eHealth, Inc. (NDAQ:EHTH)
Follow-up to Prior Post
Shares of eHealth rose on its first day traded as a public company, rising to $22 after being priced at an already increased $14 range.

Penn National Gaming Inc. (NDAQ:PENN)
SEC Filing Watchlist
PENN moved higher today on speculation that the company may be the target of a takeover. Ever since Harrah's was targetted in one of the largest LBOs ever, the entire gaming sector has been on edge. After call option volume increased greatly early in the day, many sources began to speculate that Boyd Gaming may have an interest in the company.

PRB Energy, Inc. (AMEX:PRB)
Press Release
PRB announced today that its Board of Directors had agreed to repurchase approximately 10% of their outstanding shares, which amounts to 750,000 through 2006. The transactions are said to take place on the open market or in negotiated transactions.

SAIC, Inc. (NYSE:SAI)
Follow-up to Prior Post
Shares of the newly public SAIC rose today to $17.25 and being priced at $15 (top end of their range). The offering for the company was made through a large syndicate that included Morgan Stanley, Bear Stearns, Citigroup, Wachovia, Banc of America, Cowen, Jefferies, Stifel Nicolaus, William Blair, KeyBanc, Mellon Financial and Stephens.

UnumProvident Corp. (NYSE:UNM) is higher by around 9% in today's trading on takeover rumors. Sun West of Canada has been quoted as one of the potential suitors, although no information has been confirmed. The speculation came as a result of unusual options activity earlier today (large buying of call options), which typically occurs when there is a takeover story, LBO, or other similar event that would spike the price. The company would not make a bad acquisition for the right company, as it is trading below enterprise value with a forward PE of just over 12x. Moreover, the company has a decent cash position with very little debt. This is definitely a company worth keeping an eye on incase these rumors materialize.

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Barnwell Industries, Inc. (AMEX:BRN) is under pressure from 16.3% holder Mercury Real Estate Advisors to sell off its Energy Division and institute a share buyback program. In the 13D filing with the SEC, Mercury attached a letter outlining their demands:

"As a significant shareholder of the Company for approximately the past two years, we have witnessed the Company’s preliminary success in unlocking the significant value in its desirable real estate holdings on the western coast of the main island of Hawaii and the improvement in profitability of its oil and natural gas business in Canada. Although there remains substantial unrealized value in these assets, we believe the Company’s current corporate structure, egregious executive compensation and disparate business divisions are fundamentally flawed. We further believe that strategic alternatives, including the sale of its energy division, must be evaluated to fully maximize the value of the Company for all shareholders. Finally, a substantial share buyback program should be put into effect immediately.

Based on our analysis, we believe the value of Barnwell’s real estate interests alone translates into a per share value in excess of $11 ... Looking at recent energy transactions in Alberta, we currently believe that the value of Barnwell’s proven BoEs (barrels of oil equivalent) translates on a standalone basis into a per share value of approximately $18 ... With the combined value of its real estate and energy divisions implying a $29 per share price at a minimum, Barnwell is a dramatically undervalued company.

However, its unnecessarily complex corporate structure, which includes independent businesses with no synergies, obfuscates its intrinsic value. Further, an executive management team at Barnwell characterized by nepotism in the Chief Executive Officer and President positions continues to reap million dollar-plus salaries, in part driving general and administrative expenses to an astronomical 21% of total revenues for the nine months ended June 30, 2006.

As the largest shareholder of the Company, we demand that the Board hire an investment bank to evaluate strategic alternatives, including a sale of the energy division and a share buyback program using proceeds received from lot sales in Increment I and II ... We believe that the Board should be committed to maximizing value for all shareholders, not paying excessive compensation to a complacent management team lacking in transparency." (Read the rest of the letter)

The stock is currently trading at around $21 per share. According to Mercury, if the company were to be valued at purely asset/breakup value, it would entail a 38% premium to the current market price. If the company is able to restructure and reduce expenses, this number could go substancially higher. The stock is undervalued with a catalyst - and therefore, definitely one worth keeping an eye on!

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Acme Packet, Inc. (NDAQ:APKT)
S-1/A Filing by the Company
The company revealed today its IPO range of $8 to $9 per share with 11.47 million shares outstanding. Acme Packet is the leading provider of session border controllers, or SBCs, that enable service providers to deliver secure and high quality interactive communications—voice, video and other real-time multimedia sessions—across Internet Protocol, or IP, network borders.

James River Coal Company (NDAQ:JRCC)
13D/A Filing by Pirate Capital
Pirate Capital announced today in an amended 13D filing with the SEC that Matthew Goldfarb - an employee of Pirate Capital and a member of the company's Board - has voluntarily resigned from his position with Pirate Capital. The fund did not sell any of its 14% stake in the company. This could indicate continued confidence in the company as the coal industry slowly turns itself around.

New York Times Co. (NYSE:NYT)
13D/A Filing by Morgan Stanley
Morgan Stanley disclosed in an amended 13D filing with the SEC that they had increased their stake in NYT to 7.62%. The company had nothing further to say about their accumulation; however, in their original 13D filing with the SEC back in April, Morgan Stanley said that they would like the company to reorganize their capital structure to combine Class A and B shares while also commenting on the fact that management was underperforming while their salaries have been on the rise.

Tarragon Corp. (NDAQ:TARR)
8K Filing Watch
Tarragon is higher today on talks that the company may be the target of a LBO (leveraged buyout) in the $15 range. The company is a specialized homebuilder that is trading well below enterprise value, but trading down 44% so far this year. The company moved up over 11% today on these rumors.

Bairnco Corporation (NYSE:BZ) said today in a press release that it has completed its evaluation of strategic alternatives. The company insisted that it would be in the best interest of shareholders to allow the company to continue implementing its own plans rather than put itself up for sale or take Steel Partners' $12/share buyout offer. BZs CEO commented:

"Our Board conducted an extensive, thorough review and concluded that the current strategic alternatives available - including Steel Partners' tender offer - would not deliver the same value potential as operating Bairnco as a standalone company," said Bairnco Chairman and Chief Executive Officer Luke E. Fichthorn III. "Bairnco's discussions with Steel Partners were impeded by Steel Partners' refusal to execute a confidentiality agreement that would have allowed it to examine materials that the Company believes demonstrate the superiority of our strategic plan over the Steel Partners offer. Were Steel Partners to enter into such an agreement, the Company would be willing to enter into discussions. We participated in discussions with a broad range of other potential strategic and financial partners. These discussions served to reinforce our view that our strategic plan provides superior growth and value creation opportunities for Bairnco and our stockholders. We are optimistic about our future as an independent company and will pursue our strategy aggressively."

The company also said that had purchased Southern Saw Holdings, Inc. for $14 million through its subsidiary Kasco Corporation. The CEO commented:

"The combination of Atlanta SharpTech and Kasco will permit us to build on the strengths of both organizations resulting in a more cost effective overall organization while providing improved product and services to our customers. The addition of Atlanta SharpTech is expected to be accretive to Kasco and Bairnco's earnings in 2007 and beyond."

After this move, the stock is likely to move down from $12 in the near term, since the buyout premium no longer applies. Steel Partner's initial offer of $12 came when the stock was trading at $10 in a downward trend. Longer-term future valuation will depend on investors' confidence in managements ability to execute their plans. However, if Steel Partners takes further action in the form of a raised bid or hostile action, it could drive up the price from this point.

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Harley-Davidson, Inc. (NYSE:HOG) revealed in an 8K filing with the SEC today its operating results and plan to institute share buyback program. Shares moved up 1% today on the news.

The associated press release contained the specifics:

"[The company announced] record revenue and earnings per share for its third quarter ended September 24, 2006. Revenue for the quarter was $1.64 billion compared to $1.43 billion in the year-ago quarter, a 14.3 percent increase. Net income for the quarter was $312.7 million compared to $265.0 million, an increase of 18.0 percent over the third quarter of 2005. Third quarter diluted earnings per share (EPS) were $1.20, a 25.0 percent increase compared to last year's $0.96.

During the first nine months of 2006, the Company repurchased 17.2 million shares of its common stock at a cost of $911.0 million. On October 11, 2006, the board of directors of Harley-Davidson, Inc. authorized a new share repurchase program for up to 20 million additional shares.

'As we look to the future, the Company believes it will continue to deliver EPS growth in the range of 11 - 17 % annually through 2009. We expect earnings growth to be driven by solid revenue growth, margin improvement and the benefits of strong free cash flow,' said Ziemer."

Harley Davidson remains a strong company with excellent cash flow and shareholder return (through a dividend and share buyback programs). This stock remains and excellent one for anyone looking for a solid company to invest in with relatively little risk.

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Chaparral Steel Company (NDAQ:CHAP)
8K Filing by the Company
Chaparral Steel announced today in an 8K filing with the SEC that it would begin a $0.10/share dividend and institute a $100 million share buyback program. In the associated press release, the company attributed this to strong cash flows and a confidence in the company's future prospects. Share buyback programs often times indicate a strong confidence in the company, while dividends are a great way to return some profits to the shareholders if it can't be better spent on internal projects.

Large Jacuzzi Brands, Inc. (NYSE:JJZ)
13D/A Filing by Southeastern Asset Management
Southeastern Asset Management revealed in an amended 13D filing with the SEC today that they strongly oppose the buyout deal recently put on the table by JJZ. According to the filing: "Our initial reaction to today's announcement is that we vehemently oppose this transaction, because the $12.50 price is completely insufficient. The Board began a process of exploring options at an inopportune time, when the results of the Bath division were far below what it's capable of producing." If higher terms are sought, it could lead to either a greater buyout premium or a breakup of the negotiations.

Phelps Dodge Corp (NYSE:PD)
13D/A Filing by Atticus Capital
Atticus Capital disclosed today, in an amended 13D filing with the SEC, a 9.97% stake in the company. The fund also revealed that it may have located a suitor for the company, stating: "The Reporting Persons and an investment bank have recently met with several potential investors, including private equity firms and strategic buyers, to discuss each firm’s possible interest in pursuing an acquisition of the Company." If the company accepts the funds proposals, it could mean significant upside in the event of a buyout offer.

Google, Inc. (NDAQ:GOOG) announced a few days ago that they acquired YouTube - a popular online video sharing website - for $1.6 billion. The acquisition is Google's largest by a wide margin, with their total acquisition costs in 2005 at just $130 million for 15 companies. The market became interested in the company after YouTube signed a licensing deal with Warner Music, which directly addressed the copyright issues that kept so many parties away. But why the large purchase price? Some speculate the Google may have made the purchase in anticipation of a bidding war between Yahoo, Microsoft, and other media companies that may be interested in a leading segment of the online video market. Moreover, the two companies are also both funded by Sequoia Capital - one of the world's largest venture capital funds - which may have also contributed to the smooth deal. The transaction is expected to be completed by the end of the year.

Many people have criticized the purchase, reasoning that the company is only 18 months old, founded ago by 29 year old Hurley and 27 year old Chen, with no profitability and a high cash burn rate relative to its valuation. However, others argue that the company is a brilliant acquisition that Google will be able to creatively monetize; but, with such an elastic market, any advertising that would affect video playback in any way might cause a mass migration to competing services. Google itself remains confident in its purchase; during a conference call, Brin even went so far as to say that "this really reminds me of Google just a few short years ago." Investors applauded the move as the stock rose over $8 in trading the day the deal was announced. Whether or not YouTube turns out to be a good purchase largely depends on what methods Google uses to monetize the website. This entails finding an effective advertising technique that won't disrupt the highly elastic traffic that uses the site.

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ImClone Systems Incorporated (NDAQ:IMCL) announced yesterday in an 8K filing with the SEC that its director, David Kies, was resigning effective October 9, 2006. The company also announced the resignation of William Crouse - another Board member. These resignations greatly enhance the odds of a successful takeover by Carl Icahn and company. For more information about what Icahn has planned for the company, please see our previous post.

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Hedge fund Barington Capital revealed their disappointment with A. Schulman, Inc. (NDAQ:SHLM) today in an amended 13D filing with the SEC. In the filing, Barington enclosed a letter to the Chairman of the Board expressing his disappointment at the lack of progress that the company has made since the two parties met last year.

The filing noted that:

"On October 9, 2006, James A. Mitarotonda, the Chairman and Chief Executive Officer of Barington and a member of the Company’s Board of Directors, sent a letter to Terry L. Haines, the Company’s Chairman, President and Chief Executive Officer. The letter notes that as a result of the past performance of the Board, including with respect to the matters detailed in the letter, the Reporting Entities lack confidence in the ability of the incumbent directors to improve shareholder value for the Company’s stockholders. Therefore, in order to ensure that stockholder interests are preserved, Barington intends to nominate four (4) individuals for election to the Board at the Company’s 2006 Annual Meeting of Stockholders."

According to the terms of the October 21, 2005 settlement agreement entered into between the Company and the Barington Group (the “Settlement Agreement”), the Business Plan is required to include measures to:

• return the Company’s North American operations to pre-tax profitability;
• reduce the Company’s effective income tax rates;
• reduce the Company’s working capital;
• reduce the Company’s selling, general and administrative expenses; and
• improve the Company’s gross margins.

If Barington Capital is able to replace the Board with its own members and successfully execute its plan, then this stock may be one worth keeping an eye on for the long-term picture as it is trading below enterprise value with a forward PE of 17x.

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