Borders Group, Inc. (NYSE: BGP) is quickly catching the attention of many investors as it continues to pursue a turnaround strategy that is beginning to show results. The company’s stock is down over 50% since the beginning of 2007 as it continues to struggle against larger competitors and online sales. However, many investors are hoping that newcomer CEO George Jones can successfully orchestrate a turnaround for the troubled bookseller.

Borders, the second largest bookstore in the nation after Barnes & Noble (NYSE: BKS), recently announced that it achieved same-store sales growth across its three business segments for the first time since the first quarter of 2004. Internationally, the company showed the strongest growth with sales jumping 26.9% and same-store sales jumping 10.8%. However, the company was set back by charges related to its divesture of Waldenbooks.

Billionaire activist investor William Ackman also recently reported increasing his stake in Borders Group to 22%. Ackman is well known within the investment community for achieving spectacular returns by placing large bets in troubled companies and working with them to turn around. He has managed to return over 20% annually since his hedge funds inception, which mirrors performance of the greatest investor of all time – Warren Buffet.

However, a confident investor and early results do not guarantee success for the struggling Borders Group. Ackman has shown he is not perfect after losing nearly half of his investment last year in Target (although he still insists it is extremely undervalued and remains invested) and the company still faces an uphill battle against not only Barnes & Noble but also online booksellers like Amazon.com (NDAQ: AMZN) that can offer customers cheaper prices and convenience. The bookseller still has a lot of work ahead of it if it, but we now know that it is on the right track.

In the end, Borders is a great turnaround play that should be kept on the radar of all value investors. The bookseller is has shown early success in its turnaround strategy while at least one famous investor has taken notice and put a substantial amount of money at stake. Combined, these factors make BGP a stock worth watching!

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Barnes & Noble, Inc. (BKS)
Amazon.com, Inc. (AMZN)