Nabi Biopharmaceuticals (NDAQ:NABI) is under increasing pressure to expand its contract with Bank of America to include a possible sale of the company. Third Point, an activist hedge fund and majority holder of the company, sent their demands to management today in a 13D/A filing with the SEC. The meeting to decide if this new course of action should be implemented is due to take place on September 15th.

To understand why there is a problem with NABI, we must first look at the past. In their lengthy letter attached to the 13D filing, Third Point elaborated on their history with the company:

"When we first became Ligand shareholders last year our thesis was similar to that driving our Nabi investment: Ligand was an asset-rich company with value substantially above what Wall Street was giving it credit for, but the value of its assets was obscured by poor management and imprudent capital allocation decisions. When we concluded that it was highly unlikely that these values would ever be realized under existing management and Ligand's business plan, and that there was indeed a substantial risk that continued cash burn might eventually force management to sell off the company's valuable assets at fire sale prices, we demanded that Ligand immediately initiate a process to maximize shareholder value. The result is striking: the stock is up by 30% since we became involved; just last week Ligand announced the sales of its two commercial operations at extremely attractive prices; and the company has never been in a stronger financial position, nor had a more exciting future. Due to our direct and substantial involvement in the value maximization process, significant cash should be returned to Ligand's shareholders shortly, and the prospects for the "new" company's remaining R&D pipeline and partnered products is tremendously exciting."

The hedge fund also noted how unresponsive and evasive CEO Tom McLain was in dealing with shareholders. In particular, Third Point had difficulty obtaining access to the company's books needed to complete a valuation of NABI to determine the best course of action. However, the fund noted that they "will not be deterred by the Company's attempts to ignore its shareholders and hide behind legal facades". At the end of the letter, Third Point summed up its argument:

"In sum, it is irrefutable that a majority of your shareholders vehemently oppose the long-term, highly-risky strategic plan that you continue to force upon us against our collective will (while, once again, you undertake very little risk yourselves due to your negligible outright holdings in the stock). You have had six months now to do your research and come to the only accurate conclusion - i.e., if you truly take your fiduciary, legal and moral obligations seriously you will agree to act upon the will of the majority of Nabi shareholders (many of whom have apparently now communicated with you directly) and empower BofA to explore all possibilities to maximize the significant asset values embedded within Nabi. As Mr. McLain has explained to us himself, it is very difficult for a small biotechnology company to succeed in the marketplace today. We agree, and when that company is not strongly capitalized and extremely well managed - Nabi being neither of these - it is nearly impossible. It is time that you finally acknowledge this and, should this prove to be the optimal outcome, place our valuable assets, at a substantial premium, in the hands of stronger operators."

If this proposal goes through, then there is a chance the company could be put up for sale at a substancial premium to its current market price. This makes it a stock definitely worth watching!

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Adams Express Company (NYSE:ADX) took some heat today from shareholders after the release of its proxy filing on September 6th. Karpus Management filed a 13D with the company containing a letter to the Board, which read:

"We have read your recently released preliminary proxy materials and are writing to you to express our dissatisfaction with the inherent shareholder disregard expressed in the materials.

In fact, while reading the preliminary materials, we found many instances where the proposed changes are argued to benefit the company's discretion in the long-run but find absolutely no compelling reason why it would be in shareholders' best interests to relinquish the key accountability measures listed in the proxy materials.

What's more, we can find no indication why it is that the Board is calling this special meeting altogether because in our belief it would have been more efficient and cost effective to have shareholders vote on these issues at the same time that they voted on the routine annual meeting matters back in March.

As an agent of the shareholders, the Board should be reminded that it is afforded the task of monitoring the activities of a Company's officers and/or managers and the overall performance of a Company so that it can enhance shareholder value. Given the circumstances before us, the Board appears to be failing in this task and also seems to forget about its duties to shareholders altogether."

The company is seeking to ammend its company charter in two ways:

• By requiring a larger 2/3 vote in order to convert the company from a closed-end mutual fund to an open-end fund. The difference is that closed-end funds are valued based on the demand for shares of their investment fund while open-end funds are valued based upon the NAV (net asset value) of the stocks that they hold. So, why is there anger over this by shareholders? Well, typically closed-end funds trade at a discount to their NAV (for a variety of reasons), so any conversion to an open-end structure would unlock this value for shareholders.
• By removing the rights of shareholders to ammend the company bylaws. Although the company notes that this technique has never been used on Adams Express, and is only used on rare occasions in the general market (when these provisions exist), it is a tool that activist shareholders could use to advance their own goals.
  

Clearly, it appears as if the company is worried about activist shareholders coming in and converting the fund from a close-end fund to an open-end fund to unlock shareholder value. This stock is worth keeping an eye on because if these provisions do not pass, that opens the door to potential activist shareholders to come in and try to unlock the stock's NAV value.

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Stratos International (NDAQ:STLW) announced today in a press release that the company would be exploring strategic alternatives, which could include a possible sale of the company. The company also said that it had retained CBIC World Markets Corp as its exclusive advisor. The story becomes interesting when we see that activist hedge fund Steel Partners is a majority holder, holding almost 15% of the company.

The company noted in its press release that:

"Steel Partners II, which issued a press release in June indicating that Steel Partners might be willing under some circumstances to make an offer for Stratos, would be welcome to participate in the process."

So, what was this offer? Well, if we look back to their June 13D/A filing with the SEC, we can see the following:

"We believe we have exhausted all our efforts to privately discuss with the Board  of  Directors a value enhancing  transaction in any  meaningful way. Accordingly, Steel  Partners II, L.P. publicly sets forth its willingness to offer to acquire all of the common stock of Stratos it does not  already own, through one of its affiliates or other appropriate  acquisition entity by merger or otherwise, for $7.50 per share in cash (the "Transaction"). Our proposal is not subject to any financing  contingency. This  represents a  substantial  23% premium to the current market price of $6.09 per share. We believe this all-cash offer will provide shareholders immediate liquidity and an immediate opportunity to maximize their investment in the Company. We urge the Board to allow the Company's  shareholders to have the opportunity to decide whether to accept our proposal.

We propose that the Transaction be accomplished through a definitive tender offer/merger agreement. Our proposal is conditioned upon satisfactory completion of due diligence typical for a transaction of this type (our  familiarity  with the Company  should  enable us to complete  all  required  due  diligence on an expedited basis), obtaining all necessary consents and approvals,  waiver of any Company  anti-takeover  provisions  including the Company's  shareholder  rights plan, other customary conditions for a transaction of this type and size and the execution  of a  definitive  agreement.

If as a result of our due diligence we find  evidence of  additional  value inherent in the Company  based on operating  results or  otherwise,  we would be willing to upwardly adjust the offer price to reflect such additional  value. We invite the Board to share with us any  documentation  in the Board's  possession which it believes  reflects  additional  value in the shares that it believes is not already known to us."

The stock is up 10% on the news, now trading at $6.70 - which is still a substancial discount to Steel Partners' offer of at least $7.50 per share. With such a large existing stake in the company, the hedge fund would be acquiring the rest of the company for cheaper than any other potential bidders. Whether or not additional bidders will show up remains to be seen; however, from what we know now, STLW appears to be trading at a steep discount to Steel Parters' June offer, and may be a buying opportunity even at these levels. Either way, it's a great stock to keep an eye on as the process of finding strategic alternatives begins...

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