BP (BP) should have seen this one coming. An arbitration tribunal set up by BP's existing Russian partners blocked the $7.8 billion share swap deal proposed by BP with Russia's state-controlled Rosneft. The tribunal was setup at the behest of the Alfa-Access-Renova consortium, which is BP's partners Russia's third-biggest oil producer TNK-BP. BP is the third largest of the six oil and gas "supermajors" after Exxon Mobil (XOM) and Royal Dutch Shell. Other competitors include Chesapeake (CHK), Anadarko and Chevron (CVX).

Our price estimate for BP stands at $49.38, implying a roughly 5% premium to its current market price.

BP's (BP) headache continues over its planned share swap with Russian-owned Rosneft. According to a report from Sky News, the Association of British Insurers (ABI) announced its concerns over the impact of the swap. ABI reportedly controls 10% to 15% of the U.K. stock market.

ABI's reservations also include a Swedish court's decision to block BP's planned venture with Rosneft in the Arctic. Perhaps most concerning of all -- and not just to ABI -- is Wednesday's report announcing that U.S. prosecutors are considering manslaughter charges against BP for its Gulf of Mexico oil spill. Eleven oil workers were killed as a result of the spill.

Recently Anadarko (APC) has agreed to buy BP's 93% interest in the Wattenberg Plant, located in the northeastern part of Colorado, for about $575 million. Anadarko already owns the remaining interest in the plant.

Anadarko is the largest producer of natural gas in the Wattenberg field and the deal will provide Anadarko with 100% ownership of the plant. The company relies heavily on natural gas, which we estimate accounts for nearly 40% of its stock value. It vies for business with established oil and gas producers like Exxon Mobil, (XOM) ConocoPhillips (COP), Chevron (CVX), BP (BP) and Duke (DUK).

Analyst Upgrades

• Marriott (MAR) to outperform from market perform at Wells Fargo.
• Quest Diagnostics (DGX) and Owens-Illinois (OI) to outperform from neutral at Credit Suisse.
• FirstMerit (FMER) to outperform from perform at Oppenheimer.
• Safeway (SWY) to hold from sell at Citigroup.
• Babcock & Wilcox (BWC) to buy from neutral, as well as Jacobs Engineering (JEC) and W. R. Berkley (WRB) to neutral from sell, at Goldman.
• Pioneer Natural (PXD) to overweight from equal weight at Barclays.
• Teekay Tankers (TNK) to buy from underperform at BofA/Merrill.

This is the fourth update to my ranting eight months ago that acquiring six of the most hated, and most highly traded stocks with constant negative headlines would outperform the overall market. The theory has born fruit as the toxic stocks are ahead and the difference is increasing over time.

BP (BP) is one of the world's leading oil and gas companies with operations in more than 80 countries. It provides customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items. It competes with other major oil companies like ExxonMobil (XOM), Chesapeake (CHK), Anadarko (APC) and Chevron (CVX).

Friday's fourth-quarter GDP numbers offered more evidence that the economy is picking up steam, but one of the biggest obstacles to the recovery remains the stubbornly high unemployment rate. We'll find out whether there's been any movement on that front when employment data for January comes out this week. The Challenger Job-Cut report and ADP employment data are due Wednesday, and the government's unemployment rate on Friday. Another mild increase in jobs is expected, in line with the three-month average, but not enough to significantly reduce the unemployment rate.

Also look for the ISM manufacturing and nonmanufacturing indexes this week, as well as the Chicago PMI and the New York NAPM index. And Fed Chairman Ben Bernanke will speak to the National Press Club on Thursday.

Analyst Calls

• Medtronic (MDT) to buy from neutral and 1-800-Flowers.com (FLWS) to neutral from sell at Goldman.
• CarMax (KMX) to outperform from perform at Oppenheimer.
• Points International (PTSEF) to buy from neutral at Merriman.
• Nokia (NOK) to market perform from underperform at Morgan Keegan.
• Amdocs (DOX) to overweight from equal weight at Barclays.
• Western Alliance (WAL) to outperform from sector perform at RBC Capital.
• Carbo Ceramics (CRR) to outperform from market perform at BMO Capital.
• Rackspace (RAX) to buy from hold at Benchmark Co.
• Brinker (EAT) to equal weight from underweight at Morgan Stanley.

Analyst Upgrades

• BP (BP) to buy from hold at RBS.
• Symantec (SYMC) to buy from hold at Deutsche Bank.
• GenOn Energy (GEN) and Nationwide Health Properties (NHP) to buy from hold at Citigroup.
• Logitech (LOGI) and Patriot Coal (PCX) to neutral from sell, as well as ARM Holdings (ARMH) to buy from neutral, at Goldman.
• Silvercorp Metals (SVM) to outperform from market perform at BMO Capital.
• Cinemark (CNK) to equal weight from underweight at Morgan Stanley.
• Smith & Nephew (SNN) to market perform from underperform at Bernstein.
• Molex (MOLX) to overweight from underweight at JPMorgan.

Earlier today, shares of oil behemoth BP plc (BP) slid lower thanks to the shutdown of the Trans-Alaska Pipeline System. The shutdown took place on Saturday, as a leak was discovered at the 800-mile network that transports oil across Alaska. BP owns a 47% stake in the pipeline system. Overseas, BP shares finished the day more than 1% lower and are currently mere percentage points lower in American trade.

BP has seen its fair share of problems lately, what with the whole Gulf of Mexico oil spill. In fact, the Oil Spill Commission blamed BP for having "a role in all of the mistakes made at the Macondo well." The pipeline's operator stated that the leak was discovered at 8:15 AM (local time) on Saturday and that the pipeline was shut at 8:50 AM. By 6 AM on Sunday, 90% of the oil had been recovered within the building.

Alaska Pipeline Service, which operates the Trans Alaska Pipeline, on Saturday told BP (BP) and other producers to reduce their output by 95%. An extended shutdown could drive oil prices to $100 per barrel.

This is a nasty situation coming in the middle of winter. The Wall Street Journal quoted BP spokeman Steve Rinehart who said that this is a "significant event." He further added: that the latest shutdown means "a big reduction" in the middle of winter "when we have temperature and weather challenges."

Analyst Upgrades

• Boeing (BA) to overweight from neutral at JPMorgan.
• Alcoa (AA) to buy from hold at Deutsche Bank.
• BP (BP) to outperform from market perform at Raymond James.
• Office Depot (ODP) and Staples (SPLS) to buy from neutral at Janney Capital.
• ON Semiconductor (ONNN) to buy from hold at Citigroup.
• Kennametal (KMT) and Polyone (POL) to buy from hold at KeyBanc.
• Airgas (ARG) to outperform from market perform at William Blair.
• EchoStar (SATS) to neutral from underperform at Macquarie.