Martha Stewart Living Omnimedia, Inc. (NYSE:MSO) moved higher today by 4% after CNBC mentioned that the company could become a private buyout target. Whether or not this rumor could be substanciated is the cause of much debate on the street. Many argue that by going private Martha Stewart would be able to again take a position as head of the company after being banned by the SEC after her insider trading fiasco. Moreover, the company is slowly beginning to improve their bottom line. However skeptics are quick to point out that there are many risks that still exist, and it would not be prudent for management to consider such a transaction while these remain on the table. Whether or not these rumors turn out to be true remains to be seen; however, this is a good stock to keep on the radar incase such a transaction ever materializes.

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The Gap, Inc. (NYSE:GPS) revealed today in a Form 4 filing with the SEC that Chairman Robert Fisher sold one million shares on October 19th and 20th at prices averaging $19.45. Although the majority of this sale was by trusts, Fisher did personally sell over 250,000 shares. This sale comes as Gap recently moved higher after it announced that it would launch on online shoe store to compete with Zappos.com, called Piperlime. Many insist that Piperlime does not have a chance at competing with Zappos or other online shoe stores, and will actually lose money as a result of their liberal shipping and return policies. Whether the sale of shares is simply a diversification move or a hint to future problems with Piperlime or other areas of the company remains to be seen.

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Douglas Emmett, Inc. (NYSE:DEI) began trading on the NYSE today after adding shares and pricing itself on the upper end of its $19 to $21 range. According to their S-11 filing with the SEC:

"We are one of the largest owners and operators of high-quality office and multifamily properties in Los Angeles County, California and have a growing presence in Honolulu, Hawaii. Our presence in Los Angeles and Honolulu is the result of a consistent and focused strategy of identifying submarkets that are supply constrained, have high barriers to entry and exhibit strong economic characteristics such as population and job growth and a diverse economic base. In our office portfolio, we focus primarily on owning and acquiring a substantial share of top-tier office properties within these submarkets and which are located near high-end executive housing and key lifestyle amenities. In our multifamily portfolio, we focus primarily on owning and acquiring select properties at premier locations within these same submarkets. We believe our strategy generally allows us to achieve higher than market-average rents and occupancy levels, while also creating operating efficiencies." (Read More)

This IPO comes as the REITs are seeing renewed strength in commercial real estate while the overall housing sector continues to suffer with purchasing slowdowns and higher interest rates. DEI is only the fourth company to raise over $1 billion this year through an IPO, following Mastercard, SAIC, and Warner Chilcott. This stock is definitely one to watch as the commercial real estate market continues to make inroads.

CSK Auto Corp. (NYSE:CAO)
13D/A Filing by Karsch Capital Management
Karsch announced today in an amended 13D filing that it wants the company to include in its proxy materials for the next annual meeting a proposal that the company immediately hire an investment banking firm to pursue a sale. This is the second letter that the fund has sent to the company containing such demands.

IntercontinentalExchange, Inc. (NYSE:ICE)
13D/A Filing by Goldman Sachs
Goldman Sachs revealed today that it is still actively selling its stake in IntercontinentalExchange along with Morgan Stanley. The two financial institutions were both initial partners with ICE (an OTC and Energy exchange) since its IPO in 2005.

NetManage, Inc. (NDAQ:NETM)
8K Filing by the Company
The company revealed in an 8K filing with the SEC today that their Board "has determined not to enter into negotiations with Riley Investment Management, LLC and Zeff Capital Partners, L.P., each a stockholder of NetManage, regarding their interest in acquiring all outstanding shares of NetManage common stock that they do not already own." The offer was for $5.25 per share in cash.

The Wall Street Journal reported today that Tribune Company (NYSE:TRB) has caught the eye of at least three private equity firms, and could begin receiving bids for the company this month. We first began reporting on this rumor back in September, when there was talk of a LBO in the future. According to the WSJ, Madison Dearborn Partners, Providence Equity Partners and Apollo Management make up one of the groups, while Thomas H. Lee Partners and Texas Pacific Group have combined to form another, citing sources with knowledge of the situation.

Since buyouts typically come at a significant premium to the prevailing market price, this stock may be worth watching. Moreover, the possibility of a bidding war between two groups of funds make it not only a safer bet that a buyout would go through, but also more likely that it would go through at a higher price. The stock is currently trading up around 2.5% on the news.

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Talk America (NDAQ:TALK) moved down 10% today after Sun Partners withdrew its $9 cash bid for the company (covered in a previous article). According to an 8K filing with the SEC:

"On October 23, 2006, Talk America Holdings, Inc. issued a release announcing that Sun Capital Securities Group, LLC (“Sun Capital”) had advised Talk America that it has determined, after extensive due diligence review and consideration, that it would not make a definitive offer to acquire Talk America at a price greater than the $8.10 price per share provided under Talk America’s September 22, 2006 merger agreement with Cavalier Telephone Corporation and, accordingly, that Sun Capital was withdrawing its earlier conditional proposal to acquire Talk America."

Currently the stock is trading at around $7.85 per share, which represents a 3% discount to the $8.10 offer, which is still likely to go through. However, some investors are now concerned that Sun Partners may have found a problem in their extensive review of the company that may jeapordize the $8.10 per share offer.

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Quipp, Inc. (NDAQ:QUIP) may soon find itself in hot water as hedge funds Henry Partners and Matthew Partners (9.4% owners) demanded that the company immediately put itself up for sale or institute other measures designed to help unlock shareholder value. The hedge funds made seven comments/demands, highlighted in a letter attached to a 13D filing made today:

"1. We believe the best strategic alternative is for Quipp to agree to be sold now to the highest bidder in an arms-length transaction. We believe that Quipp's shareholders should then have the opportunity to decide at a special meeting whether or not the agreed upon consideration is acceptable to them. For the record, we have no intention of being a bidder for Quipp.

2. We are strongly opposed to, and would not support, Quipp making any additional acquisitions. Our opposition to such a step is based on the consideration paid in the Newstec acquisition, and the subsequent poor results of that unit as disclosed in Quipp's quarterly filings.

3. We are also strongly opposed to Quipp parting with any more of its cash reserves, unless such cash is distributed, or otherwise returned, solely to Quipp's shareholders.

4. We are strongly opposed to, and would not support, any effort by Quipp to pursue a "going dark" process. We believe that any cost savings purportedly offered by such a step are far outweighed by the potential further loss of both public market value and transparency that "going dark" actions typically result in.

5. If, for whatever reason, Quipp is not sold to a third party in the near term, we believe that Quipp should continue for the time being as a publicly-traded entity, with management focused solely on managing the now-existing business for maximum profitability, rather than seeking further acquisitions.

6. In conjunction with Quipp continuing as a publicly-traded entity, we would expect a further reshaping of the membership of the Board of Directors such that more representatives of Quipp's major shareholders are offered the opportunity to serve on Quipp's Board in place of its current members, some of whom may wish to retire from the Board. As one of Quipp's largest shareholders, we would expect to participate in that process.

7. As a further part of Quipp continuing its public company status, we strongly believe the shareholder rights plan should be repealed and not reinstated without the prior approval of Quipp's shareholders, and that all Quipp directors be required to purchase in the open market, with their own funds, a realistic, yet meaningful quantity of Quipp shares so as to align more closely their thinking with that of the actual owners of the business." (Read More)

Investors have struggled with the company for several years, as it moved down from $16 in 2004 to its current range between $7 and $8 per share. If these hedge funds can succeed in putting the company up for sale, it could result in quick short-term gains. However, even if the company cannot be sold, if the funds are successful in instituting their own Board members, it could spell a turnaround for the company in the medium to long term. Board members are typically (essentially) chosen by the company's management, and therefore rarely enforce measures designed to help shareholders at the expense of management. With large investors holding seats on the Board, more measures could be instituted to unlock shareholder value and curb spending.

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ExlService Holdings, Inc. (NDAQ:EXLS)
S-1 Filing by the Company
ExlService IPO'd today at $13.50 per share, above its expected range of $10 to $12 per share. The stock moved up to $17.13 after its debut, up nearly 27%. ExlService Holdings, Inc. is a recognized provider of end-to-end offshore services, including Business Process Outsourcing (BPO), research and analytics, and risk advisory services. It primarily serves the needs of Global 1000 companies in the banking, financial services and insurance sector.

Granite Construction Incorporated (NYSE:GVA)
Press Release
Granite Construction issued a statement today in response to rumors that the company is a potential takeover target. According to the company "they are not aware of any developments that would substantiate a rumor contained in a news article issued yesterday that speculates of a possible takeover of Granite Construction."

Optimal Group, Inc. (NDAQ:OPMR)
13D/A Filing by Clinton Group
Optimal Group received a letter from the Clinton Group today, via a 13D filing with the SEC, urging them to return a portion of their large cash position to shareholders through a special dividend or share buyback. Moreover, the letter demanded that the company immediately attempt to put itself up for sale. If any of these actions materialize, it could mean significant returns for shareholders in the short term.

Google Inc. (NDAQ:GOOG) reported in an 8K filing after-hours yesterday that they topped earnings estimates by $0.20, coming in at $2.62. The company impressed analysts with a net income that nearly doubled to $733.4 million while they reported that their foreign market share rose from 39% to 44%. These results suprised analysts as the stock traded up over 6% at open today.

The primary concern that investors had going into the quarter was the fact that Google was spending too much money without showing significant improvements in their bottom line. The numbers released yesterday relieved these concerns as well as some copyright infringement concerns that investors had concerning the acquisition of YouTube. The company noted that federal legislation protected the company so long as it made "good faith" efforts to remove material that infringed on intellectual property rights. All together, this release boded well for the company, as many investors are expecting Google to hit $500 before heading lower.

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Texas Industries, Inc. (NYSE:TXI) may be targetted by Nassef Sawiris/NNS Holding, who disclosed a 2.3% stake in the company today via a 13D filing with the SEC. Mr. Sawiris also disclosed a series of derivative holdings, which (if exercised) would give him a 9.1% stake in the company. In the 13D filing, Nassef opened up the possibility for a sale of the company:

"The Reporting Persons purchased the Securities based on the Reporting Persons’ belief that the Issuer’s common stock at current market prices is undervalued and represents an attractive investment opportunity. However, Mr. Sawiris has had communications with the Issuer and it is anticipated that Mr. Sawiris may, from time to time, have discussions with management, the board of directors and other shareholders of the Issuer.

Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of shares of the Issuer’s common stock at prices that would make the purchase of additional shares desirable, the Reporting Persons may endeavor to increase their position in the Issuer through, among other things, the purchase of shares of the Issuer’s common stock or options on such shares on the open market or in private transactions, through a tender offer or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

The Reporting Persons intend to actively monitor efforts by management to increase stockholder value. The Reporting Persons may also decide in the future to propose a transaction whereby all or a portion of the Issuer be sold, and in connection therewith the Reporting Persons may seek to participate in such transaction or seek to acquire control of the Issuer in a negotiated transaction or otherwise. If it should acquire control of the Issuer, it may transfer all or part of it to affiliated or unaffiliated persons. The Reporting Persons also may seek in the future to have one or more representatives elected to the board of directors or to propose other matters for consideration and approval by the Issuer’s stockholders or board of directors." (Read More)

It is worth noting that Mr. Sawiris is involved in the heavy materials business himself, which enhances the odds of a potential sale of the company. And although Texas Industries isn't particularly cheap at these levels, it does have a nice piece of the heavy materials market share in the southern United States. This is definitely a stock to watch as this situation unfolds, as any sale of the company would command a premium to the current market price. The stock is currently up over 3% on the news.

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