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 Large Cap Watch List (Track at Marketocracy).

Though less than the Small Cap Watch List and Mid Cap Watch List (Track at Marketocracy), there was still relatively high turnover in this list. 14 of the original 33 names made the cut for the new list (which was trimmed to just 26 names.) Part of the reason for the turnover was to reduce overlap between the lists. One third of the Mid Cap Watch List (Track at Marketocracy) names appear on each of the Small Cap and Large Cap Watch List (Track at Marketocracy)s, but there is no longer any overlap between small and large.
So without further ado, the names on the chopping block from the previous list are:

3M (MMM); Continental (CTTAY.PK); Mitsui (MITSY); Anheuser-Busch (BUD); ConocoPhillips (COP); Helix Energy (HELX); IndyMac Bancorp (NDE - Annual Report); Barr Pharmaceutical (BRL - Annual Report); Quest Diagnostics (DGX); Public Storage (PSA); ITT Educational Services (ESI); Equifax (EFX); Rent-a-Center (RCII); Kroger (KR); Ricoh (RICOY); First Data Corp. (FDC); Expeditors International (EXPD); and Keyspan (KSE).

The new list is:

Large Cap Watch List (Track at Marketocracy) member Mitsui & Co. (MITSY), Japan’s second-largest trading company, agreed to acquire Steel Technologies Inc. for about $396 million in cash to gain control of metals-processing plants in the U.S., Canada and Mexico, according to Bloomberg.com: Japan

Steel Technologies shareholders will receive $30 in cash, 63 percent more than yesterday’s closing price, Tokyo-based Mitsui said today in a statement. Mitsui will assume $136 million of Steel Technologies debt. The companies have been partners for two decades, jointly owning three U.S. processing plants that cut and shape metal for industrial customers.

Mitsui wants to expand in North America as clients such as Toyota Motor Corp. increase spending in the U.S. Toyota plans to build a $1.3 billion plant in Mississippi that can make 150,000 sport-utility vehicles a year. About 45 percent of sales at Louisville, Kentucky-based Steel Technologies are to automakers.

There’s not too much to say about this… the acquisition is bite-size for Mitsui and Steel Technologies has been in the doghouse this year after missing earnings. If Mitsui had its eye on Steel Technologies for a long time, it didn’t lose anything for waiting.

Although interestingly the acquisition premium makes the five-year performance of the two companies virtually identical.

Disclosure: Author is long IShares MSCI Japan Index (EWJ) at time of publication.

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 Large Cap Watch List (Track at Marketocracy) (to be measured against the S&P 500) follows.

Astute observers will notice less overlap between this watch list and the names in the Small Cap Watch List and Mid Cap Watch List. This was not for lack of overlap, as the smallest S&P 500 name has a market capitalization of $600 million, which would allow for complete overlap with the Mid Caps if we chose. Instead we selected an arbitrary low of $2 billion for large-cap names, which cuts off five names that are actually in the S&P 500.
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.