Shadow Stock Fund
Quarterly Report
March 31, 1995
MESSAGE
To Our Shareholders
Shadow Stock Fund's third fiscal quarter ended March 31, 1995 saw a healthy
rebound from the decline in the December 1994 quarter. The Fund's total return
(price change and reinvested distributions) of 5.7%, compared favorably with
the return of 4.6% achieved by the unmanaged Russell 2000 index of small
capitalization stocks during the period. It was also slightly stronger than
the 5.6% average return of the small company growth funds covered by the
Lipper Mutual Fund Performance Analysis.
Net asset value rose from $9.52 per share on December 31, 1994, to $10.06 at
the end of March. Net assets of the Fund increased from $33.5 million at the
end of 1994, to $37.1 million at the end of the quarter. Of this, $1.7 million
was the result of net purchases by existing and new shareholders, and the
balance was due to portfolio appreciation and accumulated income after
expenses.
Performance data contained in this report is for past periods only. Past
performance is not predictive of future performance. Investment return and
share value will fluctuate, and redemption value may be more or less than
original cost.
The Fund continues to have attractive valuation characteristics. The average
price/earnings ratio based on estimated earnings for 1995 for the companies
in the Fund is only 9.6, way below the Standard & Poor's 500 multiple of 14.3
times earnings. The average price-to-book value is 1.2, compared to 3.0 for
the S&P 500 companies and 2.1 for the Russell 2000.
One of our companies NAMIC USA, completed its emergence from the shadows at
the end of the quarter. This Glen Falls, New York manufacturer of medical
products for fluid administration through catheters was acquired by Pfizer.
The Pfizer shares were sold when received. We had purchased NAMIC last March
1994 for $10. The Pfizer sale brought the equivalent of $21.85 per NAMIC
share - a nice gain in one year.
The stock market has been strong and resilient in the face of the problems in
Mexico, other emerging markets, Barings Bank and the financial markets in
genral. Recent strength has been focused on technology stocks and the stocks
of larger rather than smaller companies. The market has benefited from some
easing of interest rates recently. In the uncertain economic environment we
currently face, the very reasonable valuations of our stocks should continue
to offer good relative potential. We expect the portfolio to continue to
display very low risk characteristics among its small company fund peers.
We appreciate your continued use of our Fund in your investment program.
Sincerely,
LARRY D. ARMEL
Larry D. Armel
President
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STATEMENT OF NET ASSETS
March 31, 1995
<TABLE>
<CAPTION>
SHARES COMPANY MARKET VALUE
<S> <C> <C>
COMMON STOCKS - 89.46%
BASIC MATERIALS - 3.23%
10,638 Aceto Corp. $ 162,229
31,400 American Pacific 213,912
4,900 Badger Paper Mills, Inc. 72,275
6,480 Baltek Corp. 51,840
2,974 Detrex Corp. 26,023
12,393 Gibson (The C.R.) Co. 72,809
18,717 Insteel Industries, Inc. 138,038
11,000 National Sanitary Supply Co. 140,250
4,300 Pitt-Des Moines, Inc. 151,575
10,150 Roanoke Electric Steel Corp. 170,013
1,198,964
CAPITAL GOODS - 13.27%
18,100 American Ecology Corp. 126,700
6,700 American Filtrona Corp. 188,438
9,444 Athey Products Corp. 56,074
2,900 Badger Meter, Inc. 67,788
26,400 Baker (Michael) Corp. 103,950
6,927 Binks Manufacturing Co. 152,394
20,200 Cascade Corp. 267,650
12,200 Cherry Corp. Cl. A 195,200
12,000 Cherry Corp. Cl. B 180,000
8,925 CIMCO, Inc. 41,278
8,000 Davis Water & Waste
Industries, Inc. 76,000
8,391 Del Electronics Corp. 46,150
8,700 Devcon International Corp. 71,231
6,200 Eastern (The) Co. 93,000
8,715 Ecology and Environment, Inc. Cl. A 74,078
10,800 Elco Industries, Inc. 162,000
16,400 Engle Homes, Inc. 120,950
16,800 Failure (The) Group, Inc. 88,200
5,775 Farr Co. 36,816
12,200 Farrel Corp. 59,475
2,600 Graham Corp. 26,000
11,582 Greiner Engineering, Inc. 140,432
5,000 Heist (C.H.) Corp. 45,000
6,200 Industrial Acoustics Company, Inc. 96,875
11,500 International Jensen Inc. 103,500
2,400 Lynch Corp. 89,400
5,649 Maxwell Laboratories, Inc. 36,719
14,600 Mestek, Inc. 151,475
5,650 Met-Pro Corp. 105,938
7,700 Noland Co. 155,925
35,400 O'Sullivan Corp. 362,850
1,800 Oilgear Co. 24,975
11,500 Oriole Homes Corp. Cl. A 86,250
3,700 Penn Engineering & Manufacturing Corp. 199,800
12,200 Plasti-Line, Inc. 85,400
12,600 Puerto Rican Cement Co., Inc. 357,525
3,700 Salem Corp. 94,813
5,700 Southwest Water Co. 48,450
14,700 Starrett Housing Corp. 115,763
26,875 Terex Corp. 178,047
24,500 Video Lottery Technologies, Inc. 211,313
4,923,822
CONSUMER CYCLICAL - 16.39%
12,400 American Recreation Centers, Inc. 89,900
12,300 Amplicon, Inc. 199,875
4,600 Analysis & Technology, Inc. 57,500
20,500 Bon-Ton Stores, Inc. 217,813
12,000 Carmike Cinemas, Inc. Cl. A 237,000
8,300 Comarco, Inc. 80,925
13,300 Crown Books Corp. 207,813
46,000 Deb Shops Inc. 184,000
30,721 Dixie Yarns Inc. 168,965
34,600 Egghead, Inc. 294,100
7,066 Frederick's of Hollywood, Inc. Cl. A 37,980
8,932 Frederick's of Hollywood, Inc. Cl. B 49,126
4,880 Gander Mountain, Inc. 50,020
4,000 Geodynamics Corp. 32,000
26,300 Gottschalks Inc. 180,812
12,700 Government Technology Services, Inc. 79,375
9,703 Hampton Industries, Inc. 61,857
5,827 Hein-Werner Corp. 28,407
1,700 Howell Industries, Inc. 49,725
26,200 InaCom Corp. 222,700
11,716 Knape & Vogt Manufacturing Co. 175,740
15,815 LDI Corp. 59,306
5,199 M/A/R/C (The) Group 68,887
5,000 McRae Industries Inc. Cl. A 33,125
11,011 Oneita Industries, Inc. 133,508
20,700 Optical Coating Laboratory, Inc. 194,063
8,000 Outlook Graphics Corp. 76,000
14,000 Pancho's Mexican Buffet, Inc. 78,750
5,500 ProGroup, Inc. 37,125
6,700 Pulaski Furniture Corp. 137,350
33,000 RPC Energy Services Inc. 247,500
17,400 S & K Famous Brands, Inc. 126,150
10,500 S K I Ltd. 157,500
17,272 Sands Regent 99,314
8,000 Scheib (Earl), Inc. 58,000
10,200 Spec's Music Inc. 40,800
46,100 Syms Corp. 328,462
22,000 Syratech Corp. 401,500
7,000 Thomaston Mills, Inc. Cl. A 91,000
1,000 Thomaston Mills, Inc. Cl. B 13,500
11,200 Trimark Holdings, Inc. 75,600
14,600 Uni-Marts Inc. 83,950
3,500 Valley Forge Corp. 64,750
11,122 Virco Manufacturing Corp. 91,756
7,700 Vista Resources, Inc. 164,587
6,585 Watsco, Inc. Cl. B 113,591
4,900 Weyco Group, Inc. 171,500
14,828 Wolohan Lumber Co. 226,127
6,079,334
CONSUMER STAPLES - 12.47%
12,900 Bio-Rad Labs, Inc. Cl. A 369,262
6,800 Cagle's, Inc. Cl. A 124,100
19,400 Chattem, Inc. 106,700
6,700 Continental Can Company, Inc. 185,088
3,644 Del Laboratories, Inc. 160,336
3,000 Foodarama Supermarkets, Inc. 30,375
16,000 Forschner Group, Inc. 176,000
3,200 Genesee Corp. Cl. B 120,000
32,750 Golden Poultry Company, Inc. 212,875
15,600 Immucor, Inc. 109,200
34,100 Ingles Markets, Inc. Cl. A 328,212
6,725 Marsh Supermarkets, Inc. Cl. A 75,656
9,125 Marsh Supermarkets, Inc. Cl. B 84,406
14,150 Medex, Inc. 155,650
9,000 PSICOR, Inc. 109,125
7,250 Rauch Industries, Inc. 65,250
21,200 Riser Foods, Inc. Cl. A 169,600
23,700 Robert Mondavi Corp. Cl. A 287,363
7,426 Ropak Corp. 80,758
14,500 Salick Health Care, Inc. 529,250
20,550 Sanderson Farms, Inc. 241,462
4,100 Seaway Food Town, Inc. 56,375
4,800 Seneca Foods Corp. 164,400
8,400 Span-America Medical Systems, Inc. 37,800
14,100 St. Ives Laboratories, Inc. 116,325
4,900 Tranzonic Cos. Cl. A 72,887
2,950 Tranzonic Cos. Cl. B 42,406
12,900 Vallen Corp. 187,050
12,800 Western Beef, Inc. 78,400
12,800 Worthington Foods Inc. 147,200
4,623,511
ENERGY - 0.60%
12,400 Convest Energy Corp. 48,825
11,000 Maynard Oil Co. 50,875
12,760 Swift Energy Co. 121,220
220,920
FINANCIAL - 21.15%
18,000 ALLIED Group, Inc. 508,500
20,100 American Travellers Corp. 391,950
5,400 Amwest Insurance Group, Inc. 77,625
8,700 Central Reserve Life Corp. 66,338
4,300 Cotton States Life and Health
Insurance Co. 39,237
36,100 EMC Insurance Group Inc. 374,538
5,200 Financial Institutions Insurance
Group Ltd. 70,850
17,200 First Financial Caribbean Corp. 208,550
13,500 Jefferies Group, Inc. 432,000
4,900 Kentucky Medical Insurance Co. Cl. A 33,075
8,400 Lawrence Insurance Group, Inc. 21,000
10,820 Markel Corp. 522,065
18,920 McDonald & Co. Investments, Inc. 269,610
7,000 Merchants Group, Inc. 101,500
15,500 Meridian Insurance Group, Inc. 178,250
5,800 Midland Co. 256,650
12,648 Mid-South Insurance Co. 173,910
10,300 Milwaukee Insurance Group, Inc. 106,863
7,600 Minuteman International, Inc. 76,000
12,500 Mobile America Corp. 107,812
27,500 Money Store Inc. 690,937
26,800 Morgan Keegan, Inc. 398,650
10,800 National Insurance Group 58,050
4,850 National Security Group, Inc. 80,025
7,100 National Western Life Insurance Co. 246,725
10,800 Navigators Group, Inc. 167,400
12,300 Norex America, Inc. 121,463
5,200 Penn Treaty American Corp. 94,900
10,800 Piedmont Management Company Inc. 132,300
15,100 Pioneer Financial Services, Inc. 166,100
15,000 PXRE Corp. 361,875
8,500 Reading Co. Cl. A 93,500
12,000 RLI Corp. 280,500
4,200 Scott & Stringfellow Financial, Inc. 54,600
23,300 State Auto Financial Corp. 390,275
18,400 Stewart Information Services Corp. 315,100
8,085 Walshire Assurance Co. 101,062
5,000 Ziegler (The) Companies, Inc. 75,000
7,844,785
MISCELLANEOUS - 0.19%
4,500 Programming and Systems, Inc. 9,000
2,600 Scope Industries 62,400
71,400
TECHNOLOGY - 8.65%
2,900 Allen Organ Co. Cl. B 119,625
14,700 BEI Electronics, Inc. 86,362
7,500 Dataram Corp. 39,375
4,100 Datron Systems Inc. 48,688
12,400 E For M Corp. 74,400
8,900 Equitrac Corp. 40,050
3,100 Espey Mfg. & Electronics Corp. 39,525
33,800 Future Now Inc. 185,900
4,700 Giga-tronics Inc. 32,900
18,100 Hadco Corp. 218,331
5,100 HEICO Corp. 58,012
5,400 Information International, Inc. 41,850
18,848 Intellicall, Inc. 75,392
8,300 Intermetrics, Inc. 37,350
6,300 Interphase Corp. 67,725
11,513 Isco, Inc. 125,204
7,900 JFR Systems, Inc. 104,675
5,900 K-Tron International, Inc. 35,400
6,900 Keithley Instruments, Inc. 88,837
22,300 Micronics Computers Inc. 119,862
3,800 Moore Products Co. 61,750
11,400 Nichols Research Corp. 171,000
8,100 Norstan, Inc. 184,275
19,300 North Star Universal, Inc. 101,325
25,000 Rexon Inc. 118,750
17,400 Safeguard Scientifics Inc. 432,825
3,700 SBE Inc. 35,150
8,200 Summagraphics Corp. 41,000
19,500 Trident Microsystems, Inc. 307,125
8,800 Vertex Communications Corp. 116,600
3,209,263
TRANSPORTATION & SERVICES - 2.11%
10,650 International Shipholding Corp. 216,994
4,800 Kenan Transport Co. 96,000
9,466 KLLM Transport Services, Inc. 128,974
8,000 Marten Transport, Ltd. 164,000
12,100 Petroleum Helicopters Inc. 122,513
3,600 VSE Corp. 53,550
782,031
UTILITIES - 11.40%
4,400 AlaTenn Resources, Inc. 83,600
17,100 Bangor Hydro-Electric Co. 179,550
3,800 Berkshire Gas Co. 57,950
16,950 Cascade Natural Gas Corp. 235,181
7,700 Chesapeake Utilities Corp. 102,025
10,750 Colonial Gas Co. 217,688
19,450 Connecticut Energy Corp. 371,981
6,000 Connecticut Water Service, Inc. 144,750
4,000 Delta Natural Gas Company, Inc. 73,000
1,600 Dominguez Services Corp. 28,000
12,600 E'town Corp. 327,600
7,613 EnergyNorth, Inc. 135,131
3,400 Essex County Gas Co. 80,750
3,100 Florida Public Utilities Co. 58,125
8,500 Green Mountain Power Corp. 212,500
3,600 Maine Public Service Co. 81,900
8,500 Middlesex Water Co. 138,125
22,419 NUI Corp. 339,087
21,900 Philadelphia Suburban Corp. 391,462
10,800 Providence Energy Corp. 178,200
8,100 SJW Corp. 262,237
17,200 Southern California Water Co. 277,350
8,476 UNITIL Corp. 138,795
7,100 Upper Peninsula Energy Corp. 113,600
4,228,587
TOTAL COMMON STOCKS - 89.46% 33,182,617
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<TABLE>
<CAPTION>
FACE AMOUNT DESCRIPTION MARKET VALUE
<S> <C> <C>
REPURCHASE AGREEMENT - 8.62%
$ 3,200,000 UMB Bank, n.a.,
5.71%, due April 3, 1995
(Collateralized by U.S.
Treasury Notes, 10.50%,
due August 15, 1995) 3,200,000
TOTAL INVESTMENTS - 98.08% $ 36,382,617
Other assets less liabilities - 1.92% 710,656
TOTAL NET ASSETS - 100.00%
(equivalent to $10.06 per share;
10,000,000 shares of $1.00 par
value capital shares authorized;
3,688,525 shares outstanding) $ 37,093,273
</TABLE>
This report has been prepared for the information of the Shareholders of
Shadow Stock Fund, Inc., and is not to be construed as an offering of the
shares of the Fund. Shares of this Fund and of the other Babson Funds are
offered only by the Prospectus, a copy of which may be obtained from Jones
& Babson, Inc.
BASIS OF DETERMINING MARKET VALUE. Each investment is valued at the latest
sales price on March 31, 1995, as reported by the
principal exchange on which the issue is traded. If no sale is reported, or
if unlisted, the average of the latest bid and asked price is used.
