Berkshire Hathaway (NYSE:BRK) revealed yesterday in a 13F/A filing with the SEC afterhours that it had taken a 5.5% stake in Target Corp. (NYSE:TGT) with purchases dating back to June 30th. This news isn't particularly suprising given Buffet's investment in competitor Walmart; however, share in the retailer climbed over 1% today on the news as investors look to follow the Oracle of Omaha's lead. According to the filing, Buffet's average price was $50.30, which means he is already sitting on a nice 17% profit as shares near $60. Buffet is known for investing for the long-term in significantly undervalued companies, meaning that he is likely expecting much more upside. Investors should keep an eye on future SEC filings by Buffet, in particular Form 4s which indicate further purchasing of TGT shares.

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Merck & Co. Inc. (NYSE:MRK) agreed to buyout Sirna Therapeutics (NDAQ:RNAI) at a 100% premium yesterday in a transaction worth $1.1 billion. This acquisition is noteworthy because it is the first time that a large pharma player recognized RNAi technologies as a key technology. RNA interference (RNAi) technology selectively catalyze the destruction of the RNA transcribed in a single gene, allowing the drug to produce a highly specific, potent, and long-lasting effects to treat diseases much more effectively. Most notably is its potential for treating cancer, which is the reason Merck gave for the buyout.

This acquisition helped boost other RNAi players, like Alnylam Pharmaceuticals Inc. (NDAQ:ALNY), which rose 20% in today's trading, and Nastech Pharmaceutical (NDAQ:NSTK), which rose 5% today. If other larger pharma players take interest in the RNAi technologies, these two companies would be likely acquisition targets, which makes them stocks worth keeping an eye on!

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Marsh & McLennan Companies, Inc. (NYSE:MMC) has found itself engulfed a whirlwind of M&A activity as yet another buyer has surfaced that is interested one of its divisions. This time the Sunday Times has reported that founder Jules Kroll is interested in buying back Kroll Inc. for $1.9 billion, a company which MMC purchased from Jules just two years ago.

The company has also been under pressure from shareholders to sell off its Putnam Investments division, which has been the subject of many acquisition offers and partnership requests. Finally, the Sunday Times also reported a few weeks ago that the Willis Group had made an offer with backing from Kohlberg Kravis Roberts LLC, which was later rebuffed by MMC and said to be merely "conjecture and speculation" by the Willis Group. Combined, all of these factors are causing shareholders to consider the notion of breaking up the company, which could result in substantial premiums to the current market prices. This is definitely a stock worth keeping an eye on!

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Infocrossing, Inc. (NDAQ:IFOX) revealed in a 13D/A filing with the SEC today that RLR Capital Partners has upped its stake in the company to 6.2% from 5.1% in June of this year. The fund has averaged in at around $11 since that time as the stock rose to the high $12s, netting them a nice 14% profit so far. The company also said in their original 13D filing in June that they have other plans for the company:

"The Fund originally acquired Shares for investment in the ordinary course of business because the Reporting Persons believed that the Shares, when purchased, were substantially undervalued and represented an attractive investment opportunity. The Reporting Persons have communicated with management of the Issuer, and expect to continue to do so, regarding the Company's business and prospects. On June 15, 2006, the Reporting Persons sent a letter to the Issuer regarding the Reporting Persons' prior meetings with the Issuer and forthcoming value creating strategic and capital structure opportunities. A copy of the letter is attached hereto as Exhibit 1 and is incorporated herein by reference.

We believe that the coming months will offer Infocrossing the opportunity to explore value creating strategic and capital structure opportunities.  No other independent U.S. company in your industry  offers the range of service capabilities you provide. We are confident that you and your board will focus on the best available alternatives to capitalize on your very favorable industry positioning in order to enhance shareholder value." (Read More)

IFOX is currently trading at a discount to its enterprise value; however, it's PEG shows that it may be slightly overvalued if it cannot improve its growth in the coming quarters. However, with a hedge fund in the game to keep the company on track and mindful of shareholder concerns, this may turn out to be a stock worth watching. Any changes in capital structure or strategy could help the company cut costs and improve their bottom line.

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Rinker Group (NYSE:RIN) received a buyout offer for $11.7 billion (or about $65 per share) in cash from Cemex (NYSE:CX) on Friday that it today called "highly conditional" and one that "materially undervalues the company". With the stock currently trading above $71, investors are clearly looking for more too.

According to the SC 14D9 filing with the SEC:

"On Friday 27 October 2006, Cemex S.A.B. de C.V. (“Cemex”) announced that it intends to make a cash takeover offer for Rinker Group Limited (Rinker) at US$13.00 per share, equivalent to A$17.00 per share (based on an average exchange rate of A$1.00 to US$0.7645). A copy of that announcement was sent to Rinker by Cemex and is attached.

Rinker Chairman John Morschel said the Cemex announcement indicates that the unsolicited, hostile offer will be highly conditional.

'The preliminary view of the Rinker Board is that the proposed offer is opportunistic and materially undervalues the company,' he said.

Mr Morschel said Rinker’s performance of 40% compound annual growth in earnings per share over the past five years, together with strong growth in revenue (19% p.a. compound) and earnings before interest and tax (33% p.a. compound), has made it one of the best performing construction materials companies in the world.

'Directors will keep shareholders fully informed of further developments and will provide a formal recommendation on the offer in ample time for shareholders to make an informed decision,' he said.

'Shareholders should take no action in relation to Cemex’s offer at this time or any document received from Cemex until they receive the directors’ formal recommendation.'

Rinker has retained UBS as its financial adviser in relation to the proposed offer." (Read More)

This stock is definitely one to keep an eye on as both management and investors are looking for a better offer. It is not uncommon in these situations for the bidder to raise the bid one or more times to satisfy at least one of the two groups.

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Energy Partners, Ltd. (NYSE:EPL) provided an update on its search for strategic alternatives in an 8K filing with the SEC today. In an attached press release, Chairman and CEO Bachmann said:

"We are committed to continuing our process of exploring all options to maximize stockholder value, including a possible sale of the Company. A number of parties have already signed or have agreed to sign confidentiality agreements, and we are entertaining interest from others. Woodside's ultimatum and disingenuous rhetoric will not deter our Board of Directors from pursuing the best interests of all EPL stockholders.

"Woodside's self-serving behavior is very disappointing. We have not heard a word from them since our Board announced its process to explore strategic alternatives on October 12, 2006, and they have not sought to participate in this process, as many other companies are doing. In addition, Woodside has backtracked on its promise to pass through to EPL stockholders the savings from a reduced Stone termination fee, effectively reducing its original offer." (Read More)

If the company can successfully find another buyer, it could mean a significant premium to today's prices. With "a number of parties" having already signed confidentiality agreements, this buyout possibility may have some merit. This makes EPL a stock definitely worth watching as the company continues to explore its options.

Cheniere Energy Inc. (AMEX:LNG) revealed today in a 13D filing with the SEC that SRM Global Master Fund had taken a 6.5% stake in the company. The filing said that the fund would review their investment on a continuing basis and may engage in discussions with management concerning the business and future plans. The real story here is in SRM Global, however.

SRM Global is a relatively new hedge fund, launched by Jon Wood - who brought in over $2.4 billion for UBS in six years before launching his own fund. This new hedge fund focuses on trading shares of organizations that are merging, capital structure arbitrage (price difference between related corporate securities), and investment in industries and stocks that are not doing so well or are in trouble. Given his incredible track record, any investment by SRM Global makes this stock definitely one worth watching.

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Hillenbrand Industries, Inc. (NYSE:HB) said today in a press release that the company would consider splitting its healthcare and funeral businesses into two seperate publicly traded companies, after having evaluated strategic alternatives for the company.

According to the press release:

"Hillenbrand's Board of Directors and senior leadership recently evaluated a range of strategic alternatives, with input from its financial advisors Citigroup Corporate and Investment Banking and Goldman Sachs Group. These alternatives included the continuation of Hillenbrand's current operating structure, the sale of one or both of its businesses, returning cash to shareholders through an increase in balance sheet leverage, and the spin-off of or split off of one of its businesses. Having reviewed and fully endorsed the operating strategies presented at today's Investor Conference, management and the Board concluded that separating Hillenbrand's current operations into two publicly traded companies merits further, more detailed consideration as a means to position Hillenbrand's market-leading healthcare and funeral services businesses for sustained growth and value creation."

The company also has the full support of the Board as well as outside advisers that the company had hired to investigate the issue. The Chairman of the Board of Directors said:

"Under the leadership of Peter Soderberg, our new CEO, the management team has been working diligently to develop a motivating and achievable plan for growth for its two operating companies. I am pleased to report that the strategy we unveiled today has the enthusiastic support of the Board. Concurrently, the Board and management have been working with outside advisors to explore the alternatives available to enhance shareholder value and best assure achievement of our strategic vision. We believe the Board should undertake further exploration of the merits and mechanisms of a potential separation of the healthcare and funeral services businesses into two publicly traded companies."

Companies that restructure through splitting operations generally see significant gains as independent companies. By focusing on one area instead of many, companies are often able to cut costs and streamline operations while improving revenues through more effective marketing. This is especially true for unrelated businesses that exhibit little or no synergy within the same company. Combined, these factors make this company one to watch closely as the Board continues to investigate the possibility.

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Visteon Corp. (NYSE:VC) is again seeing its stock being accumulated by Pardus Capital. The hedge fund rose its stake in the company to 15.6%, but did not make additional comments about their strategy or plans. See our previous article for more information about Pardus' interest in the company.

In past filings, they noted that they would:

"continue to engage in discussions from time to time with management, the Board of Directors, other shareholders of the Issuer and other relevant parties concerning, among other things, the business, operations, board composition, management, strategy and future plans of the Issuer. In the context of these discussions, the Reporting Persons have raised with the Issuer the possibility of an individual suggested by them joining the board, and have been informed that the Issuer has taken this matter under advisement."

The company continues to struggle after Pardus' last purchase in September after Valeo withdrew its bid for the company. The stock is, however, up over 3% today on the news. This stock is definitely one worth watching as Pardus has a large stake in the company and continues to accumulate shares.

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The Mills Corporation (NYSE:MLS) may be recapitalized with an additional $1.2 billion by Gazit-Globe Ltd, according to a 13D/A filing with the SEC. Many investors are concerned that the company may sell itself at its current prices, which are significantly lower than historical levels. This new recapitalization offer would allocate enough money for the company to rebuild itself and recover some of its lost value. Investors applauded the idea as the stock moved up 14% today on the news.

A letter filed with their 13D/A gave more details:

"Chaim Katzman, Gazit-Globe’s chairman, said his company’s goal is to recapitalize what it views as a struggling Mills Corporation, and that it is prepared to 'invest up to $1.2 billion into Mills' in accordance with the terms outlined in the Schedule 13D that Gazit has filed with the Securities and Exchange Commission [seen below].

'It is not a question of whether or not the board must take action to ensure the continuity of Mills in order to restore profitability and leadership in the industry,' said Katzman, 'but rather what kind of action is necessary and appropriate.'

'At this point it is clear to us that an outright sale of the company is not in the best interests of shareholders,' continued Katzman. “We’re urging the Mills’ board of directors in the strongest terms possible to consider our recapitalization proposal.'

'We believe Mills can and should be rebuilt, and not sold,' said Katzman, who added that his recent discussions with Mills leadership left him concerned that the company might elect to simply sell itself at a distressed price. 'We have helped build and rebuild companies over the years. We know how to take companies such as this and re-energize them so that maximum shareholder value is achieved.'" (Read More)

In an earlier filing, they detailed the capitalization amounts and other considerations:

"As you are aware, we are also a significant stockholder in the Company with an approximate 4.9% [now 9%] ownership interest. Due to our ownership position, we are not in a position at this stage in the process to execute the confidentiality agreement the Company has circulated as a precondition to obtaining material non-public information. Rather, we strongly encourage the Company to make all relevant financial and other information public as soon as possible so that we, and other potential bidders who may have similar issues to ours, may participate in the bidding process and enhance stockholder opportunities to achieve the best value for the Company.

Based upon our extensive review of the currently available public information, and, as discussed below, our in-depth property analysis, we are prepared to recapitalize the Company by investing new capital in the form of common stock. The cash amount would be up to $1.2 billion at a price per share of $24.50. This new common stock would be classified as Series B and would entitle Gazit to a majority of the seats on the Company’s board. The new common stock would also be convertible into the currently outstanding series of common stock. This new investment would be in addition to our current holdings of the Company's common stock." (Read More)

This is definitely a stock to keep an eye on as this situation unfolds. If Gazit-Globe is successful in recapitalizing the company and rebuilding shareholder value it could mean a significant return in the medium-term.

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