Factory Card & Party Outlet Corp. (NDAQ:FCPO)
13D/A Filing by Midwood Capital
Midwood Capital is an activist hedge fund that was first involved with FCPO back in August, when it said the company was trading at a substancial discount to its intrinsic value and encouraged the company to explore a possible sale of the company. The company has not publicly responded to this request, which is likely why the fund continues to purchase shares. Midwood now holds a 9.7% stake in the company, giving it substancial power to enforce their plans if they desired to do so. The company is currently trading 25% below its enterprise value with a book value of $9.38 per share.

Magnetek, Inc. (NYSE:MAG)
Form 4 Filing by the Director
Magnetek Director Yon Jorden disclosed in a Form 4 filing with the SEC today that he had purchased 10,000 shares of the company in a transaction worth approximately $37,800. This comes shortly after 10% holder Bryant Riley purchased over $320K worth of stock just two days earlier.

Patient Safety Technologies, Inc. (AMEX:PST) revealed today in an 8K filing a number of changes that the company plans to enact as it undergoes a restructuring. These changes included spinning off its SurgiCount Medical unit and the resignation of its interim CEO. In its press release, the company cited five key changes that it was going to make in its efforts:

• Spin-off to PST shareholders of a majority interest in SurgiCount Medical, Inc., which will become a publicly traded company
• New private placement of common stock by SurgiCount to fund future growth
• Possible acquisition of another operating company by the Company
• Resignation from the Company by CEO and Director Milton "Todd" Ault III, in order to assist the Company in implementing reorganization plan
• Financial restructuring, including debt conversion

Now, there are two key opportunities here. The first is the turnaround of this company, which is down from a 2005 high of around $6 per share to its current levels of $1.55 (after moving up 22% in today's trading). If this company can turn itself around it could mean significant share appreciation for investors. The second major opportunity here is in the spin-off opportunity, which is worth noting because spin-offs tend to outperform the larger market in their first year. Let's take a look at the company's plans and how they related to these two opportunities...

The Spin-off
The company's press release had the following to say about the proposed spin-off:

"The Board has approved a spin-off by the Company of a majority interest in its wholly-owned subsidiary, SurgiCount Medical, Inc. The Company also intends to raise new equity capital on behalf of SurgiCount, and has already engaged an investment banking firm to assist SurgiCount in conducting a private placement of its stock. SurgiCount intends to file a registration statement with the Securities and Exchange Commission in connection with the spin-off and become a public reporting company, as well as seek a listing on a national securities exchange. The Company is currently exploring the structure of the proposed spin-off transaction in order to minimize the tax impact of the spin-off on the Company and its shareholders."

The registration statement will be filed as a S-1 filing with the SEC under the new company's name with a notice likely as an 8K under PST's company name. The press release also clues us into the fact that the spin-off will likely be share for share transaction, since the company noted it would structure it in a way to minimize the tax impact. This is good news for outsiders, because existing shareholders may not want the shares and sell for non-valuation-related reasons, making the shares available for cheap.

The Turnaround
The company's press release also noted many things about the proposed restructuring:

" The Board has also approved management’s exploration of opportunities to complete an acquisition of another suitable operating company. In this regard, the Company is in discussions with a possible acquisition target and is authorized to enter into a letter of intent with the company to explore a possible transaction. The Company also intends to sell, liquidate or monetize its other assets and extinguish certain of its debts in preparation for a possible acquisition. The Company does not intend to publicly disclose further developments with respect to a possible acquisition transaction unless and until a definitive agreement is reached.

Further, as part of this restructuring, Ault Glazer Capital Partners LLC, one of the Company’s major creditors, has agreed in principle to convert its outstanding loans to the Company into equity, and convert two loans on properties owned by Automotive Services Group, PST’s wholly owned subsidiary, into PST common stock. This conversion, when completed, will eliminate approximately $3.3 Million of the Company’s existing debt, thereby significantly enhancing the Company’s Balance Sheet.

Separately, the Company has reached a settlement agreement with Winstar Global Media, Inc., relating to the Company’s $1 Million Note with Winstar, and is currently awaiting a New York Court to approve the terms of the settlement agreement, which is currently set for November 7. The settlement, whereby the existing liability was reduced to $750,000, provides that the Company abide by a payment schedule set forth in the agreement, and eliminates another $250,000 of debt, plus interest, of the Company."

This news is significant for several reasons. First, the company is eliminating almost $4 million of company debt while also trimming down its operations. If their proposed acquisition turns out as expected, it would also enhance their offerings and strengthen their cashflow. Although this process will take significantly longer, it could mean an eventual return to the company's previous highs.

Related Companies
American Capital Strategies, Ltd (ACAS)
Allied Capital Corporation (ALD)
UTEK Corporation (UTK)

ConAgra Foods Inc. (NYSE:CAG) revealed today in a Form 4 filing with the SEC that President & CEO Gary Rodkin purchased 75,000 shares on the open market in a transaction valued at over $1.8 million. The company also revealed that their Executive Vice President of Legal & External Affairs purchased a total of 11,000 shares in a transaction valued at almost $270,000. These transactions are worth noting because two key executives purchased a significant amount of shares on the same day, which could indicate that a favorable event is in the company's future.

Related Companies
Hormel Foods Corporation (HRL)
Del Monte Foods Company (DLM)
Overhill Farms, Inc. (OFI)

ImClone Systems Incorporated (NDAQ:IMCL) has been embroiled in a battle with activist investor Carl Ichan for some time now, and things just keep heating up. The drama reached a new high today after the company released an interesting bit of information about Mr. Icahn:

"Mr. Icahn fails to tell you that only a few weeks ago he asked the Board to waive Section 203 of the Delaware General Corporation Law, which would have facilitated him buying more than 15% of the Company’s common stock without first making a tender offer to all stockholders.  He fails to tell you that the directors he now seeks to remove refused to grant him this waiver.

Mr. Icahn also fails to tell you that when a proposed acquirer told the Company a few weeks ago that it would be prepared to make an offer to acquire the Company for $36 per share in stock if Mr. Icahn would support it, he refused.

Mr. Icahn says he wants the Board to find a permanent Chief Executive Officer, but fails to tell you that he, one of his employees and one of the directors he proposes remain on the Board already constitute three of the six members of the committee tasked to find the new Chief Executive Officer.

By a majority vote, your Board determined that, although control of the Board may be in the best interests of Mr. Icahn and his affiliates, it would not be in the best interests of all stockholders.

We urge you to reject this maneuver by Mr. Icahn, who owns less than 15% of the outstanding stock, to remove six members of your Board and take over effective control of your Company and its future.  The directors Mr. Icahn seeks to remove have extensive experience and knowledge of the Company and the biotechnology industry—knowledge that would be lost if Mr. Icahn is successful.  Your Board is committed to acting in your best interests and believes that a balanced Board is better positioned than one dominated by Mr. Icahn to maximize long-term value for all stockholders." (Read Entire Letter)

Carl Icahn responded nine hours later with a convincing message to shareholders:

"1. ImClone filed a statement  today with the Securities and Exchange  Commission intimating that it turned down a bid of $35.50 for the Company as a result of my opposing it. This is in contradiction  to the Company's  statement of August 10, 2006,  indicating  that it turned  down the bid  because it was  inadequate.  It should be noted that the bid was a conditional  non-cash offer and made with the bidder's stock, which I believed was overpriced. Either the ImClone Board is now attempting to totally  mislead you or they are admitting  that they did not even have the strength of  conviction  to support a sale they believed in when an 11% stockholder  was  against  it. Are they now saying  that they wanted to sell the Company  (whose stock price had peaked at $86 per share in July 2004) for $35.50 in a non-cash transaction?  While I admit I was opposed to the bid, if the Board really  wanted to sell the  Company  at  $35.50,  it  should  have done what any self-respecting  board would have done.  They should have  accepted  the bid and then tried to convince the  stockholders  that the transaction was in their best interest and not let an 11% stockholder stand in their way.

This whole episode  points out that the Board is either unable to make decisions even if they believe  them to be in the best  interests  of  stockholders  or is currently misstating the facts solely to entrench themselves and keep themselves from being removed.

2. I  believe  that  ImClone  is  worth  more  than  $36 a share if it is run by competent people,  including  competent  high-level  management  supervised by a competent Board of Directors.  I believe in its product and its pipeline,  and I believe its other  stockholders  share that belief.  On September 14, 2006,  the Company's  investment banker called and said that the same bidder was interested in making the same  all-stock  bid at $36 with the same  conditions,  if I would favor it. I felt then that I was being  asked to comment on a non-bid but stated that if the all-stock bid were made, I still thought that the  consideration was inadequate and would vote my shares against it. In fact, no one from the Company even  contacted me to tell me that they changed their mind on the basis that the new suggested price was 50 cents higher,  nor did anyone from ImClone urge me to support the $36 possible  bid.  Had the Board really  favored a sale at $36, the Board  could  have  pursued  the  matter  and asked the  bidder to make the bid. However, I must admit I am very glad they did not." (Read Entire Letter)

Some investors are convinced that the Board is attempting a last ditch effort to save their jobs, while others contend that Carl Icahn is simply a smooth talker with a vendetta against the company. But we won't have to wait too long to find out, as the consent cards are already en-route to shareholders.

Related Companies
Medarex, Inc. (MEDX)
Amgen, Inc. (AMGN)
OSI Pharmaceuticals, Inc. (OSIP)

Apple Computer, Inc. (NDAQ:AAPL)
8K Filing by the Company
Apple announced today in an 8K filing with the SEC that they had concluded their options probe. The company found that there was no misconduct by any member of Apple's current management team; however, serious concerns were raised about two former officers. The company is reporting these results to the SEC, while issuing a formal apology to shareholders.

Joy Global Inc. (NDAQ:JOYG)
Form 4 Filing by CFO
Joy Global CFO, Donald Roof, revealed today that he had recently purchased 10,000 shares of the company's stock, valued at around $330,000. This news comes shortly after the company's CEO said that commodity prices could fall significantly (10-30%) without their customers slowing down their mining (JOGY creates and sells mining equipment). The stock was up 1% today on the news.

WorldGate Communications, Inc. (NDAQ:WGAT)
13D/A Filing by Antonio Tomasello
Antonio Tomasello revealed today in a 13D/A filing with the SEC that he now owns 7.02% of the company, up from his 6% stake disclosed earlier this year. In his original 13D filing, he stated that these transactions were for "investment purposes" only. He began acquiring share in June at around $1.40 per share through July and August for prices as low as $1.18 per share and still now at $1.70 per share.

Pier 1 Imports, Inc. (NYSE:PIR) moved lower today after the company issued a clarification to comments made by Chairman & CEO Marvin J. Girouard to the press. According to the press release:

"Mr. Girouard was quoted as saying that he predicted the chances are '50-50' that the Company's Board will reach an agreement with a buyer on a sale price. Mr. Girouard was also reported as saying that a deal would likely happen quickly. He was quoted as saying that, 'It would be in weeks, not in months.'"

The press release goes on to clarify the company's situation:

"Since May, Pier 1 has agreed to provide confidential financial data to several entities for the purpose of permitting those entities to consider a possible transaction with Pier 1, one of which was the investor to which reference was made in the articles [Jakup a Dul Jacobsen, a Danish investor who owns 9.8% of the company. See our previous article on this topic.].

To date, Pier 1 has received one preliminary indication of interest, but the entity submitting that indication of interest subsequently advised Pier 1 it would not continue further discussions with Pier 1 regarding a possible transaction. Pier 1 has had no other substantive discussions, to date, with any of the other entities regarding a possible transaction ... Pier 1 makes no prediction whatsoever as to when, if ever, Pier 1's Board will reach an agreement with respect to a proposed transaction."

Despite its large cash position, a declining free cash flow and negative margins may spell trouble for the company if it cannot find a buyer, especially after the company recently cut its dividend. Shares are currently trading down nearly 3%.

Related Companies
Cost Plus Inc. (CPWM)
Bed Bath and Beyond Inc. (BBBY)
Kirklands, Inc. (KIRK)

Titanium Metals Corporation (NYSE:TIE) revealed today in a Form 4 filing with the SEC that it's Chairman & CEO, Harold Simmons, purchased another 200,000 shares on the open market today in a deal worth over $4.7 million. He had previously bought 155,400 in September and 125,000 shares on July 14th. This transaction brings his stake to over 61 million shares. TIE has been slowly trending down to $23.82 after peaking at a split-adjusted $44.81 per share in May. The company is a producer of titanium products used in the aerospace industry among others, and has benefited from the spike in the aerospace industry (by companies like Boeing) for titanium used in their landing gear and other parts. The company's stock has dropped recently as commodity prices have slid to lows and inflation pressure has mounted. This insider buying activity could indicate that the CEO believes the company is ready for a turnaround.

Related Companies
RTI International Metals (RTI)
Allegheny Metals Incorporated (ATI)
Aleris International Inc. (ARS)

Alliance Data Systems Corp (NDAQ:ADS)
8K Filing by the Company
Alliance announced today that it would be instituting a buyback program to repurchase up to $600 million of its common stock through 2006. This is significant because Alliance's market cap is only $4.52 billion, which makes this transaction cover around 14% of the company's outstanding stock.

Hastings Entertainment, Inc. (NDAQ:HAST)
8K Filing by the Company
Hastings announced today that it would buyback $2.5 million worth of shares because it believes its stock is current undervalued. This follows the company's previous arrangement to buy back $12.5 million, of which it still has $3.6 million remaining. The company is trading well below its enterprise value ($117 million EV with an $81 million market cap!).

SAIC (NYSE:SAI)
S1/A Filing by the Company
SAIC said today that it would be pricing its shares between $13 and $15 with 75 million shares being issued. The company also revealed that it would be issuing a special dividend of between $1.6 billion and $2.4 billion paid to investors holding prior to the public offering. This is likely occurring because the company is currently employee-owned - so, this would be a bonus before they go public. The company also revealed it was growing at an annualized rate of 15.5% with revenues of $7.8 billion during their latest fiscal year.

Northfolk Southern Corp (NYSE:NSC) announced today in an 8K filing with the SEC that it would buyback an additional 50 million shares after already purchasing 17 million last quarter. The transaction is valued at over $900 million, while the previous transaction was valued at $730 million. The stock is off its high of $56 in May to it's current level around $44. The company is currently trading below enterprise value with a PEG of only 0.84 - making it significantly undervalued. This buying could indicate that the company believes it is at a bottom.

Related Companies
CSX Corporation (CSX)
Kansas City Southern (KSU)
Union Pacific Corp (UNP)

Banta Corporation (NYSE:BN) announced today in a press release that it has rejected Cenveo's increased bid to buyout the company. We covered Cenveo's bid in a previous article in September, when they offered $47/share for the company and called the company's actions "110% un-American". Cenveo also threatened to take other actions, which were not detailed. The only way for them to acquire the company without shareholder approval of a bid is through a hostile takeover, where Cenveo would begin acquiring Banta share on the open market until they achieve a majority position (which would be reported in 13D filings with the SEC). Then, they could nominate their own directors to the Board and attempt to take over the company in a proxy battle. However, this is a very expensive process, making it an unlikely scenario. The alternative is for them to raise their bid even higher, in hopes that the Board will approve.

In the press release, Banta also said it would seek other ways to increase shareholder value:

"The Board has authorized management, in consultation with its financial advisor, UBS Investment Bank, to explore all potential strategies for further maximizing shareholder value, including, but not limited to, remaining independent, joint ventures, mergers, acquisitions, further return of capital, or the sale of the Company ... The Company also advised that it does not intend to disclose developments regarding its evaluation unless, and until, a final decision is made."

The Board is most likely hesitant to sell the company at $47 because the stock has already traded as high as $52 this year - the only reason Cenveo was able to place an offer at such a premium is because the company's stock dropped to $34 after they lowered their FY 2006 guidance. As a result, the Board may see this offer as not having the premium that most people expect when buyout offers come. Moreover, Cenveo may have problems convincing other shareholders to sell out at this price for the same reason - many shareholders may have been buyers in the $50's, so the $47 offer does not represent a premium.

What happens with the evaluation of strategic alternatives remains to be seen. Cenveo has called this process a joke, stating that management never had any intention of doing anything to help the company's shareholders. However, if the company does follow though with its review process, it could result in a special dividend, share buyback program, or even a sale, which could open up the company to a bidding war. The results of this can be found in the company's future 8K filings, while any hostile action by Cenveo will be first seen in future 13D filings. This stock is definitely one to keep an eye on!

Related Companies
StarTek, Inc. (SRT)
Courier Corporation (CRRC)