the deal as it would further consolidate industry. IP (proforma) would have 37% share while RockTenn, its next largest competitor, which recently acquired Smurfit Stone, would control 20%. The deal is all-cash and is accretive at the current offering price. However, because Temple has rejected the offer, the ultimate outcome is uncertain. It is possible that IP will have to increase its offer (we believe the deal would be accretive up to $35). Another bidder could emerge (Georgia Pacific, a private company, is a possibility). In any event, this development has caused uncertainty and IP shares have come under pressure due to timing and higher purchase price concerns. In the long-run, we believe this would be a very good deal for the industry and IP, but patience is required for now.

J.P. Morgan Chase (JPM)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$40.94	Cash Flow at a Discount	$4.90	$5.62	7.8	13.4	12.0	March-09	$162.7
	Assets at a Discount (P/B)	2011E BVPS	2012E BVPS	1-Year Forward P/B	15-Year Avg. P/E	GBP Target Multiple
		$47.50	$47.50	0.8	1.3	1.5

J.P. Morgan emerged from the financial crisis as the leading banking institution in the United States. JPM's strong balance sheet allowed the company to take advantage of opportunities to buy assets like Bear Stearns and Washington Mutual at fire-sale prices. While these assets remain difficult, we believe that within the next several years, they will prove to be highly profitable investments. In addition, the strong balance sheet means that JPM will be able to meet or exceed new international banking capital requirements being agreed upon this year without raising additional capital. JPM should return to normal earnings power faster than most financial institutions and earn a 12% return on equity by 2012. Thus, we estimate that JPM can earn $5-6 in 2012 (including the impact of new regulations). Based on a 12x multiple, our target price is nearly $70. Additionally, JPM is selling at about 80% of book value versus an average of approximately 130% over the past 15 years. Shares should rise above book value as sharply falling loss provisions over the next three years lead to significantly higher earnings. When the economy falls into recession, banks increase their provisions for losses, immediately hurting their earnings. Profits drop sharply, but long before the economy is booming again, this loss provisioning peaks. It's important to note that this occurs several quarters before actual reported losses peak. In other words, the bank may take a 30% provision for a loss in March when a homeowner stops paying his mortgage. That provision hurts the bank's earnings immediately. Then, in December, when the house is foreclosed upon and the bank actually loses 30% of its mortgage loan, there is no further loss taken unless the provision was inadequate. In fact, if the bank wrote off more than 30% of the loan in March, it may actually book a gain in December. This seemingly semantic distinction between taking a provision and a loss is actually quite important from an investment standpoint, as it means that banking companies typically report terrible earnings at the beginning of the economic downturn, and their earnings start to improve much earlier than other industries. The current economic uncertainty has brought into question the timing of when modest profits will return to more normal levels, but it has not changed the long-term potential that those profits will be earned.

Marathon Oil (MRO)/Marathon Petroleum Corp. (MPC)

Share Price 6/30/11	GBP Valuation Methodology	Value MPC ($Bil.)	Value MRO (E&P) ($Bil.)	Total Value ($Bil.)	Shares (Mil.)	Value Per Share	Added to Portfolio	Market Cap ($Bil.)
$52.68	Assets at a Discount (Sum of Parts)	$16,108.0	$42,356.0	$58,464.0	712.1	$82	February-11	$22.8

We like to invest in restructurings and spin-offs. This is because the market seems to prefer "pure plays" and during the complexities of spin-offs companies are sometimes misvalued. Our interest in Marathon Oil was sparked by the announcement of its intention to split into two companies: an oil and gas exploration company and an oil refining company. Splitting into two companies will allow each company to follow its appropriate strategic direction and will greatly improve transparency. Given our work on Valero, we are excited about owning separate shares of MPC, a well-positioned independent refiner with assets primarily in the Midwest, in addition to the shares of the oil and gas exploration company. Marathon Oil will have proved reserves of over 1.5MMBOE making it a "mini-major" oil company. About 60% of Marathon's reserves are in North America (including the Canadian Oil sands assets) while the remaining 40% are international. Historically, the company has a mixed record in exploration. However, as a stand-alone company, we believe management will have an opportunity to improve capital allocation. Over time, we believe management can generate higher returns on investment as a pure oil and gas company than in the past. We calculate the combined value of both pieces in the range of $70-80 per share. At roughly $50 a share, we believe both businesses are selling at meaningful discounts to their peers. We expect this discount to narrow as each company becomes established in the market place and can be more appropriately measured and valued against its "pure play" peers.

Microsoft (MSFT)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$26.00	Cash Flow at a Discount	$2.60	$2.90	9.5	23.9	15.7	August-10	$219.3

At the end of 1999, Microsoft traded at $54 and earned 71 cents per share, representing an astonishing 76x price-to-earnings multiple. Today, you could buy a considerably less sought-after share for $26, a decline of about 50%, even though earnings have more than tripled to $2.55 per share. Despite consistent earnings growth, Microsoft shares are now cheap on virtually all statistical measures. They are trading at about 9.5x 1- year forward EPS whereas MSFT's 15-year average forward P/E is 24x. Even more attractive, the free cash flow yield – the amount of cash the company produces each year compared to the share price – is now 13%. That seems like a good deal for one of the few AAA-rated companies left in the country. Of course, the stock has languished because of the move away from PCs (and therefore away from Microsoft's operating system and applications software), and towards devices like the iPad. We understand and agree that this trend is negative and will continue. But it's a matter of degree and speed. We believe the PC will remain an essential device for the three year time horizon of our MSFT investment. Further, we believe that while the iPad may cannibalize some PC sales, it will be mostly purchased in addition to someone's PC rather than as a replacement. We certainly do not advocate a return to a 20+ multiple given that the company serves a slowing and relatively mature segment of technology. But we would expect to see some multiple expansion as the company continues to deliver on earnings and free cash generation. Additionally, MSFT should benefit from the ongoing Windows 7 replacement cycle. We expect the company to return some of its stockpile of cash ($36.7 billion) to investors through share repurchases and/or a special dividend. While the recent acquisition of Skype generated some buzz, we do not expect it to have much impact on results in the short-term.

Mosaic (MOS)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$67.73	Cash Flow at a Discount	$4.00	$6.50	13.6	31.5	15.0	May-09	$18.7

Mosaic is the second largest fertilizer producer in a consolidating industry. Our investment thesis has both cyclical and secular aspects. From a cyclical perspective, the past several growing seasons have seen a dramatic decline in fertilizer usage worldwide due to economic concerns. But farmers can only under-fertilize for so long before soil needs to be replenished with nutrients, and we believe that this "catching-up" has been occurring, driving demand and pricing higher. We note that potash prices peaked in the $600s before the economic downturn and are now hovering around $400. If prices were to return to peak levels, EPS for Mosaic could reach $9. On a longer term basis, we like Mosaic because the world needs more food, but worldwide arable acreage is actually decreasing, creating a greater need for yield enhancements like fertilizer. Emerging market populations are moving up the economic ladder and as they do, consumption moves to more grainintensive proteins (i.e., beef requires four times more grain feed than chicken). In addition, corn, which is the most fertilizer-intensive crop, is hitting record prices. Corn is not only used for food, but also fuel (ethanol). US regulation requires 15 billion gallons of biofuel use by 2015, about 25% higher than current levels; this will have a significant impact on the amount of corn grown domestically. In January, Cargill announced its intention to sell its 64% stake (286 million shares) in Mosaic. After a series of complex transactions, Cargill as an entity technically no longer owns Mosaic shares, but Cargill shareholders and debtors do. These holders sold 115 million shares at the end of May for $65 per share and intend to sell their remaining 171 million share position over time. The remaining shares may act as a near-term overhang, but the divestiture should benefit MOS shareholders over the long-run as liquidity improves. Additionally, MOS is a likely candidate to be added to the S&P 500 Index and other indices. (It had previously been excluded due to Cargill's majority control.) Mosaic's balance sheet remains clean with a $1.2 billion net cash position. Finally, larger mineral/mining companies have been on the lookout for fertilizer investments for some time. (Witness the failed takeover attempt by BHP Billiton of Potash last year at a large premium to market price.) It is entirely possible that a bidder may emerge for Mosaic as the Cargill shareholdings get disseminated to more liquid (and willing) sellers.

Navistar (NAV)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$56.4	Cash Flow at a Discount	$5.90	$8.00	8.3	11.3	13.0	May-09	$4.1

Navistar is a producer of heavy and medium duty commercial trucks and school buses. The company also manufactures diesel engines for its own use and for sale to third parties. In addition, Navistar has developed a profitable military business over the last three years by leveraging the company's truck expertise for application into the MRAP platform (Mine Resistant vehicles). Navistar is leveraged to the economic cycle and is benefitting from a recovery as heavy truck sales come off 50-year lows. In fact, volume levels have been terrific recently, and the stock is up over 40% since our initial purchase. We expect sales to continue to improve over the next two to three years as an aging fleet requires replacement and new truck emission standards are being introduced in the US. As business returns to more normal levels, we expect the company's earnings to increase dramatically to between $8 and $10 per share. We believe the stock should sell at 13x earnings, implying an $80-100 present value.

TEVA Pharmaceuticals (TEVA)

Share Price 6/30/11	GBP Valuation Methodology	2011E EPS	2012E EPS	1-Year Forward P/E	15-Year Avg. P/E	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$48.22	Cash Flow at a Discount	$5.07	$5.72	9.0	28.8	13.0	October-09	$45.3

TEVA Pharmaceuticals is the largest generic drug manufacturer in the world with a leading US generic share of about 25%. It holds the important position as the industry's low-cost manufacturer. The company has compounded earnings at over 25% per year for the last ten years, historically trading at 28x forward earnings and a premium to the market. The stock is now trading at 9x 2011E EPS; we believe it should trade at 13x forward earnings given its market leading position and strong growth potential outside the US. Additionally, it has one of the largest and most visible product pipelines in the industry. We believe this pipeline, combined with the global secular trend toward generic drug penetration, will drive results at well above market (and industry) average rates, over time resulting in a premium valuation for the shares and significant upside from current levels. At the moment, a third of its profits come from the multiple sclerosis drug Copaxone. The stock has faltered over concerns that a generic version of Copaxone will be forthcoming soon, but (for complex legal reasons) we believe these fears are premature. We believe that TEVA can continue to grow earnings at about 12% a year for the next three years, and that the market will reward such a strongly growing company with a higher multiple.

Valero (VLO)

Share Price 6/30/11	GBP Valuation Methodology	2011E BVPS	2012E BVPS	1-Year Forward P/B	15-Year Avg. P/B	GBP Target Multiple	Added to Portfolio	Market Cap ($Bil.)
$25.57	Assets at a Discount (P/B)	$29.50	$32.25	0.8	1.2	1.4	January-10	$14.6

Valero Energy, our largest position, is the nation's largest independent oil refiner. Oil refining — the business of taking crude oil and turning it into gasoline, diesel and other petroleum products — has been a dirty, deeply cyclical business for over 100 years. The industry combines two compelling traits: it is both unloved (giving it a low valuation) and essential to our economy. Over the years, we have made successful investments in similar industries like coal (which provides 52% of America's electricity), steel, iron ore, auto parts and copper. In times of economic weakness, shares of these deeply cyclical industries often decline more than the overall market. But in times of recovery, these shares tend to outperform market darlings that may be in better businesses that didn't drop as much during the lean years. Simply being a member of an out-of-favor industry is not enough to justify an investment. At least three other criteria must be present: low valuation, a margin of safety in an uncertain world, and a catalyst to realize a higher value. We believe each of those is present in Valero. VLO now sells for approximately 75% of book value. For the last 25 years, with the exception of 2009, it had always sold above book value at some point in each calendar year with an average price-to-book of 120%. In addition to the attractive valuation, we require a margin of safety. It remains the only independent refinery with an investment grade credit rating and was the only such company to remain cash flow positive during the 2008-09 downturn. If the economic recovery falters or takes longer than we estimate, Valero can remain profitable and maintain positive cash flow, allowing some margin of safety for our investment. Finally, we need a catalyst to ensure that a cheap stock will appreciate to become a fairly valued one. In Valero's case, that would be an economic recovery that would lead Americans to take to the road (and skies) again, resulting in higher demand for gasoline, diesel and jet fuel. The cyclical recovery is underway and margins and profitability should continue to improve. To put the current price in context, in 2007, Valero sold for $78 per share, but is now selling at $25.57. We calculate the replacement value of the refineries is north of $50 per share or about 2x the current market price, but more importantly, refining margins are again approaching record highs, and Valero's earnings should increase to more than $4 a share this year, and $5 next year. A reasonable 9x multiple would make the stock nearly a double from current levels.

Visteon (VC)

Share Price 6/30/11	GBP Valuation Methodology	2011E EBITDA ($Mil.)	2012E EBITDA ($Mil.)	2011 EV/EBITDA	GBP Valuation Multiple	Added to Portfolio	Market Cap ($Bil.)
$68.41	Assets at a Discount (EV/EBITDA)	$670.0	$789.0	4.7	5.7	February-11	$3.49

Visteon, like General Motors, is a company selling at "too low a price" because investors remember the old Visteon: a leveraged, high-cost, and mostly domestic auto parts company. After its emergence from bankruptcy in late 2010, Visteon has no debt, no contracts with the United Auto Workers, and only one plant left in the United States. Most of its profits come from China and Korea—two strong auto markets. Visteon owns 50% of a Chinese auto parts maker (Yanfeng), which we believe could be worth $2.3 billion to Visteon—or almost three quarters of Visteon's current market capitalization. In addition, it owns 70% of Halla, a Korean parts maker. We believe Visteon could buy the rest of Halla, and add more than $1.00 to its annual earnings per share. As worldwide auto sales recover from the unprecedented 2008-2009 slump, the new Visteon should be able to grow its profit faster than the market expects. As profit builds, memories of the "old" Visteon should diminish. Like our recent, successful investment in Lear Corp., Visteon is a formerly-bankrupt auto parts company that is underfollowed on Wall Street. We believe that legacy, together with overseas profits, creates a compelling investment opportunity right now.

Williams (WMB)

Share Price 6/30/11	GBP Valuation Methodology	Value MPC ($Bil.)	Value MRO (E&P) ($Bil.)	Total Value ($Bil.)	Shares (Mil.)	Value Per Share	Added to Portfolio	Market Cap ($Bil.)
$30.25	Assets at a Discount (Sum of Parts)	$10,029.8	$11,200.0	$21,229.8	588.1	$36	August-05	$17.8

We have held WMB for almost five years. During this time, the stock has generated a total return of 56% versus 21% for the S&P 500. As we hoped, in January, Williams announced its intention to split into two companies as a means to unlock shareholder value. In the third quarter of 2011, the company will sell 20% of its exploration and production company to the public. The company intends to distribute the remaining shares to its holders a year after the offering. The exploration and production company produces natural gas from several basins in the United States, but the largest resource play is located in the Rocky Mountains. We calculate its value at approximately $8-10 per share. The "new" Williams Companies will operate a "midstream" business, which gathers and processes natural gas and related byproducts and will own and operate one of the country's premier natural gas pipeline systems in the United States. We believe this business is currently worth between $28-30 per share. As a result of the announcement, William shares appreciated sharply. This investment is a good example of the Grisanti Brown philosophy of identifying companies that represent Assets at a Discount; its assets were worth more than the share price, and the company took steps to enable shareholders to recognize that value. We are pleased the company chose to unlock the value the way we had anticipated it would.

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The views presented in the letter were those of Grisanti Brown & Partners LLC as of June 30, 2011, and may not reflect their views on the date this letter is first published or at anytime thereafter. These views are intended to assist in the understanding of investments by Grisanti Brown & Partners LLC and do not constitute investment advice. None of the information presented should be construed as an offer to sell or recommendation of any security mentioned herein.

Grisanti Brown & Partners LLC