Autobytel Inc. (NDAQ:ABTL) is an automotive marketing services company that brokers and facilitates the sale of automobiles through the Internet. They own several web portals, provide customer relationship management software and services, and help with data and lead generation services. The company's stock has been slowly declining since 2004 when it reached an all-time high of just under $15. Currently, the stock is trading at just over $3/shares after a 13D filing with the SEC revealed that their largest shareholder - Liberate Technologies - was seeking immediate change to maximize shareholder value

The lengthy letter attached to the 13D filing gave an overview of Liberate's position:

"We are one of Autobytel's largest shareholders. We invested in Autobytel because the company is positioned for significant upside and could become the leading online automotive firm.

However, the company is also at a crossroads. We believe that the company has three strategic choices. First, the company could move immediately to restructure its business, streamline its operations, reform its corporate governance and position itself for future growth. Second, it could engage in a sale process to maximize near-term value for shareholders. Or third, it could continue down the current path, and make no significant tactical or strategic adjustments.

We believe the first path leads to the greatest shareholder value over time and we strongly recommend it. But if the board is unwilling to implement change, then the company should immediately pursue a sale process. The third path will simply be a continuation of the last seven years - a steady destruction of shareholder value."

Shareholders applauded this move as ABTL stock rose 18% in mid-day trading. This level of support is encouraging because it may force management into changes, and also increases the chances of a successful proxy battle, if it came down to that. Although the stock may be a little overpriced in the short-term right now, it is certainly worth keeping an eye on as this story develops.

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Finish Line Inc. (NDAQ:FINL) is a mall-based specialty retailer of athletic, lifestyle and outdoor footwear. Recently their stock has caused some concern among investors after sliding from $18 to below $12 during the past four months. This drop came as a result of lower than expected earnings and sales numbers during the last few quarters. The drop has prompted one of their largest shareholders and activist hedge fund, the Clinton Group, to petition the Board to seek strategic alternatives in a recent 13D filing with the SEC. In a letter attached to the filing, the group said:

"We have invested in Finish Line because we believe the market price of Finish Line shares fails to reflect the true earnings power of the traditional Finish Line concept stores, management's ability to turnaround the recent same store sales trends, the potential for margin improvement and realization of operating leverage and the value potential of the Man Alive and Paiva concepts. Further, we departed our meeting with a greater sense that such beliefs are indeed accurate.

While we are supportive of management as operators of the business, we are writing this letter to encourage your board to take immediate steps to enhance shareholder value. Today, we choose to highlight the following as initial steps that the board should do to enhance shareholder value: (1) eliminate the unfriendly shareholder corporate governance structure including the dual class voting structure, (2) commence a Dutch tender offer in conjunction with a modest senior debt financing, and (3) to the extent the share price continues to languish, engage a reputable investment banking firm to explore strategic alternatives including, but not limited to, a going private transaction or an outright sale of the Company."

Currently, Finish Line is trading at a low 11x earnings (industry 16x) with no debt and a sizable $72 million (or $1.30 per share) in cash which would make them an attractive target to any potential acquirer. The Board's response remains to be seen; however, with the stock up over 8% in early trading today, it is definitely a situation that warrants keeping an eye on.

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Bakers Footwear Group, Inc. (BKRS)
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DSW, Inc. (DSW)

A recent S&P 500 research report showed that corporate buybacks have risen to a record $116 billion in the second quarter this year, up 175% in only two years. Put another way, this number is very close to index companies' capital expenditures during the same period! This comes as a byproduct of another trend in corporate America - record amounts of cash in the bank, which has caused many companies to face more and more difficulty justifying the amount of cash they have tucked away. As a result, many investors are demanding that more be done to maximize shareholder value in the form of dividends and share buybacks. This is a good things for investors as it causes less shares to be on the market, which (in theory) increases the stock price.

Here are a few companies that recently announced buybacks:
Pep Boys (NYSE:PBY) - $100 million
Cascade Corporation (NYSE:CAE) - $80 million
Shuffle Master (NDAQ:SHFL) - $30 million
Sunco (NYSE:SUN) - $1 billion
Amazon.com (NDAQ:AMZN) - $500 million

Hewlett-Packard Company (NYSE:HPQ) announced yesterday in an SEC filing that Thomas J. Perkins had suddenly resigned from the Board of Directors. In his mandatory filing with the SEC in the event of a resignation, he expressed concern over the way HP was handling investigations designed to uncover individuals leaking news and trade secrets. This announcement forced HP to reveal its entire investigation, which has been causing controversy on the street. In their 8K filing with the SEC, HP stated their case:

"HP has been the subject of multiple leaks of confidential HP information, including information concerning the internal deliberations of its Board of Directors.  HP believes these leaks date back to at least 2005.  In response to these leaks, outside legal counsel conducted interviews of directors in early 2005 in order to determine the source of the leaks and to obtain each director’s reaffirmation of his or her duty of confidentiality.  The interview process did not yield the source of the leaks.  Notwithstanding these actions, the leaks continued.  As a result, the Chairman of the Board, and ultimately an internal group within HP, working with a licensed outside firm specializing in investigations, conducted investigations into possible sources of the leaks of confidential information at HP.  Those investigations resulted in a finding that Dr. George A. Keyworth II, one of HP’s directors, did, in fact, disclose Board deliberations and other confidential information obtained during Board meetings to the media without authorization.  At a Board meeting on May 18, 2006, after Dr. Keyworth acknowledged that he had leaked confidential information, the Board, after deliberation, asked Dr. Keyworth to resign his position as a director, which he declined to do.  It is at that meeting that Mr. Perkins resigned from the Board after expressing personal frustration with the Chairman of the Board relating to the handling of the matter with the Board.  He stated that he objected to the matter being brought before the full Board and that he believed the Chairman had agreed that he and she would handle the matter privately.  The Chairman disputed Mr. Perkins’ assertion, explaining that she was complying with advice from outside counsel on the appropriate handling of the matter.  At the time, Mr. Perkins confirmed he did not have any disagreement with HP on any matter relating to HP’s operations, policies or practices."

But there was one line which caused so much controversy:

"HP informed Mr. Perkins that no recording or eavesdropping had occurred, but that some form of 'pretexting' for phone record information, a technique used by investigators to obtain information by disguising their identity, had been used."

Apparently, HP had hired an outside investigative firm to obtain the information. Pretexting occurs when someone pretends to be someone else in order to obtain information. For example, to obtain phone records, an investigator may call the phone company pretending to be a customer by giving false credentials and personal information. Although this technically not illegal on a national level, the state of California is investigating whether or not it is a punishable offense under state law. In the end, HP has found at least one of its leakers and they will likely face very little reprecussion as a result of the techniques they used, other than the loss of Mr. Perkins.

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IBM (NYSE:IBM)

NVE Corp (NDAQ:NVEC) has been experiencing continued volatility recently, nearly retesting its high of $37 after moving up over 12% in mid-day action on huge volume. NVE is most known as the maker of MRAM, which is being heralded as the next generation of Random Access Memory after SRAM and DRAM. Although several other companies (including IBM (NYSE:IBM) and Infiniteon (NDAQ:IFX)) are developing MRAM technologies, NVE is the sole owner of the patent on its so-called "spintronics" methodology. This technique relies on an electron's spin rather than its charge, which makes it many times faster and denser than existing RAM.

So, what's causing this rise? The two predominant rumors on the market are that (1) Freescale Semiconductor (NYSE:FSL) may be infringing upon some of NVE's MRAM-related patents, which may eventually result in licensing deal, and (2) that IBM (NYSE:IBM) may be reconsidering a partnership deal with the company with the announcement of a new storage system. Note that there have been insider acquisitions of stock, but very little insider purchasing - which would further confirm a possible licensing or partnership deal. Any announcements will likely come in the form of an 8K, so watching for that filing along with Form 4's would be a good idea for those interested in following this company.

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Sizeler Property Investors, Inc. (NYSE:SIZ) announced on August 21st that had entered into a merger agreement with Revenue Properties Co. (TO:RPC) in which each share of Sizeler common stock outstanding at the time of the merger will be exchanged for $15.10 in cash. Two days ago, a different company - Compson Holding Corp - announced that it would raise its bid from $15.50 to $16.10. After a day without response from the company, shareholders are calling for the company to at least review the competing bid. Opportunity Investors - a hedge fund holding over 6% of the company - also issued a letter, in a 13D filing with the SEC, to the board, bringing up another key issue: management's relationship with Revenue Properties Co. The concern stems as a result of management's relationship to Revenue Properties Co.:

"As you know, we have significant concerns with respect to how Sizeler handled the auction process for the Company. The conflicts of interests between you, as Chairman of Sizeler, and Revenue Properties Company Limited and Morgaurd Corporation are particularly disturbing. The Compson offer now provides you with the opportunity to put to rest the question of whether or not the process was indeed fair and designed to maximize value for all Sizeler shareholders, not just Revenue Properties."

As a result, the hedge fund demanded that the board consider other options:

"In light of the superior all cash offer proposed by Compson we call on the board to immediately enter into discussions with Compson or any other interested party that may be willing to offer a premium to the current $15.10 per share offer. In addition, given the attractiveness of the Compson proposal, we call on the board to reconsider liquidation as a means to maximize value for all Sizeler shareholders."

This conflict of interest will likely force the board to at least consider the Compson bid, which is more than 6% higher than the current market price. This course of action could result in a bidding war or the abandonment of the sale. Either way, this stock is worth keeping an eye on - with the price sitting at around $15.09, any competing bids would likely come at a substancial premium.

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Acadia Reality Trust (AKR)
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SEC filings are the lifeblood of companies - they contain everything investors need to know to make informed decisions (unless the company illegally witholds the information!). Despite this, many investors ignore these filings and/or fail to realize how they can be used to profit. So, in the interest of creating more informed investors, here's a list of the five most important filings to watch:

1. Schedule 13D & 13G – This filing will let you know when a mutual fund, hedge fund or other entity acquires a 10% stake in a company. Often times when companies are undervalued, activist hedge funds will start acquiring a stake in the company in an effort to convince management to unlock shareholder value through a sale, special dividend, share buyback or other similar measures. Occasionally, these forms can also tip you off to potential acquirers purchasing a large amount of shares before making a tender offer for the remaining shares. Either way, these situations happen when huge shareholders are unhappy and want quick money - which presents great opportunities for those willing to tag along for the ride!
   
2. Form 3 & 4 – This filing is one made by directors, officers and 10% owners of the company. Insider buying – that is, when directors and officers purchase large amounts of shares – often occurs before a positive event for the company. For example, insiders may purchase many shares ahead of a blowout earnings announcement. These filings can also foreshadow other positive events, like potential takeover bids or other favorable events. Insiders know more than everyone else, so following their lead is usually a good idea!
   
3. Form 10-12B – This filing is the one for spin-offs – in particular, it details the spin-off terms and other company details. Spin-offs are very useful to watch because they typically outperform the market in their first year. This often happens because parent company shareholders usually are not interested in the spin-off and therefore dump their shares, which causes the stock to become undervalued. Watching these forms can tip you off to some great opportunities!
4. Form 8K – These filings are extremely important to watch because they detail material current events relating to the company. Whenever there is something worth announcing that cannot be classified in another form – this one is used. These things can include press releases, shareholder letters to management, litigation, SEC investigations, and other similar events. Many opportunities present themselves through these 8Ks!
5. Form 10K – This is the annual report for a company. Now, the numbers aren’t necessarily the most important part; instead, the notes at the end of this document occasionally contains the most interesting material. This can include future forecasts, status on litigation, future company plans or other material similar to that in the 8K. The information found in 10Ks can be extremely useful in coming up with a fair value for a stock!
   

It can be tedious to constantly check for new SEC filings via the SEC's EDGAR service, so I would recommend using a service like SECFilings.com to subscribe to free e-mail alerts when certain filings are made (they also have RSS and other options). You can setup alerts for companies you own, or companies in general, so you can always stay on top of the market!

Sara Lee Corp's (NYSE: SLE) spin-off of Hanesbrands, Inc. (NYSE:HBI) was completed today as the new company begins its first day of trading. Hanesbrands initial 10-12B filing with the SEC provides an overview of the new company:

"Although we are a newly independent company, our product portfolio includes some of the most recognized apparel essentials brands in the United States, including Hanes, Champion, Playtex, Bali, Just My Size, barely there and Wonderbra. We design, manufacture, source and sell a broad range of products such as t-shirts, bras, panties, men’s underwear, kids’ underwear, socks, hosiery, casualwear and activewear. In fiscal 2005, we generated $4.7 billion in net sales and $359.5 million in income from operations. Our mission is to create value for you, our stockholders, and for our customers through effective supply chain management, competitive prices, high quality and service excellence. Our strong brands and dedicated employees will drive this value."

Spin-offs outperform the overall market in most cases. This is because when shares are distributed to parent company shareholders, they often times immediately sell the shares, for a variety of reasons. This creates a windfall that ultimately results in a stock that is below its true value - which is a great buying opportunity for investors. Moreover, this company has a great, recognizable brand name, solid financials, and a great management team. Combined, these factors make HBI a stock worth watching.

Nabi Biopharmaceuticals (NDAQ:NABI) revealed in an amended 13D filing with the SEC today that activist hedge fund Third Point had contacted the company to make several demands. According to the filing, these demands included:

"(1) to investigate and, we believe, confirm that the members of the board of directors of the Company have engaged in gross mismanagement in managing the affairs of the Company, (2) to investigate and, we believe, confirm that such members breached, and are continuing to breach, their fiduciary duties to the Company and its stockholders, (3) to determine whether to conduct a proxy contest to replace the members of the board of directors and (4) to determine whether to commence litigation against such members for breaches of fiduciary duty, among other wrongs. These purposes are reasonably related to the Stockholders' interests as stockholders of the Company."

 These demands stem from years of mismanagement that led to the company's 50% haircut late last year and the continued dismal performance of NABI stock to date. The letter to management (attached to the filing) provides further reasoning behind the demands:

"The Stockholders believe that the board of directors of the Company has grossly mismanaged the affairs of the Company and has engaged, and is engaging, in breaches of fiduciary duty contrary to the interests of stockholders ... the Stockholders believe that the granting of stock options to certain members of management in February 2006 was deliberately and wrongfully timed to maximize the economic benefit to the option grantees and was contrary to the interests of stockholders. In addition, Stockholders believe that the directors have ignored, and are continuing to ignore, the will of the majority of the Company's stockholders, and are embarked on a scheme to entrench themselves in office for as long as possible and to maximize the personal financial benefits to themselves during their remaining tenure at the expense of the Company and its stockholders. The Company's board of directors has paid mere lip service to the interests and wishes of its stockholders, and has refused to engage in substantive dialogue concerning the gross mismanagement over which they have presided."

This is certainly an interesting development as investors are increasingly frustrated with the poor performance of the company. If Third Point can successfully obtain the information they desire it could lead to durastic measures, which could include a proxy battle and/or litigation against the company's management among other things. Either way, this is a great stock to keep on the radar as the situation develops.

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Parlux Fragrances Inc. (NDAQ:PARL) announced in a press release today that it had received a letter from Glenn Nussdorf stating that he had acquired 5% of the company's shares on the open market and seeking authorization to purchase additional shares that may exceed 15% of the company. This transaction is interesting because Mr. Nussdorf owns a majority interest in E Com Ventures, Inc. (NDAQ:ECMV), which is a major Parlux customer. Now, Mr. Nussdorf could have continued to acquire shares without seeking authorization, but this would have prohibited him (or his associates) from doing business with Parlux. By asking the Board to grant him Interested Stockholder Approval as defined in Section 203 of the Delaware General Corporation Law (DGCL) he is opening the door to business transactions, which could include a potential merger or buyout of PARL by E Com Ventures. PARL's Board convened in a special meeting today, which approved the transaction provided that no shares were purchased from Directors. This stock is definitely worth keeping a close eye on as Mr. Nussdorf begins acquiring more shares. Shares are up 12% today on the news.

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