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:

Although the organic growth at Mid Cap Watch List (Track at Marketocracy) member Delhaize Group was nothing to write home about – particularly when compared to the recent report from Large Cap Watch List (Track at Marketocracy) member Kroger – the company did manage to excite speculation in Europe that a deal could be in the works with Dutch rival Ahold. Ahold better fit without some of U.S. – Reuters:

Belgium’s Delhaize would find Dutch rival Ahold a better fit without some of the latter’s U.S. operations, notably its U.S. Foodservice unit, Delhaize’s chief financial officer said on Thursday.”It becomes more complementary,” Craig Owens said in response to a question after the company’s 2006 results news conference.

The comments reignited speculation that the two may seek some form of merger, sending shares in Ahold up 4.0 percent by 1215 GMT.

Here are the highlights from 2006, as reported by Delhaize:

• Accelerating sales growth: +5.5% at identical exchange rates
• Strong comparable store sales growth in the U.S. (+2.7%) and in Belgium (+2.8%)
• Excellent full year results at Alfa-Beta in Greece with 13.5% sales growth
• Operating margin of 4.9%
• Net profit from continuing operations: +12.1% to EUR 425.6 million

Kroger showed much stronger growth in the U.S. Delhaize’s Food Lion subsidiary may suffer from poor competitive positioning.

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.