Scottish Re Group Limited (NYSE:SCT) shares jumped over 10% today as the company updated investors on its "strategic alternatives". The company first ran into trouble in July after it blindsided investors with wide losses for the second quarter due to "lower than expected new-business volumes, higher than anticipated retrocession costs and income-tax expense due to the inability to recognize future deferred-tax benefits". This, combined with the resignation of the CEO and various profit warnings, caused the stock to drop over 75%. Since then, the stock has regained some ground after the company confirmed that it would be able to remain solvant. Moreover, the company announced that it would begin the auction process to put itself up for sale in addition to acquiring further financing in order to remain liquid.

Today, the company announced that it had succeeded in both of its goals. Scottish Re announced that it had received proposals from a number of potential bidders last Friday, along with three written proposals for possible financing (between $150 - $250 million). Considering the fact that the stock was trading at $16 shortly before the second quarter earnings were reported and $25 earlier in the year, many investors are speculating that the buyout offers may be significantly higher than the stock's current levels. This is optimism is further driven by SCT's impressive cash flow. Moreover, the fact that there are several bidders opens up the doors to a potential bidding war. So, what's the downside? The company said that it expects its former executives to sell their stock, which includes stock options (that must be exercised within 60 days of their departure) and shares held in their 401k plans. Whether or not they sell remains to be seen. Either way, this stock is a great one to keep an eye on as these events unfold...

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U-Store-It Trust (NYSE:YSI) is an REIT (real estate investment trust) operating in the self storage unit space. The company has recently undergone several changes aimed to help the company recover after falling from $22 in April down to $16 in June. The company announced today in a series of Form 4 filings with the SEC that its CEO Dean Jernigan purchased a total of 195,000 shares (or about $3.9 million) on September 5th and 6th at an average cost of $19.88. Analysts applauded the move with Merrill Lynch's Christopher Pike maintaining his target of $21 saying that they "believe that an operational turnaround is far from fully priced into U-Store-It's stock".

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Metropolitan Capital disclosed a 7% stake in Cyberonics Corporation (NDAQ:CYBX) today in a 13D filing with the SEC. The hedge fund also enclosed a lengthy letter stating their intention to nominate three candidates to the company's Board of Directors, with the support of the shareholder group Committee for Concerned Cyberonics Shareholders. In the letter, Metro elaborates on several critical issues facing the company, reasoning that "if there was ever a question about the need for change at Cyberonics, recent events have provided an emphatic answer ... Our nominees will provide a much needed independent voice in the Boardroom, which will represent the start of the process of rebuilding shareholder value." (Read the rest of the letter)

Metro was first involved with Cyberonics six years ago, when Medtronics (NYSE:MDT) offered to buyout the company at $26 per share. Mr. Cummins, the past and current CEO of the company, implored Metro to reject the offer, saying that he would be able to generate more value over the long-term. Metro agreed and the offer fell apart. This turned out to be a bad move as shares have declined over 50% so far this year alone. Meanwhile, Mr. Cummins has profited handsomely from over $17 million in options grants and even more in restricted shares. Even more appaling is the fact that the Board granted Mr. Cummins stock options on the same day as an FDA approval of the company's primary product, which resulted in an overnight gain of over $2 million - not bad for a days work! Despite the CEO's poor performance and questionable ethics, the Board of Directors went so far as to contract Mr. Cummins for an additional five years with the company and institute a 50% pay raise.

Clearly change is needed in this company, and Metropolitan Capital is taking the steps to enforce it. Whether or not they can salvage the company depends on many factors. Even if they successfully obtain the three seats on the Board, the group will likely face a proxy battle to remove Mr. Cummins and also be forced to pay contract termination fees and a plethora of other costs. In the long term, however, this move could help the company turn itself around and provide significant returns to shareholders.

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