XL Capital (XL): XL Capital is a Property & Casualty insurance company, which is down about 75% over the past 52-weeks, due to the fact of its exposure to the insurance industry and weakening reinsurance market. However, XL is poised to snapback hard in the coming days and weeks. The way XL and most reinsurers make their profit, is that they reinsure insurers paper—almost acting like the "big brother" if you will of the insurers, such as MBIA and Ambac. In short, XL insurance portfolio is broken up into the following: 23% Casualty, 17% property 32%, Specialty (which includes Environmental, Aerospace) and Professional which is 28% For the reinsurance business it is broken up as follows: 33% Casualty, 31% Property, 15% Property Cat., 14% Other, 3% Marine & Energy, and 1% Health So why trade/buy XL Capital? Third Avenue is boosting its stakes in Ambac (7% of shares outstanding) and MBIA (10%+ share outstanding). S&P affirmed Ambac’s AA rating, which is a positive going forward. But, the most important reason came recently from MBIA’s extremely complex earnings report (which can be found here: http://biz.yahoo.com/bw/080808/20080808005217.html?.v=1) 1) MBIA did not change its estimates of “stress” case losses. Meaning that the company could be overcapitalized 2) MBIA booked no new reserves or impairments on its Residential Mortgage-Backed Securities and Collateralized Debt Obligations 3) MBIA’s CDO exposure actually fell by $5 billion All in all, XL Capital is a less risky way to play the recent 100%+ movies in the bond insurances, while still offering substantial upside.

Another name I like next-week is HJ Heinz (HNZ): A company who said that commodities prices actually peaked for them 3 quarters ago. Last quarter’s sales increased 11.2%, well above the long-term target growth rate of 4%-- Double digit sales growth for a “food” stock is unheard of. Organic sales increased 6.7%, with organic growth generated in all five business segments. Volume increased 4.0%, reflecting strong volume growth of 5.9% in Europe and sustained growth in North American Consumer Products, Australia, New Zealand, and the emerging markets. Net pricing increased sales by 2.7%, mainly in North America, as well as Heinz’s businesses in the U.K. and Latin America. Growing well above managements forecasts Heniz could see a multiple expansion as inventors look for an indirect/safe way to play international growth. A staple company with recession proof products, EPS should be enacted despite an economic downswing Look out: this low beta stock, could really move higher

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