Google Inc. (NDAQ:GOOG) made an interesting filing on July 20th that is only now starting to garner attention after the WSJ covered it. The filing is a 40-APP, which is an "application for exemption and other relief filed under the Investment Company Act of 1940". Although the document is only a automated notification generated as a result of a paper submission, it does highlight Google's concerns.

The Investment Company Act requires any company that holds more than 40% of their worth in securities to disclose their holdings - as they are considered in the eyes of the SEC as an investment company/fund. Google currently has just over $14 billion in assets with almost $6 billion of that in securities - unfortunately for Google, that's 42%. The company also has $4 billion in cash! Google currently holds primarily U.S. Governement bonds, but is seeking to move its money into higher yielding municipal bonds and high-grade corporate bonds. Notably, companies like Yahoo and Microsoft obtained similar exemption which allowed them to utilize higher yield investment tools.

It is unclear as of now whether or not Google will be granted the exemption. If they are not, a look into their investments might tip investors and their competition off as to future acquisitions and other intentions. What does this mean for Google investors? Well, if they are able to gain the exemption, it will mean increased investment returns for the company. These returns could be substancial given the large amount of cash and securities that the company has invested. If they are unable to gain the exemption (which was Yahoo's problem before they tried a second time), they may be forced to reveal their equity holdings, which would give investors a good look into possible acquisitions and areas of interest for Google. Either way, this is definitely something to watch.

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Science Applications International Corp, or SAIC, announced yesterday in an 8k filing with the SEC its plans to go through with their restructuring and initial public offering. SAIC is one of the world's largest private companies, providing technological products and services to various private and governmental agencies - the company is most well known for its close ties to the CIA and Department of Defense. SAIC initially planned on going public in the first few months of 2006; however, they delayed the process in December after it incurred unexpected costs from the a contract with Greece, which resulted in a $115m loss.

In a memo, the company outlined the upcoming IPO process:

"We will file an amendment to our IPO registration statement with the SEC in early September that contains a prospectus including updated financial statements for the first six months of fiscal 2007. The prospectus will also show an initial or preliminary IPO price range within which we expect to sell shares in the IPO. We will determine the price range in consultation with our underwriters (Morgan Stanley and Bear Stearns), which will reflect current market conditions and recent financial performance. Shortly after filing our IPO registration statement, senior management will embark on a "road show" to present information about our company and its prospects to potential investors."

When the company updates its prospectus it will give shareholders a better view of the company's current financials. With many related companies experiencing a slowdown recently, many analysts are casting doubt as to whether SAIC will be able to IPO at a price close to their June projected price of $47.28. Regardless, when one of the largest private companies on earth is going to IPO, it is always something worth keeping an eye on...

A recent report by Glass, Lewis & Co. revealed that the number of delinquent quarterly filings by companies with a market cap over $75m has hit a new high of 138 after the previous record of 120 set just last quarter. The number is about 52% higher than the number one year ago at this time. The commission attributes most of these deliquencies to the recent options backdating scandel that has hit the market, which have caused many companies to take another look at their books before releasing their most recent numbers. Over 80 companies are currently under some kind of investigation from the SEC - 48 of them have delayed their quarterly filings as a result. So far, only two companies have had prior CEOs convicted. Other reasons for the delays include restatements and unresolved accounting issues. The final impact of these delays remains to be seen, with some analysts suggesting that this will all blow over and others saying this is something that cannot be ignored.

Aether Holdings Inc. (NDAQ:AETH) has decided to switch businesses yet again. For those who don't remember, Aether started out in the wireless business back before the dotcom boom. After reducing its workforce by over 99% and watching its stock price move from mover $300 to under $3, the company decided to get into the mortgage securities business. Now, in a recent 8-k filing with the SEC, they announced they were changing businesses yet again - this time to the footwear business (through their NexCen Brands subsidiary). According to the filing:

"On August 21, 2006, Aether Holdings, Inc., a Delaware corporation (the “Company”), NexCen Franchise Brands, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“NexCen Brands”), and NexCen Franchise Management, Inc., a Delaware corporation and wholly owned subsidiary of NexCen Brands (“NexCen Management,” and together with NexCen Brands, the “Purchasers”), entered into an Equity Interest and Purchase Agreement (the “Purchase Agreement”) with Athlete’s Foot Marketing Associates, LLC (“Seller”), Athlete’s Foot Brands, LLC (“Brands”), The Athlete’s Foot Marketing Support Fund, LLC (“Support Fund,” and together with Brands, the “AFB Companies”), Robert J. Corliss (“Corliss”), Donald Camacho (“Camacho”), Timothy Brannon (“Brannon”) and Martin Amschler (“Amschler,” and together with Corliss, Camacho and Brannon, the “Shareholders”)."

They also announced their exit from the mortgage securities business with the sale of their remaining assets:

"Exit from Mortgage-Backed Securities Business:

At the same time as it approved the Acquisition, the Company’s Board of Directors (the “Board”), taking into account a range of business, strategic and financial considerations, decided that it was in the best interests of the Company and its stockholders for the Company to sell its remaining MBS investments for the purposes of exiting the MBS business and allocating those assets to support the growth and development of Aether’s IP business. The decision to exit the MBS business and focus on the IP business is not conditioned upon the completion of the Acquisition and, in light of the Company’s intention to finance a portion of the Acquisition purchase price with third-party debt, the Company expects to complete the Acquisition without needing to liquidate any of its MBS investments.

Because the reallocation of the Company’s MBS resources to the IP business may be considered a 'sale of all or substantially all' of the Company’s assets under Section 271 of the Delaware General Corporation Law, the Company will seek stockholder approval at its 2006 annual meeting to effect this reallocation of its assets. The Company expects to file a proxy statement for the annual meeting with the Securities and Exchange Commission within the next two weeks and anticipates that the annual meeting will be held early in the fourth quarter."

The company's new business plan is to convert all the stores it acquires into franchises and then maximize their value by building their brand. So why should we be concerned with such an unfocused company with a long history of losses that is currently struggling with it's second turnaround attempt? Well, because of the long history of losses (and its bank account)! In the tax world, there is something known as a "net operating loss carryforward" (NOLs), which enables companies to deduct their past losses against future earnings. This will give Aether a big break as it works to turnaround the company in a new market. Moreover, the company also has about $2/share in cash! This will help the company with funding acquisitions and paying off long-term debt. All things considered, the company has a dirty past and a long road ahead of it, but management has a lot of leftover "benefits" available to them to effectively capitalize on their new strategy. Whether or not they are able to do so remains to be seen; however, the stock definitely warrants keeping an eye on!

Intermagnetics General Corporation (NDAQ:IMGC) announced yesterday in a 14A filing with the SEC that they plan on moving forward with their merger plans with Royal Philips through their subsidiary Philips Holding (NYSE:PHG). This merger, which was originally announced on June 15th, had been the subject of two outstanding shareholder lawsuits that sought to prevent the merger. The lawsuits alleged that the company had "breached their fiduciary duties by failing to publicly announce an open bidding process or otherwise seek additional officers to acquire Intermagnetics, and by failing to provide full disclosure to certain material financial information." In their filing, the company noted that these lawsuits had been resolved, but gave no details. Shareholders who are on record as of August 16th will be able to vote on the proposed merger on September 26th.

Their proxy statement outlined the details of the transaction:

"If our stockholders adopt the merger agreement and the merger is subsequently completed, you will be entitled to receive $27.50 in cash, without interest, for each share of Intermagnetics common stock you own, unless you have properly exercised your appraisal rights. On June 14, 2006, the last full trading day prior to the public announcement of the merger agreement, the closing price of our common stock was $21.38 per share."

The lawsuits may have had some merit. The buyout premium in this case is only 28% - at a price less than a recent 52 week high made by the company. Why wasn't a bidding process announced so other suitors could potentially offer a greater amount to current shareholders? The board of directors, who approved this plan, are supposed to always act in the best interest of shareholders...

With these lawsuits settled, the company only needs a proxy vote and approval from the EU before moving forward. With a 70% institutional ownership stake, it is likely that the merger will move ahead as planned.

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Activist hedge fund Pirate Capital announced its final slate of nominees for the Cutter & Buck, Inc. (NDAQ:CBUK) board of directors today in their ammended 13D filing with the SEC. According to the filing:

"On August 18, 2006, pursuant to discussions between representatives of the Issuer and representatives of the Reporting Persons, the Issuer notified the Reporting Persons of its decision to include David A. Lorber, a Director and Senior Investment Analyst at Pirate Capital, amongst the Issuer's eight nominees for election as directors at the Issuer's 2006 annual meeting of shareholders (the "Annual Meeting"). Concurrently, the Issuer also notified the Reporting Persons of its decision to include Thomas O'Riordan, an industry expert recommended to it by the Reporting Persons and considered by the Governance Committee of the Issuer, amongst the Issuer's eight nominees for election as directors at the Annual Meeting. Mr. O'Riordan is a consultant to the footwear, apparel and sporting goods industries and was recently a senior executive and director with Fila. Mr O'Riordan is also a member of the Board of Directors of Innovo Group, a publicly traded apparel company."

Pirate also revealed a 13.5% stake in the company, amassed since December 10, 2004, when it first announced it's ownership in the stock. After buying at the top and watching the stock sink from the mid-14s to it's current level below $10, the fund is now ready to step in and unlock shareholder value. Although it may be a long-term play, Pirate Capital has a very skilled management team and a high rate of success when it comes to unlocking shareholder value through turnarounds or liquidations. Given their likely averaged price, you can be sure that they are looking for a significant premium to the current price. CBUK is definitely a good stock to keep an eye on when it comes closer to the board's election at the upcoming shareholder's meeting.

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Great Wolf Resorts, Inc. (NDAQ:WOLF) has recently drawed some confusion from investors after an August 15th 13D filing made by Hayground Capital. The confusion arose when Hayground - the Wolf's largest shareholder - announced the the company had contacted him seeking advice regarding a possible sale of the company:

"On August 9, 2006, Bruce Neviaser,  Chairman of the board of directors (the "Board") of the Issuer,  called Mr. Ader to elicit Mr. Ader's views  regarding a possible sale of the Issuer.  Mr. Neviaser  expressed his belief that the Issuer has a worth of at least $16 per share of Common  Stock  and  sought  Mr.  Ader's advice as to which  investment  banking firm to contact and how best to go about an  organized a sale of the Issuer as a way to maximize  the value of the Common Stock for all  shareholders.  Mr.  Ader  expressed  his strong  support  for the Issuer's  engagement of an investment  banking firm to explore a sale and stated that any one of a number of major investment  banks could add substantial  value in conducting an organized sale process."

The stock immediately jumped from $11 to $12 on this announcement. (Side note: The next day, at around 2pm, there was a Form 4 filed with the SEC by Bruce Neviaser - the same man who had interest in a possible sale of the company and insisted it was worth at least $16 - announcing a sale of 3,500 shares he owned. Moreover, this same man had told Mr. Ader that he intended to sell 200,000 additional shares on the open market, despite the buyout proposition.) A day later, the company then released a press release via an 8K filing (PR) saying the following:

"Great Wolf Resorts, Inc. (NASDAQ: WOLF), America’s leading family of indoor waterpark resorts, today said that the company has no plans to sell the company or engage an investment banking firm to explore the possible sale of the company. Yesterday, the company received a letter from Hayground Cove Asset Management LLC, a shareholder, in which Hayground encouraged the company’s Board of Directors to engage an investment banker to explore a sale of Great Wolf Resorts."

If the board wasn't interested in a sale of the company, why did they contact Mr. Ader? Apparently, the board of directors "routinely discusses prospects for Great Wolf Resorts", which included a possible sale of the company. That's fine, but just how serious is Hayground in seeking a sale of the company? Well, they had this to say in the 13D filing:

"By letter  dated  August 14, 2006 to the Board,  Mr. Ader  reiterated the highlights of his August 9 discussion with Mr. Neviaser and articulated his view that at this time shareholder value would be maximized by a sale of the Issuer. He encouraged the Board to take immediate steps to unlock long-term  shareholder value by retaining an investment banking firm to explore the sale of the Issuer. Mr. Ader noted that the Issuer's two  significant earnings  shortfalls in 2005 caused serious damage to  management's  credibility  and the Issuer's  overall reputation  with  investors, resulting  in  the  Common  Stock trading  at  a significant  discount to underlying  asset value.  Mr. Ader requested a meeting with the Board to discuss the Reporting  Person's views  regarding  valuation of the  Issuer." (A copy of the letter can be found attached to the filing link above)

With less than 9% of the float, Mr. Ader might have some difficulty starting any kind of proxy battle; however, if he did manage to get ahold of more shares he might be able to convince enough investors to force a sale, especially given the company's poor performance in recent quarters. This stock is definitely a good one to keep on the radar as this story unfolds.

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Altria Group (NYSE:MO) shares rose today after the tobacco industry's legal picture became a bit clearer. The judge in the government's racketeering lawsuit stated the tobacco companies were deceiving the public, however, there were no significant fines attached to the ruling. Any other stipulations found in the 1600 page ruling will likely be appealed in the appelate courts. The judgement clears the way for Altria to spin-off its 88% stake in Kraft Foods (NYSE:KFT), which moved down on the news. The timetable for this action is likely to be between 10 and 14 weeks.

Spinoffs present an interesting opportunity for investors. When Altria spins off its stake in Kraft, it will distribute its 88% stake in Kraft to its own shareholders. Typically, a significant portion of these shareholders will sell their shares of Kraft because they are only interested in Altria. Many larger funds that acquire a large number of shares may also not want to hold Kraft. This results in selling pressure that has nothing to do with the underlying value of Kraft Foods. Even more, Kraft has an existing float that is being publicly traded. Some of these investors may sell off their shares in anticipation of this selling, which could result in a windfall. When and if this occurs, there will be many cheap shares available on the market for enterprising investors! The key to seeing if any of this will happen is watching Altria Group's SEC filings, particularly their Form 10.

Many people are also very bullish on the tobacco sector in general. This announcement should allow investors to remove the majority of the risk premium that was associated with this lawsuit, which should result in an increased share price. Many analysts are calling for $95 - $100 per share.

Advancis Pharmaceutical Corporation (NDAQ:AVNC) has been a rollercoaster ride for investors since it IPO'd back in 2003 at $9/share. Since then it has plummeted to under $1 before recently rebounding to over $4. What's causing this volatility? Well, the company is focused on the development of a new drug delivery system for antibiotics, known as PULSYS. This system essentially releases "bursts" of antibiotics over time instead of releasing it all at once. The theory was that this method would not only fight infections more effectively, but also reduce the risk of long-term immunity to antibiotics.

The company ran into trouble, however, when their clinical trials failed in mid-2004. The tests performed at the time concluded that the differences between PULSYS and normal drug delivery methods were not statistically significant. This news devastated investors as the stock sank from $8 to $3. Luckily, the company had acquired the rights to sell Keflex along with a $12m credit facility, which allowed them to stay afloat while they re-applied for approval. Recently on August 10th, the company redeemed themselves when it's Phase III trials of Amoxicillin PULSYS achieved its endpoints (showed statistical significance), and the stock reached a new 52-wk high. In a press release, the CEO said:

"'The positive outcome of this trial provides proof-of-concept that PULSYS antibiotic dosing is effective in eradicating streptococcal bacteria in humans,' stated Edward Rudnic, president and CEO of Advancis. 'If approved for marketing, we believe our once-daily version of amoxicillin would represent a major advance in the most widely used antibiotic in the U.S. and would be the first and only once-daily amoxicillin therapy approved for marketing in the United States.'"

This proof-of-concept has apparently attracted new investors. A 13G filing with the SEC on August 17th revealed a 17% ownership stake by Deerfield Capital Management through a hedge fund that invests in special opportunities. Note that this was bought through five different vehicals, so the reporting was not required until at least one of them reached 5%.

Although the company's recent 10Q was lackluster, these recent developments finally help prove that Advancis' technology does work. If it continues this success, it may be able to revolutionize the antibiotics market - a $27b market - through its more efficient drug delivery system. The company definitely has a long way to go, but it's a great stock to put on the radar.

Dell Inc. (NDAQ:DELL) fell after hours today after it released its 8K filing to the SEC, which announced disappointing earnings and revealed that it is currently involved in an informal SEC investigation into the ways it booked revenue during the past year.

Dell's earnings were cut in half from $0.41/share a year ago to just $0.22/share today, which was below analyst expectations. The company attributed this to "aggressive pricing in a slower market". Perhaps as a consequence, Dells market share did increase by 6% to 19.3% - most of that growth coming from outside of the United States. The company's CEO said the following:

"While we are disappointed with the results for the quarter, we are taking the necessary actions to correct missteps and improve our results for the long term," said Kevin Rollins, Dell chief executive officer. "Key actions include accelerating cost initiatives, increasing investments in service and support, and better pricing management."

Meanwhile, the company also announced an SEC investigation:

"In August 2005, Dell received notice from the U.S. Securities and Exchange Commission that it was conducting an informal investigation of the company. The notice stated that the investigation is not an indication that any violations of law have occurred. The SEC has requested information relating to revenue recognition and other accounting and financial reporting matters for certain past fiscal years, and Dell has been cooperating. In the course of responding to the requests, the company recently discovered information that raises potential issues relating to certain periods prior to fiscal 2006. While the company does not believe that these issues have had or will have any material impact on its financial position or the reported results of operations for the relevant years, the company's audit committee, upon the recommendation of management, has initiated an independent investigation. Management is committed to addressing any questions, concerns or issues the SEC or the audit committee may have."

Note that companies are not required to disclose anything that is not material. As a result, this is the first time we've heard of this SEC investigation dating back to August of 2005. The cause for concern is that the company's internal investigation has "discovered information that raises potential issues relating to certain periods prior to fiscal 2006". Whether or not this will have a material affect on the company has yet to be seen; however, it is something that will be held over Dell's head until resolved.

Currently, Dell is trading at a PE of around 19, which is at a discount to their industry and most of their peers. Provided Dell is able to find itself innocent of any wrong doings with the SEC and recover from its pricing mistakes, it could represent a great buy at these levels.

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