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January 20, 2010

VALUATION WARNING: Our models find that overvaluation is approaching

levels typically seen when a market correction is imminent. Overvalued
stocks now make up 62.5% of our universe and 28% of the universe is
calculated to be overvalued by 20% or more. ALL Sectors are now
calculated to be overvalued.

Short Score
ValuEngine Short Pick FirstBank Corp (FBP, $FBP) Up 24% in Two Days
Subscribers to our ValuEngine Forecast Model MNS Portfolio Newsletter
received their latest edition on Tuesday for a monthly re-balance. This newsletter
features a long and short side of 16 stocks from each sector we cover. The recent
market unrest over earnings, CEO health issues, and other factors have hit some
financials particularly hard.
This has been a boon to our Forecast MNS subscribers since their short-side
financial sector pick for the month was one of the hardest hit banks, FirstBank Corp
FirstBank Puerto Rico (FBP, $FBP). FBP received a downgrade from "Hold" to "Sell" from
Cantor Fitzgerald and has been one the NYSE's biggest losers as of the close
today. The stock was entered into our Forecast Model MNS Portfolio based on data
from last Friday's close at $7.10/share. It closed today at $5.40/share for a quick 24%
gain in just two days. We will have to see what the model thinks of the stock after this
substantial decline. Today's close blew through the model's original one-month
forecast target price of $5.74/share.
ValuEngine has issued a STRONG SELL recommendation for FirstBank Puerto
Rico. Based on the information we have gathered and our resulting research, we feel
that FirstBank Puerto Rico has the probability to UNDERPERFORM average market
performance for the next year. The company exhibits UNATTRACTIVE momentum,
volatility and P/E ratio.
 Based on available data as of Jan. 20, 2011, we believe that FBP should be
trading at $5.73. This makes FBP 5.41% overvalued. Fair Value indicates what we
believe the stock should be trading at today if the stock market were perfectly
efficient and everything traded at its true worth. For FBP, we base this on actual
earnings per share (EPS) for the previous four quarters of -$2.12, forecasted EPS for the
next four quarters of -$0.07, and correlations to the 30- year Treasury bond yield of
4.53%.

First BanCorp operates as the holding company for FirstBank Puerto Rico that
provides a range of financial services and products to retail, commercial, and
institutional clients in Puerto Rico, the United States, and the British Virgin
Islands. FirstBank Puerto Rico distinguished itself by providing innovative marketing
strategies and novel products to attract clients. Besides the branches and lending
offices, the Corporation has offered a telephone information service called
Telebanco since 1983. This was the first telebanking service offered in Puerto Rico. The
Corporation's clients have access to an extensive ATM network all over the world. The
Corporation was the first in Puerto Rico to open on weekends and the first to offer in-
store branches to its clients.

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MARKET OVERVIEW
Summary of VE Stock Universe
Stocks Undervalued 37.44%
Stocks Overvalued 62.56%
Stocks Undervalued by 20% 15.98%
Stocks Overvalued by 20% 28.29%
SECTOR OVERVIEW

Sector Change MTD YTD Valuation Last 12- P/E

MReturn Ratio
Aerospace -1.25% 3.37% 3.37% 10.15% overvalued 31.32% 18.98
Auto-Tires-Trucks -2.54% 0.93% 0.93% 15.15% overvalued 32.58% 20.29
Basic Materials -2.61% -3.29% -3.29% 19.65% overvalued 41.62% 39.71
Business Services -1.67% 1.70% 1.70% 13.41% overvalued 15.34% 32.84
Computer and Technology -2.32% 8.86% 2.93% 10.93% overvalued 32.61% 37.38
Construction -2.57% 1.63% 1.63% 2.12% overvalued 8.76% 29.23
Consumer Discretionary -2.08% -0.76% -0.76% 5.14% overvalued 20.37% 30.6
Consumer Staples -1.74% -0.69% -0.69% 6.39% overvalued 16.11% 24.57
Finance -1.96% 0.17% 0.17% 7.14% overvalued 15.06% 27.93
Industrial Products -2.12% 0.45% 0.45% 11.98% overvalued 25.43% 32.19
Medical -2.05% 1.61% 1.61% 0.92% undervalued 14.52% 35.9
Multi-Sector Conglomerates -1.26% 2.20% 2.20% 15.49% overvalued 28.88% 34.63
Oils-Energy -2.07% 1.73% 1.73% 28.07% overvalued 33.36% 47.76
Retail-Wholesale -1.76% -2.27% -2.27% 6.68% overvalued 21.85% 26.54
Transportation -1.88% -1.18% -1.18% 13.56% overvalued 22.63% 28.2
Utilities -0.97% 0.34% 0.34% 7.05% overvalued 13.23% 20.55