Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.

Gordon Pape, editor of The Internet Wealth Builder, chose Brookfield Asset Management (NYSE: BAM) as his favorite stock for 2007, which rose 31% as of 6/1/07. Here is his original recommendation and his current opinion on Brookfield.

For his new favorite, the advisor looks to Precision Drilling (NYSE: PDS). He explains, "If you like to buy good companies at beaten-down prices, take a good look at this income trust.

"Precision Drilling, which provides services to the Canadian oil patch, has been battered and bruised by a decline in oil exploration activity, distribution cuts, and, of course, the proposed new tax on income trusts which is now working its way through the Parliament of Canada.

"Investors were hit with a second distribution cut in six months when the trust announced on May 18 that it is chopping another 32% off its monthly payment, slicing it to 13 cents. That reduces the annual payment to $1.56 a share, less than half last year's level of $3.24.

"There's no doubt this oilfields service provider is going through a tough period and management hasn't tried to sugar-coat the situation. Despite the gloomy outlook, RBC Capital Markets said in a research report that the firm's dividend cut probably represents the last one for the year.

"The trust's payout ratio should now be marginally below that of other oil service providers and it is generally expected that drilling activity will pick up later this year.

Major Papers:

• The Wall Street Journal reported that Ford Motor Company (NYSE: F) is looking for buyers for its Jaguar and Land Rover brands, which are valued at a combined $1.3B to $1.5B, but any sale is expected to take a month or longer.
• Airbus is in the final stages of a deal with U.S. Airways Group Inc (NYSE: LCC), which is expected to purchase about 30 A350 jetliners worth about $7B at list price, according to the Wall Street Journal.

Other Papers:

• According to the U.K. Times, Imperial Chemical Industries plc (NYSE: ICI) rejected an all-cash offer of GBP$7.2B from Dutch chemicals giant Akzo Nobel NV (NASDAQ: AKZOY), saying the proposal "significantly undervalues" the company; sources believe The Dow Chemical Company (NYSE: DOW) and Germany's BASF AG (NYSE: BF) could launch competing bids.
• BHP Billiton Limited (NYSE: BHP) is again interested in a $40B acquisition of Alcoa Inc (NYSE: AA), an aluminum producer, reported the U.K. Times.
• The New York Times reported that negotiations on a buyout of Cadence Design System Inc (NASDAQ: CDNS) by private equity firms Blackstone Group and Kohlberg Kravis Roberts appear to have stalled over price.

YRC Worldwide (NASDAQ: YRCW) -- implied volatility and call spike on LBO speculation.
YRCW, a transportation holding company with brands including Yellow Transportation, Roadway, Reimer Express, Meridian IQ, New Penn, USF Holland and USF Reddaway, is recently up $0.49 to $40.03 on LBO speculation. YRCW will be speaking at Merrill Lynch's Transportation Conference next week. YRCW has a market cap of $2.2 billion with $1 billion in debt. YRCW reported quarterly March 2007 revenue of $2.3 billion. YRCW call option volume of 6,382 contracts compares to put volume of 207 contracts. YRCW June option implied volatility is at 44, July is at 36 above its 26-week average of 32 according to Track Data, suggesting larger price risks.

Biomet (NASDAQ: BMET) -- implied volatility-risk increases into June 8th shareholder vote.
BMET a designer, manufacturer and marketer of joint replacement products announced on 12/18/06 a consortium including the Blackstone Group, Goldman Sachs and Kohlberg Kravis Roberts will purchase BMET for $44 a share in cash. Institutional Shareholder Services recommended BMET holders vote down the $10.9 billion private equity deal. BMET shareholders are to vote on 6/8/07. Indiana state law requires a 75% vote for the acquisition to be approved. BMET over all option implied volatility of 17 is above its 5-month average of 12 according to Track Data, suggesting larger risk.

Option volume leaders today are: Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG) and Wal-Mart (NYSE: WMT).

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Private equity and investors in general are beginning to open up their pocketbooks for technology. Palm Inc (NASDAQ: PALM) announced a deal with Elevation Partners which agreed to invest $325 million for a 25 percent stake in Palm.

Also, Avaya Inc (NYSE: AV) is being picked up for a nice premium, $17.50 per share or $8.2 billion by Silver Lake Partners and TPG Capital.

Ciena Corporation (NASDAQ: CIEN) went to market and issued $450 million in convertible debt. And earlier this year, Sun Microsystems Inc (NASDAQ: SUNW) picked up cash from Kohlberg Kravis Roberts in the form of a convertible stock.

Slowly but surely, private equity and investor interest in technology is picking up. This could be the very early stages of a big bull market run for tech stocks.

MAJOR PAPERS:

• The Wall Street Journal reported that TPG Capital and Silver Lake are poised to buy telecommunications equipment company Avaya Inc (NYSE: AV) for about $17 a share; Nortel Networks Corporation (NYSE: NT) was also said to be interested.
• News Corporation's (NYSE: NWS) Rupert Murdoch said he is willing to go along with tighter editorial independence, but won't give in to a key demand from Dow Jones & Company Inc's (NYSE: DJ) controlling Bancroft family that they control an editorial oversight board that would protect this, the Wall Street Journal reported.
• Barron's Online's Trader section believes Service Corporation International's (NYSE: SCI) 90% surge since August is the result of funeral service companies' virtual immunity to a slowing economy or rising rates – the market's two biggest fears right now.

OTHER PAPERS:

• The New York Times reported that software maker Cadence Design Systems Inc (NASDAQ: CDNS) is in talks with private-equity players that include Kohlberg Kravis Roberts and the Blackstone Group about a possible sale of the company.
• Technology Web sites have discovered that Apple Inc (NASDAQ: AAPL) embeds customers' personal data into files the company uses to distribute music from its online iTunes music store, creating fears about privacy, the UK Times reported.
• The UK Times also reported that Royal Bank of Scotland Group (OTC: RBSPY) may be looking to sell Southern Water for GBP4B, a move that could lead to many more deals in Britain's privatized water industry.

Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Heinz-(NYSE: HNZ) out of the money May 50 calls active; HNZ trades to Record. HNZ is recently up $1.35 to $48.28. Nelson Peltz, an activist shareholder, has been a holder of HNZ shares over the last 20-months in an attempt for HNZ to lower annual costs, sell assets and return more to shareholders. HNZ May 50 calls have traded 254 times on transaction volume of 5,990 contracts above its open interest of 402 contracts. HNZ May 50 calls are bid .35 cents, near its theoretical value of .35 cents according to Track Data, suggesting non-directional price fluctuations.

Advanced Micro-(NYSE: AMD) calls active, May option implied volatility increases to 46. AMD, a global semiconductor company, is recently up .64 to $14.56. On 12/1/05 Silver Lake and Kohlberg Kravis Roberts formed Avago Technologies through the acquisition and carved out of the Semiconductor Products Group from Agilent Technologies, Inc. (NYSE: A) (formerly a division of HPQ) for $2.66 billion, one of the largest private equity buyouts of a semiconductor company. AMD call option volume of 52,272 contracts compares to put volume of 28,105 contracts. AMD May option implied volatility of 46 is above yesterday's level of 43 and its 26-week average of 43 according to Track Data, suggesting slightly larger price risks.

Option volume leaders today are: Yahoo (NASDAQ: YHOO), Motorola (NYSE: MOT), Amgen (NSDAQ: AMGN) and Intel (NASDAQ: INTC).

Discount general merchandise retailer Dollar General Corp. (NYSE: DG) had the kind of earnings in 4Q 2006 one would expect from a company closing over 400 underperforming stores and liquidating that inventory. Although the short term numbers are not good, they are more or less in line with what Dollar General forecast it would cost to shed that much baggage. Last week, Dollar General reported fourth-quarter net income of $50 million, or $0.16 per share. This compares with 4Q 2005 net income of $145.3 million, or $0.46 per share. For the full year 2006, Dollar General reported net income of almost $138 million, $0.44 per share, compared with full year 2005 net income of $350 million, $1.08 per share.

Dollar General marked down over $279 million worth of inventory, and had closing related costs of almost $33 million. It is not surprising its earnings were not favorable. Despite these factors, 4Q net sales were still $2.5 billion, up 3% from 4Q 2005. Net sales for 2006 were $9.17 billion, an increase of almost 7% over 2005. Dollar General also repurchased 4.5 million shares of its common stock for $80 million.

Dollar General still has very strong cash flow and continues to operate over 8,000 neighborhood stores. These factors convinced affiliates of Kohlberg Kravis Roberts & Co. (KKR) to purchase Dollar General for $22 per share, a slight premium over the closing price of $21.11 on 4 April 2007, but at a 31% premium at the time of the deal in March.

Laureate Education (NASDAQ:LAUR) is in the process of a $3.1 billion buyout deal with Kohlberg Kravis Roberts, Citigroup Private Equity and SAC Capital Management.

The problem is that shareholders hate the deal. Select Equity is going to vote "no," as will T. Rowe Price Associates. Now, there is another dissenter: BlackRock (NYSE:BLK), according to a story in TheDeal.com (subscription required.)

Basically, shareholders think Laureate still has lots of growth potential (especially in foreign markets) and that the $60.50 buyout offer does not reflect this. Counting up the votes for the three dissenters, it is still below 20%. But if a couple more shareholders join the mutiny, it could mean this deal falls apart.

Although Wall Street is not betting on that. Laureate's current stock price is $58.55. You may also check out Select Equity's analysis on the deal at the SEC website.

Tom Taulli is the author of various books, including The Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

TXU Corp. (NYSE:TXU) is now the popular girl whom everyone wants to take the the prom. Not bad for a stodgy utility company.

The Blackstone Group, Carlyle Group and Riverstone Holdings may make a counter offer for the Texas power company which has agreed to be bought out by Kohlberg, Kravis & Roberts and Texas Pacific Group in a $32 billion private equity deal, the biggest ever, according to Reuters. The buyout firms are still in early discussions about a potential bid and it may not happen.

As part of the KKR/Texas Pacific deal, TXU has until April 16 to solicit and consider other offers, Reuters said.

Blackstone, Carlyle and Riverstone should get the blessing of the environmental groups that blessed the KKR/Texas Pacific Group bid. That was a PR coup that will help the companies gain leverage with regulators.

Electric utilities generate strong cash flow which private equity firms like. It's only a matter of time until the next deal emerges.

Since the story of private equity firm The Blackstone Group's potential initial public offering has been out only a couple hours, it is still very much developing. With so few details out, the implications are as yet unknown. Here is Tom Taulli's earlier piece on the subject.

From CNBC's Faber (you can watch the video here, partial transcript's here) we know that the Goldman Sachs Group Inc. (NYSE:GS) and Blackstone attorneys are preparing a prospectus. Preparing is one thing and filing is another, and yet Faber is quite adamant in his belief Blackstone will file within two weeks or by the end of March. Also, the decision to go public rests on Chairman and Chief Executive Stephen Schwarzman. Once again, an adamant Faber says "the decision has been all but made."

While Faber said that Blackstone's market value could be easily in excess of $20 billion according to bankers, MarketWatch points out that it isn't clear yet what kind of an IPO this would be. The shares could represent

As private equity funds like Kohlberg Kravis Roberts and the Caryle Group wrapped up a record-breaking 2006, many investors made comparisons to the conglomerate boom of the "go-go" 1960's, led by companies like ITT and LTV. According to breakingviews.com however, there are important differences.

The conglomerates used a combination of stock with high valuations and debt to buy out companies. The private equity firms of today are relying only on debt, and the equity markets generally come into the equation only after the firm decides to cash out and take the company public.

Ultimately, the dependency of the conglomerates on highly-valued stocks became a self-fulfilling prophecy. As long as their share prices stayed up and people believed in the concept, they were able to buy-up companies at a furious pace, and the high multiples that were being afforded their shares made earnings growth possible. It worked like this: If the company could get it's stock to trade at 25 times earnings, it could use the stock to buy companies for 15 times earnings, and revenues would grow even without synergy or cost-cutting.

Eventually, the market hit a down-turn and investors began to perceive that conglomerates were not really cutting costs. In effect, they were buying up existing companies and then adding a whole layer of upper-management. The conglomerates ended up, in many cases, being far less efficient than individually-run businesses. As investors gave the conglomerates lower multiples, they were unable to make accretive acquisitions. Then their growth slowed and the stocks plummeted.

According to Breakingviews.com (printed in today's Wall Street Journal, subscription required), the private equity funds of today are having success in large part because of cheap debt. If interest rates rise, they say, the funds will be in trouble. The number and size of buyouts has helped to fuel the performance of the stock market in the past year. If the money supply tightens and buyout firms stop buying, stock investors may suffer.

Biomet Inc. (NASDAQ:BMET) makes a variety of medical products, such as replacements for knees and hips.

Now, a variety of private equity firms want the company to themselves: Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts and the Texas Pacific Group. What's more, a founder of Biomet, Dane A. Miller, will also be an investor in the deal.

The price tag comes to $10.9 billion. And, it is a lofty valuation. It comes to 21X cash flows and 3.91X sales.

Then again, the company is likely to be sold-off in pieces – so as to pay down the debt load.

The stock didn't move on the news because, well, the company had been "in play" since April when it retained Morgan Stanley as its financial advisor.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.

Billions have flooded into private equity funds over the past few years. As a result, funds are starting to focus on mega deals. Examples: HCA ($33 billion), Freescale ($17.6 billion) and Kinder Morgan ($15 billion).

Recently, according to a report from the New York Times, the venerable private equity firm, Kohlberg Kravis Roberts & Co, was prepared to trigger a $50 billion buyout of Vivendi, a huge French conglomerate.

The deal fell apart though. Why? Well, mega deals can be extremely complex. In the case of Vivendi, there would have been onerous government regulations to deal with.

Interestingly enough, a few years ago Vivendi was on the verge of implosion because of an M&A binge. Since then, however, the company has had a nice turnaround and it is now has a collection of assets that would be of interest to private equity firms: SFR (mobile operator), Canal Plus (pay TV), Universal Music Group and a highly profitable gaming division.

Basically, private equity firms like plays where divisions can be sold-off in pieces. That is, there may be more value generated from the pieces than the whole.

The fact that Vivendi talked to KKR is very significant; it makes it more likely other firms will now approach the conglomerate.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.