Move Inc. (NDAQ:MOVE) is owner of Move.com and a series of other web portals designed to connecting real estate buyers and sellers, including Realtor.com - the official NAR (National Association of Realtors) portal. The stock, which was up to around $7 per share earlier in the year, is now on the rise again. So, is it a good time to buy? Let's take a look...

When looking at the macro picture surrounding the company, it is not difficult to see that there is trouble in the housing market. Rising interest rates make it more expensive to own a house because of the higher financing costs. More expensive loans end up pricing people out of the market, which reduces housing demand. The reduction in demand causes the price of houses to decrease, which is what we are currently seeing in many housing markets. The reduction in both demand and price are not good for realtors, as they must face both reduced demand for housing and a reduced commission (due to lower selling price). These two factors may decrease the deal flow seen at web portals like Move.com.

Since they operate an Internet portal as their primary business, we can partially qualify this thesis using Amazon's Alexa. This Alexa report shows the downward trend of traffic going to their main portal, Move.com. This reduction from a high of around 15 - 18 million visitors per day down to 8 - 10 million visitors per day is quite significant, and is likely at least partially attributable to the economic environment (since sales and marketing expenses were up during the same period).

There are also problems with the company itself - most notably, the fact that they don't make money (on a GAAP basis). According to their own 10K filing with the SEC:

"We have incurred net losses every year since 1993, except for modest net income in 2005, including net losses of $7.9 million and $47.1 million, for the years ended December 31, 2004 and 2003, respectively. As of June 30, 2006, we have incurred a modest net loss and have an accumulated deficit of approximately $2.0 billion ... certain business model changes that will require considerable investment with no assurances that our future financial performance will be enhanced by these new initiatives."

The most troubling issue is the fact that during the United States' largest real estate boom, the company was not only unable to turn a profit, but actually accumulated a $2 billion deficit! And now after the boom is (arguably) over, the company still retains an enterprise value (EV) of over $640 million. Even if the company is a clear market leader with an increasing share of the online real estate listings market (which is debatable), the company still faces both macro-economic and internal issues that it needs to resolve before becoming profitable. The company could also face antitrust issues relating to their exclusive relationship with NAR, assuming that the online real estate listings market continues to grow as fast as it is (expected to double by 2010). Finally, the company is in the process of changing its web portals, and the success of this depends largely on how well customers accept these new online destinations. Overall, it would be best to hold off on any investment in MOVE until the company achieves profitability and is able to demonstrate that it can drive traffic to its new portals.

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The daily digest is a new addition to the blog that highlights five of the most noteworthy forms filed with the SEC every day...

Ahold (NYSE:AHO)
On Watch for 8K Filings
The company is reportedly under pressure from hedge funds to break up the company and may be looking at a merger with Delhaize (according to Reuters), although many remain skeptical.

Eagle Materials (NYSE:EXP)
Form 4 Filing by Chairman
Chairman Laurence Hirsch revealed today that he has purchase 400,000 shares of the company's stock between $34.68 and $35.77 through the week. The stock is trading up over 12% on the news.

Imclone Systems Inc. (NDAQ:IMCL)
13D Filing by Carl Icahn and Co.
Carl Icahn disclosed a 14% stake in the company and said that he wants Director Kies to leave the Board of Directors. Shareholders recently re-elected Kies as Director while also electing Icahn as a Board member.

Marsh & McLennan Companies, Inc. (NYSE:MMC)
8K Filing Noting Putnam Valuation
Item 8.01 in the company's latest 8K filing notified investors that it was conducting a valuation of its subsidiary Putnam, citing several parties that were interested in a potential merger or acquisition of the division.

Palm, Inc. (NDAQ:PALM)
On Watch for 8K Filings
CNBC mentioned today that Palm is higher on takeover rumors. Any substance to these rumors would be found by looking for 8K material events filings or perhaps even insider buying.

Imclone Systems Inc. (NDAQ:IMCL) revealed today in a 13D/A filing with the SEC that Carl Icahn and Co. now own almost 14% of the company. The activist investor has been trying to replace the management and turn around the company for some time now. The stock continues to slowly decline as operating results fail to improve, while the company was unsuccessful in finding a buyer back in July. While the company is about even on the year, it has recently dropped from a high of $42 in May to its current levels of around $28 per share.

Carl Icahn believes that the problem lies with David Kies. In an attachment to this latest 13D filing, Mr. Icahn enclosed a letter asking the Chairman to immediately step down:

"Now that I am becoming a director of ImClone, I am asking you again for the good of ImClone and its stockholders to give up your position as Chairman of the Board. Given what I consider the sorry record of the Company under your watch, it is time for you to step aside and allow someone else to be elected. You have even admitted to me that the board has done a bad job. ImClone has been without effective leadership for almost three years.

You should recognize that your leadership of ImClone should come to an immediate end. The time has come for you to  peacefully  pass the baton to a successor who will be able to bring strong  leadership back to ImClone.  If you fail to do so, you will have thrown down the gauntlet and we will have to react accordingly."

Also in the letter, Carl Icahn noted several of Mr. Kies failures as Chairman of the company:

• ImClone has suffered as a result of its inability to attain the leadership position it should enjoy as an important biotechnology company.
• Commercialization has suffered, trials have not been sufficiently  pursued, the head and neck data was needlessly delayed, patent suits have been lost and the Company has not provided its stockholders the performance that they deserve.
• ImClone hired a President and CEO who was totally the wrong person for the position and it took the company many many months to recognize this and replace him. His replacement lasted only a few months. Now, ImClone has another interim CEO and his permanent replacement is nowhere on the scene.
• ImClone's meaningful lead relative to potential competitors has shrunk considerably and ImClone has suffered reversals such as the loss of the patent suit in the past week.

Clearly Mr. Icahn believes that many of the company's failures are attributable to Kies, which makes his removal necessary in order to unlock shareholder value. The activist investor is known for taking any actions necessary to accomplish his agenda. And with a 14% stake in the company, we can be sure that Mr. Kies will not remain with the company for very long. With new management and leadership, perhaps this company can turn itself around and once again establish itself as a leader in their market. It is definitely a stock worth keeping an eye on!

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Star Scientific Inc. (NDAQ:STSI) announced after-hours in an 8K filing with the SEC on Monday that it had received a letter from Judge Marvin J. Garbis of the U.S. District Court of Maryland regarding its longstanding patent infringement lawsuit with R.J. Reynolds Tobacco Company. The letter noted:

"I have Mr. McMillan’s letter of September 5, 2006 and understand all parties' interest in moving the case to final resolution. I shall try to issue decisions on the pending matters within a month."

What is this patent lawsuit about? According to their latest 10K filing with the SEC:

"In May 2001, Star filed a patent infringement action against RJR in the United States District Court for Maryland, Southern Division to enforce Star’s rights under U.S. Patent No. 6,202,649 (‘649 Patent), which claims a process for substantially preventing the formation of TSNAs in tobacco. On July 30, 2002, the Company filed a second patent infringement lawsuit against RJR in the same Court based on a new patent issued by the U.S. Patent and Trademark Office on July 30, 2002 (Patent No. 6,425,401). The new patent is a continuation of the ‘649 Patent, and on August 27, 2002 the two suits were consolidated."

The company also stated that it would immediately appeal if it did not win the case. Although the results of the case have yet to be unveiled, we do know there will likely be significant volatility in the wake of the decision - this makes STSI an interesting potential options volatility play. Either way, this stock is definitely worth watching, as this event is very material to the company's future.

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Carmike Cinemas Inc. (NDAQ:CKEC) revealed today that Watershed Asset Management had increased its stake in the company to 6.7% and nominated one of its own to the company's Board of Directors. Watershed has had an investment-only interest in the company for a long time. Back in October 2005, the fund made several recommendations to the Board in a letter attached to a 13D/A filing with the SEC:

1. Eliminate growth capital expenditures
2. Seek amendments to your bank documents and bond indentures to increase restricted payments flexibility
3. Buy back stock with excess cash; if consent from bondholders can not be secured, buy back bonds at a discount
4. Increase your dividend
5. Begin evaluating options to extract value from your real estate portfolio
6. Communicate your new free cash flow strategy

The fund summarized:

"In summary, we believe that,despite the troubles that Carmike has experienced over the last three quarters, the  compan has a number of practicalmopportunities to improve its return to investors. Moreover, with a rebound in box office performance to 2003 or 2004 levels, Carmike's EBITDA, adjusted for the GKC acquisition, could be $115 million or more. Free cash flow available for shareholders could exceed $60 million. With discipline on capital expenses and a commitment to deploy cash with a view to enhancing shareholder value, Carmike's shares would trade dramatically higher."

Since then, the stock has dropped further from a high of $35 to its current levels of $17 per share. Watershed is likely attempting to remedy the situation by electing its own member to the Board in an effort to further influence these changes within the company. In an 8K filing with the SEC yesterday, the Board announced that its current Director - James J. Gaffney - would not be running for re-election, and the company would recommend Watershed's Kevin D. Katari to shareholders. This Board spot will enable Watershed to help the company execute its plan to enhance shareholder value, and ultimately increase the stock price. This makes CKEC a stock definitely worth watching during the next few months.

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The Rowe Companies (AMEX:ROW) announced today that it would commence voluntary proceedings under Chapter 11 in an attempt to restructure the company and return it to profitability. The company has been beaten up from its highs of nearly $6 in 2005 to its current price of just $0.43. The company announced that it plans to sell off its retail division - Storehouse, Inc. - so it can focus on its core manufacturing operations. Meanwhile, Rowe intends to continue with business as usual with not even a payroll modification.

So, why is this company worth noting? Well it turns out that bankruptcies can provide investors with great opportunities to profit. The key is not in buying stock now, but rather after the company emerges from bankruptcy. Often times these companies will issue new shares to creditors, which the creditors have no interest in keeping. Therefore, there is almost always a sell off that floods the market with cheap shares. It is also important to look at the "new" company's financials once (and if) they emerge from bankruptcy. Rowe will likely report pro-forma earnings that will show whether the company is performing poorly overall due to bad management, or whether the retail segment was responsible. If it was only the retail segment causing trouble, and the company has sold it off, Rowe could be an attractive investment long-term.

Not all companies perform great after emerging from bankruptcy, but a combination of creditor selling pressure and a sale of any poorly performing segments tilts the odds in investors' favor. This stock is definitely one to watch as this situation unfolds...

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Napster Inc. (NDAQ:NAPS) announced yesterday that it was hiring UBS AG to assist the Board of Directors in reviewing strategic alternatives, which could include a sale of the company. The company noted that this decision came as a result of unnamed third parties that expressed interest in a possible business combination or acquisition. In the press release, the CEO noted:

"Our goal is to enhance shareholder value which could potentially lead to a new strategic partnership or the sale of the company but in any event our primary focus will remain on growing Napster."

The CFO also highlighted the company's strong financial position:

"Napster has a strong balance sheet with a healthy cash position of $97 million as of the close of the first quarter and we are currently generating annual revenues in excess of $100 million."

While the company certainly is not cheap by traditional measures, it does have some things going for it. With the new flurry of new products and deals in the music industry, many were expecting this kind of consolidation. The online music market is only going to grow, and Napster has a strong brand name and a large customer base. The stock is currently up over 15% on the news. As of now, we can only speculate on a buyout price; however, any future announcements will come in the form of a press release or 8K filing with the SEC - this stock is definitely one to keep an eye on!

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Cost Plus, Inc. (NDAQ:CPWM) - more commonly known by its brand name "World Market" revealed today in a 13D filing that Red Mountain Capital Partners LLC had taken a 6.2% stake in the company.

In the filing, they noted:

"Red Mountain acquired the Common Stock reported in this Schedule 13D for investment purposes because it believed that the Common Stock was undervalued and represented an attractive investment opportunity.

Red Mountain has met with the management of Cost Plus and expects to maintain a dialogue with management regarding, among other things, Cost Plus’ operations, strategic direction, capital structure and corporate governance and Red Mountain’s expectation that management will pursue appropriate measures to enhance shareholder value. In addition, Red Mountain may communicate with other persons regarding Cost Plus, including, without limitation, the board of directors of Cost Plus, other shareholders of Cost Plus and potential strategic or financing partners.

Red Mountain may, at any time and from time to time, take such actions with respect to its investment in Cost Plus as it deems appropriate, including, without limitation, (i) proposing measures which it believes would enhance shareholder value, (ii) seeking representation on the board of directors of Cost Plus, (iii) purchasing additional Common Stock or other securities of Cost Plus, (iv) selling some or all of any securities of Cost Plus held by Red Mountain, (v) proposing, whether alone or with others, a transaction that would result in a change of control of Cost Plus, or (vi) otherwise changing its intention with respect to any of the matters referenced in this Item 4."

This is good news for shareholders of the stock, which has declined from $40 in early 2004 down to its current levels of around $11 per share. Currently the company is trading below its enterprise value of $15.16 per share with a forward P/E of 21x. Any further improvements in the company's bottom line and capital structure would make it substancial undervalued - possibly even a potential buyout target, given the company's market reach. This is definitely a stock worth keeping an eye on!

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We covered Advancis Pharmaceuticals Corporation (NDAQ:AVNC) in an article back on August 18th. We noted that the company had successfully successfully achieved its Phase III PULSYS trials, which demonstrated that it's drug distribution technique was effective. Moreover, we noted a 13G filing (a more passive version of the 13D) which indicated a 17% ownership stake by Deerfield Capital Management - a fund that invests in "special opportunities".

New developments at Advancis make the situation more promising. On September 13th, the company announced that "it has received correspondence from the U.S. Food and Drug Administration (FDA), confirming that the Company's recent successful Phase III clinical trial, along with other data, would be considered adequate for filing a New Drug Application (NDA) via the 505(b)(2) regulatory pathway." The company anticipates filing the Amoxicillin PULSYS NDA in December 2006 or January 2007.

The stock is currently trading around $5.13 per share, up over 20% since our first mention of the company.

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National Atlantic Holdings Corporation (NDAQ:NAHC) revealed on Friday that 8.2% holder, The Commerce Group, Inc. (NYSE:CGI), may be interseted in more than just an investment. According to the 13D filing:

"The purpose of this statement is to report that Commerce is in the process of evaluating a potential transaction with the Issuer, including the possibility of entering into a business combination or other strategic transaction with the Issuer such as an acquisition.

Whether Commerce decides to pursue any action as described above will depend on its continuing assessment of pertinent factors, including without limitation the following:  the results of its due diligence review of the Issuer; the Issuer's and Commerce's business and prospects; the outcome of discussions and negotiations between Commerce and the Issuer concerning the terms and conditions on which any potential transaction described above would take place, including, without limitation, the purchase price for the Issuer's common stock; other business and investment opportunities available to Commerce; general economic conditions; stock market and money market conditions; the attitude and actions of the management and Board of Directors of Commerce or the Issuer; the availability and nature of opportunities to dispose of Commerce's interest; and other plans and requirements of Commerce."

The stock is up over 5% today on the news to $11 - a continuing recovery from its $8.50 lows in late June. The stock has a forward P/E of just over 7 along with over $2.90 per share in cash with no debt - making it a decent acquisition target. However, it is worth noting that the current enterprise value of the stock sits at only $7.29 per share, which reduces the likelihood of any large premium over the current price in the event of a merger or buyout. Despite this, the stock is definitely worth watching as this story unfolds.

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