Writing

Bankrolling Security

WASHINGTON, D.C. — The homeland security business has been good to Washington’s Paladin Capital Group. The private equity shop closed its $235 million Homeland Security Fund in 2004. Michael Steed, Paladin’s founder and managing partner, says that once that fund is fully invested, the firm’s logical next step is to put together another one.

“This is not a passing fad,” says Steed, 57, noting that he sees pitches for around ten prospective investments each week.

What’s behind Paladin’s good fortunes? In a terror-obsessed world, having some marquee intelligence and ex-military names among the firm’s managing directors doesn’t hurt. One notable: R. James Woolsey, present partner at Booz Allen Hamilton and director of the U.S. Central Intelligence Agency from 1993 to 1995.

But Paladin also benefits from taking an expansive view of homeland security. Terrorists, Steed suggests, want to do two things: Kill people and attack infrastructure to wreak maximum economic havoc. Under the rubric of critical infrastructure, Steed includes transportation systems, food systems, pipelines, water, electricity, the Internet, financial networks and communications. “Anything that moves,” he says.

Full story at Forbes.com

Full story at Forbes.com

15 Stock Bets For An Election Year

As the November elections loom, congressional priorities may lean more toward job security than lawmaking. But Stuart Sweet, president of Capitol Analysts Network, cautions that election-year politics will hardly bring Washington to a halt.

“It’s a beginner’s error to say, ‘Nothing will happen in an election year,’ ” says Sweet, whose Chevy Chase, Md.-based research group advises money managers on political risk.

Sure, Congress may put off tinkering with certain hot-button items, such as entitlements reform, until future sessions. But Sweet suggests plenty of issues impacting business will see significant action before election time. “All the committees are busy working on something,” he says. “And only a few of them end up on the front pages of the paper.”

Full story at Forbes.com

Port Brouhaha A Positive For These Stocks

WASHINGTON, D.C. – Whether or not Congress lets a Dubai, U.A.E., company take over management of several U.S. port terminals, the deal has stirred up interest in cargo security. That may mean good news for companies selling technology and services related to inspecting cargo.

Supporters and critics of the deal can debate its merits, but few dispute that cargo inspection systems need a good deal of improvement. A report from the U.S. Government Accountability Office last May bemoaned the lack of even minimum technical standards for nonintrusive inspection equipment. “The cargo and vehicle inspection systems market is still in its infancy,” read a line from the most recent annual report filed by OSI Systems, which sells inspection equipment.

In the accompanying table, we’ve pulled together a few stocks in this field. Several of them are small-caps, such as American Science & Engineering. The Billerica, Mass., company sells X-ray inspection systems, such as CargoSearch, which scans trucks and containers for drugs and weapons.

Full story at Forbes.com

Nanobiz To Congress: This Isn’t Asbestos

WASHINGTON, D.C. – Internet businesses haven’t been the only high-tech concerns drawing attention on Capitol Hill. It was standing room only for a recent Senate Commerce Committee hearing on nanotechnology.

The mood from the Senators? Glowing, for the most part. “This is likely to be a $1 trillion industry,” said Oregon Republican Gordon Smith. “Mind-boggling to say the least,” added Massachusetts Democrat John Kerry.

There was plenty at the hearing to boggle the mind. Bryant Linares, chief of closely held Apollo Diamond, told Senators how his company uses nanotechnology, which works on the scale of atoms or molecules, to “grow” diamonds for use in jewelry, semiconductors and other applications. Timothy Swager, professor of chemistry at the Massachusetts Institute of Technology, detailed efforts of his MIT research center–along with corporate partners like Honeywell, Raytheon and W. L. Gore & Associates–to create fabric for U.S. soldiers that can monitor health or detect explosives.

But business interests at the hearing weren’t just strutting their stuff for Congress. They also took the opportunity to press their case for keeping nanotech regulation at bay.

Full story at Forbes.com

Perot Systems Wants To Help Cure Health Care

WASHINGTON, DC – Interest in upgrading America’s health care information technology runs high in Washington. President George W. Bush promised more health IT in his recent State of the Union address, several related bills are bouncing around Capitol Hill and more legislation is likely to be introduced this spring.

Why the clamor for health tech? Pols, academics and think tankers, no matter what their political stripe, see technology as one way to duck the approaching tsunami of baby-boomer health expenses. The private sector is interested too. “Starbucks now spends more on health care than it does on coffee beans,” said Will Marshall, president of the Progressive Policy Institute (PPI), at an event organized by that group last week.

No surprise, Wall Street has also taken a shine to the area. Consider outfits like software developer Cerner and Omnicell, which makes items like computerized medication dispensing systems. Both stocks have surged in the past year and now sport rich valuations.

Investors looking to play the trend should consider the big providers of technology services. The stocks look reasonably priced and the companies could have an important role as health care wires up. One in particular to watch here: Perot Systems. At that same PPI event in Washington last week, Dr. Richard Pico, Perot’s chief medical and technology officer, elaborated on how its offerings could link up U.S. health care interests.

Full story at Forbes.com

Looking Down The Highway

WASHINGTON, D.C. – The U.S. interstate highway system will turn 50 this year, on June 29.

President Dwight Eisenhower signed the law creating the system and the Highway Trust Fund to finance it in 1956.

So when the Transportation Research Board held its 85th annual meeting in Washington, D.C., recently, a panel of academic and private sector experts took stock of the half-century gone by and gazed down the road ahead for our car-centric nation.

Like the Internet, the interstate has affected the American economy in ways its creators couldn’t and didn’t imagine. Bruce Seeley, professor of history and chair of the social sciences department at Michigan Technological University, reminded would-be seers that planners didn’t anticipate how the interstate would affect freight movement. “The idea of trucks replacing railroads in so many areas was not envisioned,” he said. Nor did planners foresee the economic importance of logistics hubs so prevalent outside such cities as Chattanooga, Tenn., and Indianapolis.

Full story at Forbes.com

Bush’s Budget: Stock Bets?

WASHINGTON, D.C. – The $2.8 trillion budget that President George W. Bush submitted yesterday for fiscal 2007 is a nonbinding first step in the budget process. Spending won’t be determined until Congress gets around to appropriations bills later this year.

Still, certain industries come out better than others in the 352-page document. In this sense, you can think of the Bush Administration’s budget as an indicator, a sign that some sectors enjoy a tailwind blowing out of Washington. The tables below show a few industries that look like budget winners, according to analysts and industry groups, along with notable stocks within them.

Full story at Forbes.com

Oshkosh Truck Powers Up In Hybrids

Among the more agreeable types of government programs are the ones that help your company win new business and cozy up to important customers. Consider the case of Oshkosh Truck, Waste Management and the Department of Energy’s Advanced Heavy Hybrid Propulsion Systems initiative.

The program, managed by the National Renewable Energy Laboratory, began in 2002. Its goal: Bring industry and government researchers together to get cleaner, more fuel efficient trucks and buses on the road by the end of the decade. Notable corporate participants are Eaton, Caterpillar, General Motors and Rockwell Automation.

In February 2003, Oshkosh Truck , which makes big, tough, trucks for military, municipal and other customers, received a $9 million grant from the Advanced Heavy Hybrid program to develop hybrid power-control systems and electronics for its severe-duty trucks. A key component of Oshkosh’s bid: its relationship with trash industry giant Waste Management .

Full story at Forbes.com

State Of The Border Security Business

WASHINGTON, D.C. – A prediction for tonight’s State of the Union address: President George W. Bush will get a standing ovation when he talks tough on stopping the flow of illegal immigrants into the U.S.

If our prediction holds, another group will have reason to clap: defense and technology contractors doing business in homeland security. Last week, a few hundred of their reps heard from the Administration on technology needed for an ambitious border security proposal, one that could be worth billions.

“This issue is clearly one of the most important public-policy priorities for the Administration as well as for the Congress,” Department of Homeland Security Deputy Secretary Michael Jackson told the crowd.

Full story at Forbes.com