Riddle me this investors: is the smart money heading into newspaper stocks? Don't laugh but CNN/Money's Paul La Monica points out that some well-known funds are increasing their stakes in this most hated of sectors on Wall Street.

But before people start loading up on the New York Times Co. (NYSE:NYT), E.W. Scripps Co. (NYSE: SSP), Gannett Co. (NYSE: GCI), Lee Enterprises Inc. (NYSE: LEE) or McClatchy Co. (NYSE: MNI) consider that these shares are down double-digit percentage points because their businesses are floundering. Yes, online advertising revenue is picking up but remember that these companies will get the vast majority of their profit and revenue from dead trees for some time to come.

But has all of the bad news been priced into these stocks? Ariel Capital Management, Wellington Management, T. Rowe Price and Fidelity Management and Research seem to think the stocks have nowhere to go but up, La Monica says.

They are certainly buying low. Can they sell high?

MOST NOTEWORTHY: New York Times Co, Lee Enterprises, McClatchy Co, Marsh & McLennan, Deutsche Bank, Ryanair and Applebee's were today's noteworthy downgrades:

• Merrill reduced estimates on New York Times Company (NYSE: NYT), Lee Enterprises (NYSE: LEE) and McClatchy Company (NYSE: MNI) to Sell from Neutral due to the slowing economy and the impact from the housing market on newspaper advertising.
  
• Citigroup downgraded shares of Marsh & McLennan Companies (NYSE: MMC) to Hold from Buy following the departure of Brian Storms, CEO of Marsh Brokerage, as they believe it suggests a continued struggle at the company's core business.
  
• The firm also downgraded Deutsche Bank (NYSE: DB) to Sell from Hold to reflect a more bearish outlook for European Banks due to the drop in credit-market revenue.
  
• UBS downgraded shares of Ryanair Holdings (NASDAQ: RYAAY) to Neutral from Buy as they expect higher costs to squeeze margins.
  
• Oppenheimer downgraded shares of Applebee's International Inc (NASDAQ: APPB) to Sell from Neutral as they do not expect another suitor to come forward.

OTHER DOWNGRADES:

• Goldman Sachs removed Forest Oil Corporation (NYSE: FST) from its Conviction Buy List.
  
• Bear Stearns downgraded Novo Nordisk (NYSE: NVO) to Peer Perform from Outperform.
  
• Soleil downgraded shares of US BioEnergy Corporation (NASDAQ: USBE) and VeraSun Energy Corporation (NYSE: VSE) to Sell from Hold.
  
• Leap Wireless (NASDAQ: LEAP) was downgraded to Market Perform from Outperform at Raymond James.

MOST NOTEWORTHY: Select newspaper stocks and Dolan Media were today's noteworthy initiations:

• Banc of America initiated six stocks in the newspaper sector with Neutral ratings: Gannett (NYSE: GCI) was started with a $51.50 target, citing a lack of clarity into the company's acquisition strategy; New York Times (NYSE: NYT) was started with a $21 target, reflecting a lack of clarity into the company's acquisition strategy; E.W. Scripps (NYSE: SSP) was started with a $43 target, as the firm feels the company's Interactive division is a "big question mark" that could drag down company growth; McClatchy Co (NYSE: MNI) was started with a $26 target, as the firm is positive longer-term, but sees downside risk to 2007 consensus estimates; Lee Enterprises (NYSE: LEE) was initiated with a $19.50 target; Gatehouse Media (NYSE: GHS) was started with a $12.50 target.
  
• Dolan Media (NYSE: DM) was initiated with an Outperform rating and $24 target at Piper Jaffray. Piper believes DM's Q3 guidance is conservative given the default rates in July and August and notes the company processes defaults in two of the three highest default rate states. Dolan Media was also started with a Buy rating and $26 target at Merrill Lynch and with a Buy rating and $28 target at Craig-Hallum.

OTHER INITIATIONS:

• Think Equity assumed coverage of Intel Corporation (NASDAQ: INTC) and Micron Technology (NYSE: MU) with an Accumulate rating and $26 target and a Buy rating and $18 target, respectively.
• Citigroup started shares of Royal Caribbean Cruises (NYSE: RCL) and Carnival Corp (NYSE: CCL) with Hold ratings.
• SuperValu Inc (NYSE: SVU) was started with a Hold rating and $47 target at Citigroup.
• Rodman & Renshaw initiated shares of Omrix Biopharmaceuticals (NYSE: OMRI) with a Market Outperform rating.