You told clients to short the southeastern bank Regions Financial. We did a thorough analysis of their loan-loss exposures. In Florida, in particular, Regions Financial [RF] had a huge amount of exposure that we felt was not captured in the Street's models in terms of what the write-downs would be.

And Cepheid [CPHD], the clinical-lab supplier? At the end of last year, there was a lot of hysteria around methicillin-resistant staph germs. Well, we called the microbiology laboratories and found a lot of resistance to the cost of Cepheid's test. They liked it because it was really easy. But it was $40 for the test and there were competitive tests available for $6 and even less. So, while there was some initial adoption with people buying the units, the follow-through wasn't there in the reagent sales.

What's the stock worth? We have $4.12 in earnings for the year ending March '09, including a 72-cent gain on the sale of aircraft. Without that gain it is about $3.40 for '09. We have $4.22 for 2010. Bristow is around $20. Our price target is about 54. I think this is one of the most compelling buys.

You've liked this stock since January, when it was near 18. Now it's under 10. What gives? One of the issues in the fleet business is that funding costs are rising faster than vehicle leases are turning over. But only 5% of the leases have any residual-value risk, and the company is a consistent free-cash-flow generator. The main reason the stock went down was people fleeing anything mortgage-related. Yet not all that much has changed, and the stock looks like an incredible bargain.

What do they do until then? If you extrapolate the guidance they offered Dec. 18, the second half of '09 will get slightly better than the first half but not much better. We come up with a loss of 25 to 50 cents a share for 2009. Cash flow is likely to be break-even to a slight loss. Our price target is $25. We have a 2010 estimate of roughly €1.40 and apply a multiple of 13, which is where Applied Materials [AMAT] and KLA-Tencor [KLAC] trade on their 2010 numbers.

Are there still stocks you'd short? Hill-Rom Holdings [HRC] is the largest supplier of beds to North American acute-care hospitals. That's about 62% of their sales. The problem is credit markets have dried up for hospitals. There are more uninsured patients; bad debt is rising. Charitable giving is down. Elective procedures are being delayed. As a result, hospitals are cutting their capital spending. According to the American Hospital Association, about 45% are reconsidering or postponing large parts of their capital-spending programs.

What's the outlook for this $40 stock? Last Friday [Dec. 19], they brought their numbers down for the fourth quarter. They didn't provide any 2009 guidance. They blamed the med-surg piece of the business, which is like Hill-Rom, and didn't say anything about orthopedics. The Street brought numbers down for 2009, but kept or expanded its margin forecast so they could keep estimated earnings looking OK. Our price target is in the low 30s. We base that on rival Zimmer Holdings ' [ZMH] multiple. Our number is $2.95 for '09. If you put a nine-times multiple on that, you get about 30.

You also suggest shorting the psychiatric-hospital chain Psychiatric Solutions [PSYS]. About 33% of revenue comes from managed care. In the past, the company was getting 5% to 7% price increases. Those increases aren't likely to continue. Occupancy should decline as a higher number of people become uninsured. In particular, patients between the ages of 22 and 64 are lost to Psychiatric Solutions if they lose private insurance, since federal rules don't allow Medicaid to pay for such patients at facilities with more than 16 beds -- which is the type of facility Psychiatric Solutions runs. A competing investment-research firm recently did a survey of facilities that take managed-care patients and found that since October, they've seen flat admissions. Another 32% of their revenue comes from Medicaid, for kids under 22 and adults over 64. We figure state budgets are going to be under pressure. So Medicaid rate increases will be limited and the money available for kids will be cut. Finally, a big issue that could really come and bite them is care quality. We are talking about kids being sexually assaulted in a facility. An incident in Chicago was patient-on-patient. There was a recent exposé in the Los Angeles Times on Psychiatric Solutions, discussing problems in their California facilities and reporting that the rate at which incidents happen at those Psychiatric Solutions facilities is higher than the rate at nonprofit facilities, which have much lower margins because they have more staff.