With the end of the first quarter approaching, it is time to adjust the names in our Watch Lists. We will price all the new lists as of the close on Friday, March 30. Today we present our planned updates to the Mid Cap Watch List (Track at Marketocracy).

As with the Small Cap Watch List (Track at Marketocracy), we were surprised at the amount of turnover in our screens. Only 7 of the original 29 names made the cut for the new list (which comes in at only 24 names.) Part of the reason for the turnover was to reduce the overlap between the Small Cap and Mid Cap Watch List (Track at Marketocracy)s. Now there is only one-third overlapping names rather than two thirds. Furthermore, given the level of outperformance we saw in the first quarter (actually just two months) and the fact that much of those gains were achieved early, perhaps the turnover is warranted.

So without further ado, the names on the chopping block from the previous list are:

Silgan Holdings (SLGN - Annual Report); Middleby (MIDD); Olin (OLN); Vector Group (VGR); Sanderson Farms (SAFM); Tesoro (TSO); Downey Financial (DSL); Waddell & Reed (WDR); Gamco (GBL); Apria Healthcare (AHG); Quest Diagnostics (DGX); ITT Educational Services (ESI); Equifax (EFX); Delhaize Group (DEG); Papa John’s (PZZA); Rent-a-Center (RCII); Cato Corp (CTR); Dassault Systemes (DASTY); Ingram Micro (IM); Energy East (EAS); South Jersey Industries (SJI - Annual Report); and American States Water (AWR).

The new list is:

Olin Corporation (OLN) reported earnings tonight, and the report was a doozy.

Joseph D. Rupp, Chairman, President, and Chief Executive Officer said, “I am pleased to report that our fourth quarter net income of $0.37 per diluted share exceeded our guidance of $0.25 per diluted share due primarily to better than expected results in our Metals and Winchester businesses, an inventory liquidation gain generated by operations, and a lower than expected restructuring charge. In Metals, weaker volumes were more than offset by improved pricing and lower costs. Winchester experienced stronger than expected sale volumes. Our Chlor Alkali business experienced normal seasonal weakness. Shipment volumes and pricing in Chlor Alkali both declined from the third quarter and pricing was weaker than the fourth quarter of 2005.”

However, while beating earnings by 50% in the fourth quarter the company expects they will more than give it back in the first:

Earnings in the first quarter of 2007 are projected to be in the $0.25 per diluted share range. This forecast reflects softness in both the Chlor Alkali and Metals businesses. In Chlor Alkali, we expect both shipment volumes and pricing to be lower than the first quarter of 2006. In the Metals business, we expect lower volumes to be offset by higher pricing. Winchester results are expected to improve year-over-year due to improved pricing. Year-over-year pension expense is expected to decline approximately $1.0 million.

Given that first quarter consensus estimates were at $0.44, that looks to be quite a miss. You’ve got to hand it to Olin, though - when they do something, they do it big.

We asked, but no one answered. So we are taking our own counsel and breaking our Watch List into three portfolios: Small Cap, Mid Cap and Large Cap. Each will be tracked against the relevant S&P index going forward from their collective inception date of January 31 (priced at the close of market trading that day.)

For your viewing pleasure, the Mid Cap Watch List (Track at Marketocracy) (to be measured against the S&P 400) follows.

Astute observers will notice a significant overlap between the names in the Small Cap Watch List and this one. In fact, of the 29 names on the Small Cap Watch List (Track at Marketocracy), 19 are included among the 29 names in the Mid Cap Watch List (Track at Marketocracy). The main reason is that we ran our screens against the criteria in the relevant indices rather than the names in the indices. Since the largest market cap in the S&P Small Cap is $3.5 billion and the smallest market cap in the S&P Mid Cap is $600 million, there is room for a good deal of overlap if one is willing to accept it.

In addition, we will provide a “quick and dirty” analysis of each name, with a goal of one such analysis per day. As the name implies, the quick and dirty analysis will be incomplete. We are hoping you will join in the debate and fill the gaps in our analysis.