Next Week's Game Plan: Clean Energy Fuels (CLNE) Fuel Systems Solutions (FSYS), Fluor (FLR), Vulcan Materials (VMC), Diana Shipping (DSX), Burlington Northern (BNI), Joy Global (JOYG), Ralcorp (RAH), Applied Materials (AMAT), Macy's (M), Kohl's (KSS), Wal-Mart (WMT), Urban Outfitters (URBN), Nordstrom (JWN), Walt Disney (DIS), Ancestry.com (ACOM)

How to Play Earnings: Kroger (KR), Best Buy (BBY), Adobe (ADBE), Palm (PALM), Apple (AAPL), Salesforce (CRM), Ralcorp (RAH), Treehouse Foods (THS), Wal-Mart (WMT), Carnival (CCL), Discover Financial (DFS), Oracle (ORCL)

At the end of each trading week, Hillbent scans for the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our Market Condition Summary to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

Okay, so Ralcorp (RAH) hasn't delivered big returns just yet. In fact, the stock has traded roughly breakeven over the last year. Yet, in a year where the S&P 500 drops 40%, that’s not too bad. So, what is this company that has fared so well in such a bad market?

Investment Thesis
Ralcorp is a private label manufacturer of a variety of food products ranging from cereals to snacks to frozen bakery products. In an economy where consumers are constrained and food costs have risen, people have increasingly traded down to so-called “knock off” store brands, a.k.a. private labels. Grocery retailers like these products as well as they often can push them through at higher margin than branded products. In fact, recent earnings calls with Costco (COST), Kroger (KR), and SuperValu (SVU) have confirmed that retailers industry wide intend to focus on promoting private label share.

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up is Eric Mindich's Eton Park Capital, who was ranked 53rd in Alpha's hedge fund rankings. Mindich received an Economics degree from Harvard and then worked at Goldman Sachs' risk-arbitrage desk. After becoming the youngest partner in the history of Goldman Sachs at the age of 27, it was clear he had a bright future.

The Bernanke Basket: Citigroup (C), US Bancorp (USB), Blackstone (BX), Wells Fargo (WFC), CSX (CSX), Norfolk Southern (NSC), Procter&Gamble (PG), Heinz (HZ)

Game Plan: Weathering the Storm, McDonald’s (MCD), Ralcorp (RAH), Treehouse Foods (THS), Wal-Mart (WMT), Procter & Gamble (PG), General Dynamics (GD), Lockheed Martin (LMT), IBM (IBM)

Boy am I mad!

It was brought to my attention last night that Jim Cramer has stolen my plan, which I called "The 3% Mortgage Solution" in my Feb 9th column, and simply added a point to it and claimed it as his own on national TV. I’m not sure how to feel about that - I’ll be glad if the plan is used of course, but seeing Cramer take credit for my work is a little irritating. In fact, "Cramer’s plan," as laid out, also lifts elements from my 2/16 article - the latest version of my year-old plan for immediately ending the mortgage crisis by making the government an equity partner in the homes. So congratulations to Cramer for sinking to yet another new low in broadcasting - I suppose only writers from TSCM, where Jim has overseen the loss of 87.5% of shareholder equity in the past 5 quarters, are worthy of being given credit by the great Cramer, while the ideas of us independent bloggers are just his for the poaching…

The Russell 1000 Index has lost 44% over the past year and is down 14% year to date. Similarly, the Russell 2000 Index is down 42% for the past 12 months and lost investors 18% since the beginning of this year. With both of these indexes down substantially recently by about the same amount, are large caps more attractive than small caps?

Percent to Target Charts: This graph shows the Percent to Target Current for a universe relative to the overall market. Values greater than 1 indicate the universe is more undervalued than the market, while values less than 1 indicate the opposite. The red line identifies the historical median value to provide a basis to understand valuation levels relative to historic norms.

Cramer once again criticized Treasury Secretary Tim Geithner, who is still haunted by the specter of the collapse of Lehman Brothers. The demise of the once-great bank has changed financials, perhaps permanently, and the sector continues to decline. While Tim Geithner claimed he lacked the legal authority to save Lehman, Cramer proves this claim false; the Primary Dealer Credit Facility which Geithner created to save Bear Stearns gave him the authority to rescue Lehman, but he chose to be complacent. Instead he chose to bail out AIG the day after Lehman died.

Citigroup recently downgraded shares of Safeway (SWY) and Kroger (KR) due to what they see as a looming price war. They also cut profit targets for Wal-Mart (WMT) and Super Valu (SVU). Competition in the grocery industry is nothing new. With the recessionary environment, consumers are more price sensitive than ever before. Private label shares in most food categories have increased dramatically in the last few months.

Kroger leads in this area with a 27% share, followed by Safeway at 25%, Wal-Mart at 18% and Super Valu at 17%. Wal-Mart traditionally doesn't place undue emphasis on private label vs. branded but is in the process of repositioning their Great Value brand and rolling out many new private label offerings. With consumer price sensitivity at a peak, this will lead to an increase in super market battles on price.

Bullish Calls:

Molson (TAP): “We are going to go with name brand here….we are going with Molson Tap at $40.”
Terra Nitrogen (TNH): “…has been a really fabulous performer in 2009…it’s got that yield…it passes on the dividend…I want you to be in TNH, not Agrium, not Mosaic and not Potash.”
Hormel Foods (HRL): “I like Hormel as a trade down.”
American Italian Pasta (AIPC): “I’ve been looking at AIPC (as a trade down play).”
RalCorp (RAH): “I like RalCorp best as a trade down play.”

Prices for food in U.S. grocery stores jumped 6.6% last year - the biggest spike since 1980 - underscoring yet again that inflation is a much bigger problem than government officials, or most economists, say it will be.

Of all food categories, prices for cereal and baked goods hit U.S. consumers the hardest, zooming 11.7% in 2008 over 2007. Prices for meats, poultry, fish and eggs gained 5.1%. Fruits and vegetable rose 3.4%, while dairy products advanced 2.7%.

This is the Third Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F filings here.

The other funds we've already covered include:

This is the Third Quarter 2008 edition of our ongoing hedge fund tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F's here.

The other funds we've already covered include:

Ben Bernanke Finally Gets It: Fortune Brands (FO), Goldman Sachs (GS), Wells Fargo (WFC), JP Morgan Chase (JPM)

Apparently we've been in a recession for a year now, and the layoffs are beginning to ripple out from malls and car dealerships to factories. Folks are cutting back, and stores are closing down. A local radio DJ spent a morning playing songs evoking the Great Depression, topped by Tom Waits grinding out "Buddy Can You Spare a Dime" with grim conviction. I inherited a Depression-ready mentality from my parents, and I've already had visions of bread lines and soup kitchens dancing in my head, rather than sugarplums.

Giving in to my pessimism and to dire predictions of more and worse to come, I've come up with a basket of stocks that I think would be most likely to survive a long downturn. I call it my Poorhouse Portfolio. I've included some typical bear-market sector stocks and added others that I think could be new additions to hard-times stocks.

Private Label manufacturers recently met for a few days at the PLMA trade show in Chicago. The mood on the economy was very dour but attendees were upbeat with the prospects for the private label food industry in 2009. Private Label clearly is gaining share among price conscious consumers. Consumers hit by job losses, disappearing 401(k)s and IRAs and daily depressing economic headlines are more price sensitive than ever before. Consumers are modifying their shopping habits for food in two major ways.

First, consumers are shopping more at stores they perceive are low price retail leaders. That's a plus for Walmart Supercenters (WMT), clubstore leaders Costco (COST) and BJ's (BJ) and dollar stores such as Family Dollar and Dollar Tree. BJ's has been performing extremely well as of late but a lot of that has to do with its high percentage of food sales driving traffic. Target's (TGT) results have been disappointing but that is primarily because food makes up a smaller percentage of its overall business.

Bloomberg TV ran a nice story on Ralcorp (RAH) yesterday morning. RAH produces generic foods and recently purchased Post cereals from Kraft (KFT).

In this economy more consumers are going to trade down to cheaper (or as we say in economics, inferior) priced goods. RAH should benefit from this shift in consumer purchasing habits.