3SOF

Unusual Volume Leaders...
What follows is a look at stocks in the S&P 500
displaying unusual volume in today's trading session.

Lee Hobson's Top Holdings and New Stock Picks
by: Insider Monkey February 09, 2011 

Lee Hobson is founder of Highside Capital Management hedge fund, which reported $2.16 Billion total assets in its last 13F filing. Hobson graduated from Princeton University in 1987 with a B.A. degree and received his M.B.A. from Harvard Business School in 1992.

Lee Hobson founded Highside Capital Management in 2003. Prior to forming Highside, Hobson was a Partner of Lee Ainslie's Maverick Capital from 1994 until 2003. In Maverick, he worked on investments in the consumer sector. He is also specialized in Latin America, which helped him to play an important role in Maverick's investments in this region. Before joining Maverick Capital, Hobson worked at PepsiCo (PEP) Foods International as an associate in the new business development division. Early in his career he worked as an analyst at Goldman Sachs (GS) in New York and at Societe Generale in Paris.

According to 13F filings, Lee Hobson's Highside Capital Management had at least 43 securities in its portfolio as of September 30th 2010. During the third quarter, Hobson bought 13 new stocks.

Here are his five largest new stock picks:

1. Expedia Inc (EXPE): Lee Hobson had $85 Million in EXPE shares at the end of September. These shares have lost 11.5% since then, underperforming the SPY by 27 percentage points. Roberto Mignone also started buying EXPE during the third quarter.

2. On Semiconductor Corporation (ONNN): ONNN is one of Lee Hobson's best performing new stock picks, returning nearly 55%. Hobson has $31 Million invested.

3. Chipotle Mexican Grill Inc (CMG): CMG was another good pick from Hobson. CMG outperformed the market by nearly 28 percentage points. Hobson has $29.2 Million invested.

4. J Crew Group Inc (JCG): Lee Hobson had $28 Million in JCG stock at the end of September. The stock gained 29.4% since then, beating the SPY by 13.9 percentage points.

5. Yum! Brands Inc (YUM): This was a weak performing stock, returning 7% since September. Hobson has $27.6 Million invested. Stephen Mandel also had 15 million shares of YUM valued at nearly $700 Million as of September 30th, 2010.

The value of the 13 new stocks in Hobson's portfolio was $337 Million at the end of September. The value weighted average performance of his new stock picks during the last 4 months was 11%+, underperforming the market by 4.5 percentage points. These new stocks are still a small proportion of Hobson's $2.16 Billion 13F portfolio.

Here is how Hobson's top 10 positions performed during the past four months:

1. SPDR Gold Trust (GLD): GLD was Hobson's biggest investment at the end of September 2010. GLD has gained 2.9% since the end of September, underperforming the SPY's 15.5% return. Hobson reduced his call option holdings by 30.4% in the third quarter but he still holds $383 Million in these options in his portfolio. There are several other hedge fund managers who also invested in gold.

2. Verisign Inc (VRSN): Hobson had almost $87 Million of Verisign shares at the end of September. Verisign has gained 11.2% since then. Hobson kept his Verisign holdings the same in the third quarter of 2010.

3. NII Holdings Inc (NIHD): Hobson had almost $86 Million in NIHD shares at the end of September. He reduced his holding by 4.5% during the third quarter of 2010. NIHD has gained 3.1% since then, underperforming the SPY by 12.4 percentage points.

4. Qualcomm Inc (QCOM): Hobson's $86 Million in Qualcomm has gained 21.8% since the end of September. Hobson has increased his stock holdings by 40.7% since the end of June. QCOM is also one of the stocks which insiders are selling like crazy.

5. Expedia Inc (EXPE): Hobson had $85 Million in EXPE shares at the end of September. These shares lost 11.5% since then, underperforming the SPY by 27 percentage points.

6. NVR Inc (NVR): Hobson has returned 16.8% from his NVR investment of $77 Million since the end of September. The stock outperformed the SPY by 1.3 percentage points. Hobson reduced the stock holdings by 4% during the third quarter of 2010.

7. Apple Inc (AAPL): Hobson increased his Apple stake by 32.5% during the third quarter. This was a timely move. Apple has returned 21.0% since then. Apple is also one of top stocks hedge funds own. Chase Coleman, Stephen Mandel, Barry Rosenstein, and David Einhorn are also among the hedge fund managers with huge Apple investments.

8. Cablevision (CVC): The stock had one of the best performances in his porfolio during last four months. CVC has returned almost 35.1% since the end of September, beating the market by a large margin. Hobson has increased stock holdings of CVC 35% since the previous 13F forms were filled at the end of June.

9. Citigroup Inc (C): Hobson had $67 Million in C shares at the end of September. This is another stock with 20%+ returns over the past four months. C gained 23.3% in four months, beating the SPY by 7.8 percentage points. C was also one of the 7 stocks insiders were buying like crazy in November.

10. Petsmart Inc (PETM): PETM has gained 18.5% since September, beating the SPY by 3.0 percentage points. Hobson had nearly $60 Million invested at the end of September.

Six of Hobson's top 10 positions managed to beat the market. The weighted average return of these stocks was 10.5% since the end of September, underperforming SPY's 15.5% return. We expected a better performance from Hobson but a 4 month time frame is still too short to judge a hedge fund manager.

Disclosure: I am long C, SPY.

About the author: Insider Monkey  It's a well known fact that insiders profit from their transactions. More than 59,000 different insiders made public filings with the SEC in 2009. The year before that, more than 65,000 did. Blindly imitating all of these insiders won't yield much. Monkeying only the top insiders, the ones who have the best track record, is a different story. Insider Monkey uses a hybrid evaluation system that exploits insider transactions and other market anomalies to reduce the number of insiders who are worthy enough to monkey. Insider Monkey also provides high quality evidence based articles to inform individual investors about the intricacies of investing.

Ian Dogan

Insider Monkey's hybrid evaluation system ...More ...More was created in 2003 by Dr. Ian Dogan. Dr. Dogan has a Ph.D. in financial economics with a specialization in insider trading. Dr. Dogan has provided consulting services to institutional investors and hedge funds, and managed a $200+ million fund using a strategy he developed utilizing insider transactions. Dr. Dogan recently authored the insider trading chapter of soon to be published "The Handbook of Investment Anomalies" by Zacks Investment Research. Insider Monkey will serve the outcome of the methodologies developed by Dr. Dogan to ordinary investors who don't have access to academic quality research and tools to shape their investments.

Meena Krishnamsetty

Ms. Krishnamsetty is the Editor of Insider Monkey. Prior to creating Insider Monkey with Dr. Dogan, Ms. Krishnamsetty was Associate Producer at Bloomberg Television. Prior to that, Ms. Krishnamsetty was on the afternoon news team at CNBC. Additionally, Ms. Krishnamsetty reported for NPR and worked as a risk management consultant at Marsh & McLennan. Ms. Krishnamsetty has a M.S. in Journalism from Columbia University's Graduate School of Journalism.

For your inquiries please contact us at [email protected]

An up to date look at one of my watch list...
20 stocks and how they have performed

Page 2 of the list...

Why not look at Page 3...

Freddie Mac posts $1.7B loss for Q4
Freddie Mac posts $1.7B loss for Q4; $19.8B for 2010; asks for additional $500 million in aid

Marcy Gordon, AP Business Writer, On Thursday February 24, 2011, 5:24 pm
WASHINGTON (AP) -- Government-controlled mortgage buyer Freddie Mac managed a narrower loss of $1.7 billion for the October-December quarter of last year. But it has asked for an additional $500 million in federal aid -- up from the $100 million it sought in the previous quarter.

Freddie Mac also posted a $19.8 billion loss for all of 2010.

The government rescued Freddie Mac and sibling company Fannie Mae in September 2008 to cover their losses on soured mortgage loans. It estimates the bailouts will cost taxpayers as much as $259 billion.

Freddie Mac's October-December loss attributable to common stockholders works out to 53 cents a share. It takes into account $1.6 billion in dividend payments to the government. It compares with a loss of $7.8 billion, or $2.39 a share, in the fourth quarter of 2009.

The company said the recovery of the housing market is still fragile.

"As we begin 2011, the housing recovering remains vulnerable to high levels of unemployment, delinquencies and foreclosures," Chief Executive Charles Haldeman said in a statement. "We expect national home prices to decline this year as housing will continue to take some time to recover."

Fannie Mae and Freddie Mac own or guarantee about half of all mortgages in the U.S., or nearly 31 million home loans worth more than $5 trillion. Along with other federal agencies, they played some part in almost 90 percent of new mortgages over the past year.

Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default and sell them to investors around the world.

The government's estimated cost of bailing out the mortgage giants far exceeds the $132.3 billion they have received from taxpayers so far. That would make theirs the costliest bailout of the financial crisis.

The two have been hit by massive losses on risky mortgages purchased from 2005 through 2008. The companies have tightened their lending standards after those loans started to go bad. Default rates on new loans are far lower.

The Obama administration unveiled a plan earlier this month to slowly dissolve the two mortgage giants. The aim is to shrink the government's role in the mortgage system. The proposal would remake decades of federal policy aimed at getting Americans to buy homes and probably would make home loans more expensive.

Exactly how far the government's role in mortgages would be reduced was left to Congress to decide. But all three options the administration presented would create a housing finance system that relies far more on private money.

Treasury Secretary Timothy Geithner will face questions from lawmakers next week at a congressional hearing on the proposal.

(This version CORRECTS Corrects total amount of money taxpayers have provided so far by subtracting dividends paid. This story is part of AP's general news and financial services.)

VANCOUVER, British Columbia, Feb. 25, 2011 /PRNewswire via COMTEX/ -- Today, Insiderslab.com found significant insider trading for Halliburton, EMC, Coca-Cola, Philip Morris, priceline.com, & ON Semiconductor.

It is a common phenomenon that a large cluster of insiders settled their trades in the same day. In general, groups of insider trading within a short period yield more information than a single settlement. Insiderslab.com focuses on large clusters, open market insider transactions in order to help investors foresee the strong signal hidden in the insider trading.

(Read full report by clicking the links, you may need to copy and paste the full link to your browser.)

Halliburton Company: Open-market Sale made by company C-Level Officers on Feb 22nd, at trade price (US$48.16). Disclose date: Feb 24th. Read Full Report: http://www.insiderslab.com/PR/022511A/HAL/Halliburton (HAL, Trade )

EMC Corporation: Market Option Sale made by company Directors on Feb 23rd, at trade price (US$26.30). Disclose date: Feb 24th. Read Full Report: http://www.insiderslab.com/PR/022511A/EMC/EMC (EMC, Trade )

The Coca-Cola Company: Open-market Purchase made by company Directors on Feb 23rd, at trade price (US$64.17). Disclose date: Feb 24th. Read Full Report: http://www.insiderslab.com/PR/022511A/KO/Coca-Cola (KO, Trade )

Philip Morris International Inc.: Open-market Sale made by company C-Level Officers on Feb 22nd, at trade price (US$61.88). Disclose date: Feb 24th. Read Full Report: http://www.insiderslab.com/PR/022511A/PM/Philip-Morris (PM, Trade )

priceline.com Incorporated: Open-market Sale made by company C-Level Officers on Feb 22nd, at trade price (US$436.30). Disclose date: Feb 24th. Read Full Report: http://www.insiderslab.com/PR/022511A/PCLN/priceline (PCLN, Trade )

ON Semiconductor Corp.: Open-market Sale made by company Directors on Feb 22nd, at trade price (US$11.01). Disclose date: Feb 24th. Read Full Report: http://www.insiderslab.com/PR/022511A/ONNN/ON-Semiconductor (ONNN, Trade )

Company insiders make thousands of filings each day, detailing their investment decisions. Insiderslab.com analyzes the raw data and compiles it into information that investors can use to enhance their investment research. You can subscribe to FREE insider trading alerts tracking all stocks on the OTCBB, NASDAQ, SP500, DOWJ and NYSE by visiting http://www.insiderslab.com .

Insider Filing Source Reference: All observations, analysis and reports are based on public information released by the U.S. Securities and Exchange Commission.

About Insiderslab.com:

Insiderslab.com is a leading provider of independent reports on insider trade. Services include insider trade reporting on blue chips and penny stocks, real-time insider trading alerts, and newsletters describing notable insider trades. Insiderslab.com features a team of experienced analysts striving to provide the investment community with the tools, software and data necessary to carry out more effective investment research. Insiderslab.com covers major stock markets in the U.S., Hong Kong, Mainland China, and Singapore. Stock trading research reports can be viewed at http://www.insiderslab.com in the U.S., and at http://www.insiders.hk in Asia.

Important Disclaimer:

Insiderslab.com is not a registered investment advisor. Nothing contained in any materials should be construed as a recommendation to buy or sell any security. Insiderslab.com and Insiders.hk are not compensated by any of the companies mentioned above, or in research reports compiled by its experts. All calculated numbers are statistics are based on the best available information and represent our best efforts toward accuracy. You hereby acknowledge that any reliance upon any materials in this press release shall be at your sole risk. You can visit http://www.insiderslab.com and http://www.insiders.hk for a more complete account of risks and disclosures.

CONTACT:


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Tel: +1-778-2976120



SOURCE Insiderslab.com

Berkshire Hathaway to buy Lubrizol for $9B in cash
AP - Mon Mar 14, 5:18PM CDT

OMAHA, Neb. (AP) — Warren Buffett's company said Monday it will spend about $9 billion cash to add specialty chemical maker Lubrizol Corp. to the eclectic mix of businesses inside Berkshire Hathaway Inc.

The purchase may help satisfy Buffett's appetite for large acquisitions to boost Berkshire's earnings power, but the deal is still significantly smaller than last year's $26.7 billion acquisition of the Burlington Northern Santa Fe railroad.

"Lubrizol is exactly the sort of company with which we love to partner — the global leader in several market applications run by a talented CEO, James Hambrick," Buffett said in a statement.

Two years ago, Berkshire invested $3 billion in preferred shares of Dow Chemical to help finance Dow's $16.5 billion purchase of specialty chemical maker Rohm & Haas in 2009. That deal likely gave Buffett insight into the high-margin specialty chemical business.

In Monday's deal, Berkshire will pay $135 per share, a 28 percent premium to Lubrizol's closing stock price Friday of $105.44. The transaction also includes about $700 million in net debt.

Lubrizol, of Wickliffe, Ohio, makes chemicals for pharmaceutical companies, fuel additives for gasoline and diesel and other ingredients for the transportation sector. Last month, it reported that its fourth-quarter profit climbed 17 percent because of a $19 million tax benefit and higher sales. The company's revenue grew 11 percent to $1.32 billion.

Berkshire already owns a conglomerate of more than 125 manufacturing and service businesses called Marmon Holdings that may use some of Lubrizol's products. Marmon's businesses serve the transportation, energy and construction markets, and Marmon makes products ranging from railroad tank cars to metal fasteners.

Buffett biographer and Berkshire shareholder Andy Kilpatrick said he thinks Lubrizol will be a good fit because it appears to be a solid company.

"He's paying a reasonable premium, and he's getting an entire business with a brand name," said Kilpatrick, the stockbroker-author of "Of Permanent Value, the Story of Warren Buffett."

Stifel Nicolaus analyst Meyer Shields said Lubrizol should complement Berkshire's other businesses, and the deal wasn't surprising after Buffett's comment in his shareholder letter about actively hunting for acquisitions.

But Shields said Berkshire shareholders may have been better off, especially in the near future, if Berkshire would simply return some of its cash to shareholders in the form of a dividend instead of acquiring Lubrizol.

"There's no real economic benefit being created by these sort of transactions as far as I can tell," said Shields, who maintains a "Hold" rating on Berkshire's stock. "If you really can't find anything to do with your cash, it's perfectly OK to not do anything with your cash. Give it back."

Berkshire finished 2010 with about $38 billion cash on hand, so it had the resources ready for a deal. Buffett has never issued a dividend at Berkshire because he believes he can generate a greater return for shareholders by reinvesting the money.

Morningstar analyst Greggory Warren said he doesn't think Lubrizol was on anyone's radar before Monday, but it seems to fit with Berkshire's recent acquisitions and should be a good use for some of the company's cash.

"It's just another decent-returning business that he was able to get at a reasonable price and slot it into the portfolio," Warren said.

Berkshire, which is based in Omaha, Neb., owns roughly 80 subsidiaries, including insurance, clothing, utility, furniture, jewelry and corporate jet firms. It also has major investments in such companies as Coca-Cola Co., Washington Post Co. and Wells Fargo & Co.

Buffett, whose investing decisions are carefully scrutinized by the world of finance, said earlier this month that while he's interested in making acquisitions, it's hard to find big businesses that fit into Berkshire well. He also noted that businesses that do appeal to him usually aren't selling at the right price.

Buffett is regarded as a master of value investing — focusing on finding financially sound companies with underpriced shares. He has simple standards for what he looks for in an investment: easy-to-understand large companies with a strong competitive advantage that generate cash and above-average returns on capital.

Lubrizol says it is the top supplier of highly profitable lubricant additives in the world and a leading maker of ingredients for personal care products and pharmaceuticals.

Lubrizol said in documents filed with the Securities and Exchange Commission Monday that the reason the company appeals to Berkshire is a combination of its successful business, strong competitive position and consistent track record.

Hambrick, Lubrizol's CEO, said in a note to customers that few changes are expected as part of the deal because Berkshire plans to support the company's current long-term growth strategy.

Berkshire's biggest acquisition before BNSF was the $16 billion stock purchase of reinsurance giant General Re announced in 1998.

Berkshire Hathaway and Lubrizol expect the acquisition to close in the third quarter. After the deal is complete, Lubrizol will become a Berkshire Hathaway subsidiary. It will keep its Wickliffe, headquarters and continue to be led by current management.

Both companies' boards have unanimously approved the buyout, but it still needs the approval of Lubrizol shareholders.

Lubrizol shares gained $29.24, or 28 percent, to $134.68, while Berkshire Hathaway's Class B shares were down $1.09 to $84.21.

___

Online:

www.berkshirehathaway.com

www.lubrizol.com

Cisco completes $95M buyout of Inlet Technologies
AP - Mon Mar 14, 6:15PM CDT

SAN JOSE, Calif. (AP) — Cisco Systems Inc., the world's largest maker of networking gear, said Monday it completed its acquisition of privately-held Inlet Technologies for $95 million.

Raleigh, N.C.-based Inlet provides digital media processing platforms. Inlet's technology, which is used in streaming multimedia, adapts the quality of the video stream in real time based on network demand.

Its acquisition will strengthen the capabilities of Cisco's Videoscape TV platform, allowing service and content providers to deliver video to any device over any Internet-based network. Cisco Videoscape combines digital TV and online content with social media for home and mobile video entertainment devices.

With the close of the acquisition, Inlet employees become part of Cisco's Service Provider Video Technology Group.

San Jose, Calif.-based Cisco shares fell 10 cents to close at $17.85.

Lockheed Martin (LMT) wins $135.5 million Navy contract
AP - Mon Mar 14, 8:23PM CDT

WASHINGTON (AP) — Lockheed Martin Corp. has received a $135.5 million contract to deliver 14 outer wing assembly kits and related support services for the Navy's P-3C aircraft, the Defense Department said Monday.

The contract also calls for the company to provide engineering analysis, integrated logistics and associated technical data support.

Work on the project will be performed in Marietta, Ga., and is expected to be completed in June 2014.

Shares in Bethesda, Md.-based Lockheed Martin ended the regular session unchanged at $80.47.

Hewlett-Packard (HPQ) hikes dividend, outlines strategy
The Associated Press - AP - Mon Mar 14, 7:01PM CDT

SAN FRANCISCO (AP) — Hewlett-Packard Co. said Monday it plans to raise its dividend for the first time in over a decade and one day soon will sell "cloud computing" services to the public.

The changes are part of CEO Leo Apotheker's efforts to chart a new course for the world's biggest technology company by revenue. Apotheker took over at HP four months ago after his predecessor, Mark Hurd, was ousted in a sexual harassment scandal.

Apotheker's presentation Monday at a conference for industry analysts and reporters marked the first time he has publicly outlined his strategy for HP since taking the job.

He offered few details. The "public cloud" was one of the few new revelations.

When it launches, it will put HP in competition with Amazon.com and other companies that have piled on to one of technology's hottest trends: selling services over the Internet. Such services allow people to rent space on servers they don't own, to run websites, for example.

Selling technology for building cloud services emerged as a cornerstone of Apotheker's plans for tying together HP's disparate resources. HP is a technology conglomerate. It's the biggest maker of personal computers and printers, and also sells servers and mobile phones and computer-networking equipment and technology services.

In focusing on the cloud, HP is positioning itself as the trusted intermediary to link those technologies.

The dividend hike is an attempt to win over Wall Street.

The dividend has been 8 cents per share since 1998. It will rise to 12 cents per share the next time the board of directors declares a dividend, which should be in May, said HP's chief financial officer, Cathie Lesjak.

HP plans on increasing the dividend by a double-digit percentage every year, Lesjak said.

She also set a target of earnings of at least $7 per share, excluding items, by 2014. The company earned $4.58 per share, on that same basis, in the latest fiscal year.

Apotheker has been active behind the scenes. In an early attempt to win over HP's approximately 300,000 employees, one of his first acts as CEO was to reverse pay cuts imposed by Hurd. Shortly after he and a new chairman were hired, HP replaced a third of its board of directors, an unusually severe boardroom purging that targeted individuals who were particularly vocal in the negotiations over Hurd's ouster, both for and against the decision.

HP shares rose 21 cents, or .5 percent, to $41.70 in extended trading.

Boeing (BA) says key test for 747-8 complete
AP - Mon Mar 14, 8:14PM CDT

CHICAGO (AP) — Boeing Co. says it has finished a key phase of testing for the new passenger version of its big 747, and the plane could make its first flight as soon as Sunday.

The first test plane went through two days of simulations of its first flight. Boeing said the so-called "gauntlet testing" wrapped up late Sunday. On Monday it said the first flight of the new 747-8 Intercontinental will happen after final review of the plane's readiness to fly, taxi testing and receipt of documentation from the Federal Aviation Administration. The first flight could be delayed if the weather doesn't cooperate.

The cargo version of the new plane has been in flight tests for about a year. The passenger version will carry up to 467 people.

Summary Box: Automakers shut plants post-tsunami
The Associated Press - AP - Mon Mar 14, 6:09PM CDT

JAPAN AUTOMAKERS: Toyota, Honda and Nissan are halting production at a number of Japanese plants for most of the week after last week's devastating earthquake and tsunami. Toyota said the shutdowns would affect production of about 40,000 vehicles while Honda said it would affect more than 16,000 vehicles.

KEY MARKET: Japan is the second-largest auto producer in the world behind China. The U.S. is Japan's largest export market.

U.S. IMPACT: Analysts said they do not expect major disruptions to dealer supplies in the United States. About 70 percent or more of the vehicles sold in the U.S. by the three major Japanese car makers are built in North America.

Shares of La. nuclear cos. take hit on earthquake
AP - Mon Mar 14, 5:28PM CDT

BATON ROUGE, La. (AP) — The crisis with Japan's quake-damaged nuclear power stations chopped into the Monday stock prices of two Louisiana companies — one with plans to build new reactors and another that uses the plants to generate power for utility customers and wholesale electricity markets.

An industry group said it was too early to tell what effect the earthquake would have on the U.S. nuclear industry. An anti-nuclear group called for a halt on domestic nuclear activity, including the construction of new plants and the relicensing of older generators. A utility analyst said he didn't believe the crisis would kill the U.S. nuclear industry, but he expected delays in licensing new plants, and in the relicensing process.

Shares of The Shaw Group Inc., based in Baton Rouge, La., slid 9.2 percent, or $3.54, to close at $34.87 after trading at a 52-week low of $27.61 earlier in the session. Shaw has a 20 percent investment in Westinghouse nuclear power and has contracts for several new nuclear plants in the United States and China.

Shaw CEO Jim Bernhard said in a statement late Sunday that he does not expect Japan's problems to affect those projects.

"At this time, we do not believe there will be an impact on Shaw's nuclear projects currently under construction in the United States and China," Bernhard said. "Our customers have indicated they intend to move forward and we believe the construction timelines will continue as planned."

Shaw spokeswoman Gentry Brann said the company currently has contracts to build eight nuclear units in the United States and six in China. Four are under construction in China and four are under construction in the United States, she said.

Shares of Entergy Corp., which operates regulated power utilities in Louisiana, Mississippi, Arkansas and Texas, fell 4.9 percent, or $3.60, to close at $70.09 after falling as low as $69.32 Monday. New Orleans-based Entergy owns or manages 12 nuclear plants in the United States. Five of those that generate power for the wholesale market were intended for a spinoff into a separate company, but that deal was called off last year after New York state utility regulators refused to approve the move.

Entergy Nuclear spokesman Mike Boling said Monday that company officials have been monitoring the situation in Japan. "Our officials have been participating with others in the industry and seeing what we can learn from the damage to the Japanese plants and the mechanical response of the plant," Boling said.

In a statement after markets closed Monday, Entergy said its nuclear plants were designed to withstand earthquakes and flooding — and federal safety standards require that the plants be designed to stand up against any natural disaster that would be more severe than any recorded historical event.

On Monday, three nuclear reactors in Japan were overheating dangerously as authorities raced to prevent devastating meltdowns of the nuclear cores. There have been two hydrogen explosions at the plants.

Washington, D.C.-based Public Citizen said the Japan crisis demonstrated "nuclear power's Achilles' heel," calling it "sheer folly to pour resources into building and maintaining nuclear reactors in the U.S." The group called on the federal government to stop relicensing older nuclear reactors, stop construction of new ones and end federal subsidies for nuclear power projects.

"The U.S. should focus on developing wind power and assisting families in the installation of rooftop solar systems," said Tyson Slocum, director of Public Citizen's energy program.

The Nuclear Energy Institute, a Washington, D.C.-based industry group, said Monday that it expected the U.S. government to study what happened exactly with the Japan plants. "But it's premature to say what the effect might be on the nuclear renaissance under way in this country and around the world," said NEI spokesman Carl Babb.

Babb said utility companies would be studying their operations to "see if they have the proper procedures in place in case something like this would happen again." Babb said a number of U.S. nuclear plants — he did not have exact figures — are constructed near fault lines, "but that is factored as part of the design and they have tougher standards. These plants are constructed on the basis of a worst-case scenario."

Michael Worms, a utility analyst with BMO Capital Markets in New York, said there likely would be delays in permitting new plants.

" The first thing the industry will do is stop the bleeding in Japan," Worms said. "They'll do their investigation and try to figure out what to do to keep it from happening again. This will take a while."

Worms said it was possible that some design changes would be ordered — and that also could delay relicensing of plants, all depending upon the eventual findings of what went wrong in Japan.

"Is nuclear dead because of this?" he said. "I don't think so. It survived Three Mile Island and it survived Chernobyl. But caution here will be the better part of discretion."

These Networking Stocks Are Worth a Look...

T.S. Eliot once wrote that "April is the cruelest month." Yet a half-dozen companies that sell optical networking equipment would beg to differ: March has been quite cruel and they're hoping April will be far kinder.

The entire group rallied higher in the first week on word that Juniper Networks (JNPR) would be ordering more optical networking gear to be used in its switches and routers. But my Monday, March 7, a raft of bad news would overtake the sector. That morning, Ciena (CIEN) predicted sales in the upcoming quarter would take a hit, because customer orders had begun to slow and inventories of unsold optical networking components were piling up. Ciena, JDS Uniphase (JDSU), Finisar (FNSR), Oclaro (OCLR) and Oplink (OPLK) all fell at last 7% that day.

The bleeding wasn't finished. Finisar weighed-in the next day, predicting sales in the quarter ended in April would lag forecasts, thanks to slowing customer orders. Finisar added the concern for much of the slowdown was coming from China, a market that was expected to account for major growth in 2011.Those same stocks that fell by high single-digits on March 7, all fell by double-digits the next day. The next few days weren't much better, and all of these stocks are off 30% to 60% since then.

Some industry watchers saw this coming. Demand for optical networking gear, which helps data traffic to move very fast through communications networks, soared 40% in 2010, according to industry research firm Ovum. Much of that growth was the result of customers stockpiling equipment to avoid being hit by any supply shortages. With key customers now sitting on ample amounts of unused equipment, a sales slowdown now seems to have been inevitable in hindsight.

Looking ahead
The quarterly slowdown increasingly looks to be the result of an industry with limited visibility, but the major customers for optical networking equipment are nowhere near the end of the line in terms of growth. In China, for example, where optical networking helps boost data transmission speeds, only 100 million handsets will be 3-G-capable this year. That's twice the amount of 2010 but still a faction of the 850 million handsets in use in China.

In the United States, the installation of optical networking equipment will remain crucial if carriers are to keep up with the exploding amount of data being consumed on wireless networks. That's not to say the industry will see an immediate bounce back. Analysts at Stifel Nicolaus figure the inventory overhang may stick around through the summer. The key for investors is to see inventories coming down and not wait until they have truly been worked though. When that finally happens, demand is likely to rebound for many of these firms and analysts will start to speak of that turn before it happens, implying share price rebounds ahead of a pick-up in demand.

Analysts at ACI Research think near-term inventory concerns are obscuring a larger brighter picture. They attended the annual Optical Fiber Conference (OFC), held earlier this month in Los Angeles, and noted that part of the slowdown is the result of key customers looking to step back and be sure they're keeping up with all of the industry's advances: "With advances come discontinuities. This heralds a tremendous amount of volatility for public companies. But make no mistake. It was the most exciting OFC in recent memory." (They're referring to the wide range of new products released at the show.)



Names to own
Analysts at Auriga Securities think Oclaro will be the first to rebound, thanks to a range of newly-released products reaching customers in the spring. "The June 2011 quarter is pivotal for the company as new products including ROADM (reconfigurable optical add-drop multiplexer) and 40G transceivers." They see shares rising from a current $11 to $14.

Longer-term, shares could rebound back to the 52-week high of $19 because Oclaro has considerable exposure to the Chinese market: China's Huawei, the world's second-largest telecom equipment provider, accounts for 17% of Oclaro's sales, a figure that has been steadily rising in recent years. Another play is San Jose, Calif.-based Neophotonics (NPTN), which derives 50% of sales from China. Shares of this early February 2011 IPO have already fallen by half from their peak.

Citigroup's analysts attended the same OFC conference and came away with their bullish industry view intact, despite the recent problems. They were particularly impressed with Ciena, predicting the company "will be a share gainer through the next cycle and expect to see a significant deal win over the next 90 days." They see shares rising from $24 to $34 in the next 12 months.

If you're a GARP (growth at a reasonable price) investor, you have to find high-growth industries that have become reasonably priced due to near-term growing pains. The optical networking stocks have plenty of room ahead of them, yet are currently being scorned while demand temporarily slows. As demand rebounds, so will these shares.