Brink's Company (NYSE:BCO)
13D/A Filing by Steel Partners
Steel Partners revealed today that they increased their stake in Brinks by 110,000 shares, bringing their total position from 5.7% to 8%. There was no change to the fund's "Purpose of Transaction", which remains for investment purposes.

FX Energy, Inc (NDAQ:FXEN)
13D Filing by James Chalmers
James Chalmers expressed his interest in executing plans brought up by another majority investor Barton J. Cohen. Choen insisted that the Board of Directors be replaced in order to institute his ideas to cut administrative expenses, revise its compensation policies, strengthen financial management and improve investor relations. He said he "was not seeking an overall change in leadership of the Company, but sought to encourage management to lead the Company in making the changes necessary to maximize all stakeholders' value in a timely fashion."

NetManage, Inc. (NDAQ:NETM)
13D/A Filing by Riley Investments
Riley Investments announced today that it would raise its previous cash offer for NetManage to $5.50 per share from its previously rejected offer of $5.25. The fund also announced that it would extend the response date to November 20, 2006. The stock moved up 8% on the news to $5.25.

Midas, Inc. (NYSE:MDS)
13D Filing by RGM Capital, LLC
RGM revealed today that it had accumulated a 5.11% stake in the company. Although the disclosure is fairly standard, it is worth noting that the fund focuses on value investments in small cap companies. MDS is currently trading below enterprise value with margins that beat their industry and earnings that are continuing to recover.

Moscow CableCom Corp. (NDAQ:MOCC)
13D/A Filing by Renova Media Enterprises Ltd.
Renova revealed today that it is interested in acquiring MOCC at $10.80 in an all-cash offer. The Board is currently reviewing the offer with independent financial advisors; however, it is worth noting that Renova already holds a 43% stake in the company with a 61% share of its capital on a diluted basis. The stock is currently trading at $11 as some may be speculating a higher offer in the future.

Nautilus, Inc. (NYSE:NLS)
13D Filing by Sun Capital Securities
Sun Capital Securities revealed today that it has accumulated a 5.2% stake in Nautilus, Inc. Although the fund did not disclose any unusual plans, there was a bit of speculation today since Sun is fresh off its dealings with TALK, after it withdrew its $9/share bid for the company. Nautilus is up 5% today after it announced its quarterly results where it dropped underperforming units to boost the company's earnings.

Swift Transportation Co., Inc. (NDAQ:SWFT) confirmed today that it received a bid for the company at $29 per share in cash by Jerry Moyes, the company's largest shareholder and former CEO. Now usually we wouldn't pay attention to a stock that has already moved; however, the stock jumped over 23% on the news in early morning trading today to $29.60 - a premium which usually indicates the anticipation of a raised bid. This possibility makes the stock worth watching a little more closely!

According to a letter attached to the 13D/A filing:

"I am pleased to submit this proposal to acquire Swift Transportation Co., Inc. ('Swift') at a substantial premium to the market value of Swift's shares. I propose to acquire Swift through a corporation to be formed by me in an all-cash transaction at a price of $29.00 per Swift common stock share. To finance the transaction, I will roll over substantially all of my current investment in Swift and have received a written commitment from Morgan Stanley for the entire amount of the debt financing necessary to consummate the transaction. Given Swift's recent performance, $29.00 per share is a full and fair price for Swift’s common stock, providing an attractive opportunity for its stockholders to maximize the value of their investment in Swift. The $29.00 offer price represents a significant, more than 21%, premium over yesterday's closing price for Swift's shares. I believe such a transaction would be in the best interests of Swift and its stockholders, and that Swift’s stockholders will find such a transaction compelling." (Read More)

The offer is still well off of Swift's highs of the year of just over $33 per share. Swift is also trading below its enterprise value with a PE of 14x earnings even after this move. While this buyout price erases nearly all of the stock's losses on the year, it would not be unfeasible for the buyout price to rise higher. Currently, the Board of Directors is reviewing the offer, with Goldman, Sachs & Co. as its financial advisor. This stock is definitely worth watching as this offer is evaluated.

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ElkCorp (NYSE:ELK) became a merger target today after Samuel J. Heyman/Building Materials Corporation of America disclosed a 10.36% stake in the company and indicated that it was interested in pursuing a business combination with the company, in a 13D filing with the SEC. In response to the interest, ElkCorp announced that they would review their strategic alertnatives, which may include a possible merger or sale of the company. Moreover, the company noted that there were several third parties that had interest in the company.

According to the attached letter:

“As we advised you last week and again on our Sunday conference call, we have a strong interest in pursuing a business combination with Elk at an all cash price to be negotiated.  We believe that a combination of our two companies provides Elk shareholders with the opportunity to realize full value for their shares because of the unique synergies that exist between our two businesses which are an excellent fit for each other.  For this same reason, the combination will provide significant benefits to Elk customers and employees.

As you know, in addition to the extremely difficult operating environment we in the roofing industry now confront - resulting from unprecedented asphalt costs, margin erosion, and excess inventories - the industry faces significant long-term challenges as well.  It is now readily apparent that, in the last few years, aberrational demand from weather-related events temporarily obscured the impact of higher costs and slowing industry growth, especially in the maturing market for laminated shingles.  In our view, consolidation is the only logical response to these conditions.

We have always held Elk and its employees in the highest regard, having known each other as competitors, suppliers, and friends.  In recent months, we have carefully studied this combination and believe that Elk and BMCA are uniquely complementary.  The limited overlap among customers and distribution channels, as well as the geographic fit of our companies’ respective facilities, offer an opportunity to enhance the combined company’s competitive position by achieving economies of scale and improving our ability to respond to customer needs to a degree that would not be available to either company on a stand-alone basis or with any other partner.

As a combined company, we would lead the industry as the lowest-cost roofing manufacturer in the country, able to deliver product quickly and efficiently to customers in every section of the country.  Our customers would also benefit from access to the most comprehensive product offering in roofing, the industry’s oldest and most developed contractor programs, and two of the industry’s most trusted and respected brand names.  Finally, bringing together our companies’ world-class employees, who have driven exceptional innovation and strong historical.

We have invested a significant amount of time and money in the evaluation of a transaction between our companies.  Since our companies have known each other for many years, we are quite familiar with your business, as we know that you are with ours.  With your cooperation, after conducting reasonable confirmatory due diligence, we expect to be in a position to promptly provide an appropriate offer to you and your shareholders.  As discussed on our conference call, we are willing, of course, to execute a customary confidentiality agreement.  In addition, you should know that as a result of our discussions with lenders, we are confident that satisfactory financing for the transaction is readily available and our offer will not be subject to a financing contingency.” (Read More)

Clearly there is a good case for the merger between these two companies, as evidenced in this letter. With several other possible bidders at the table, this could turn into a bidding war, which could mean significant share appreciation even after the stock’s 25% move in morning trading today. Even after the large move, the stock still trades below enterprise value with a forward PE of just 12x earnings. Moreover, the company is still trading down 24% on the year, meaning most investors are likely still underwater on their investment and may require a higher premium to be bought out. Either way, this company is a great one to keep an eye on as this situation unfolds.

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Travelzoo Inc. (NDAQ:TZOO) owners and brothers Ralph and Holger Bartel revealed continued dumping on TZOO stock in a series of Form 4 filings with the SEC. The two sold 1,560,000 shares - or almost 10% of the company - in open market transactions. Meanwhile, the company increased its float by 52%, from 3 million to 8 million shares. This selling and dilution erased the 20% gains that TZOO saw after it released an earnings report last week that beat street EPS estimates, showing strong growth in net profit margins. However, the increased float and 1.5 million share sale should have had a greater impact on the stock price with everything else constant; this indicates that there are buyers accumulating shares and holding the stock up. Some are even going so far as to speculate that the Bartels sold their shares in order to increase the float (which is currently only 2.94 million shares) to enable institutional buyers to participate in the action.

While these events are unusual, they are not uncharacteristic of Travelzoo. The stock has been a roller coaster ride for investors, having dropped from its 2004 highs of $95 to $17 before recovering to its current levels in the $30s. If this isn't evidence enough, all it takes is one look at the stock's beta of 6.77 to see that it is highly volatile! With 30% of the float shorted and 83% institutional ownership, more volatility is certainly on the horizon as this company continues to move forward.

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ICOS Corp. (NDAQ:ICOS) has at least one party that is now opposed to its merger plans with Eli Lilly and Company (NYSE:LLY). Five percent holder HealthCor Management said in a 13D filing with the SEC yesterday that it would oppose the merger, stating that they thought the buyout price significantly undervalued ICOS shares. In a letter to the company, they make several valid points regarding the company's relationship to LLY and why the merger is bad news for investors:

"On October 17, 2006, the Company announced that it had entered into a merger agreement whereby it would be acquired by Eli Lilly and Company ('Eli Lilly') and on November 1, 2006, the Company filed a preliminary proxy statement with the Securities and Exchange Commission whereby the Company’s management recommended that the Company’s shareholders vote to approve the merger with a consideration of $32 per share of Common Stock. After reviewing the terms of the merger and the financial condition of the Company, the HealthCor Group, as of the date hereof, has determined that it intends to vote against the merger as it does not believe the consideration offered adequately compensates the Company’s shareholders for their interest in the Company. On November 2, 2006, HealthCor Management mailed via overnight delivery service (and by facsimile transmission) a letter to the Board of Directors of the Company explaining its reasoning for not supporting the merger with Eli Lilly (the 'November 2, 2006 Letter').

The proposal by Eli Lilly to acquire the outstanding shares of ICOS for $32 per share does not fully compensate the shareholders of ICOS for its 50% share of Lilly ICOS LLC, future clinical opportunities for Cialis and other Company assets of value. Specifically, the current proposed transaction price of $32 per share values ICOS at approximately $2.0B . By applying any number of industry accepted valuation methodologies, we calculate a value of ICOS that is well in excess of $40 per share. Clearly, Eli Lilly is attempting to purchase the ICOS assets at bargain prices. Twice in the last two years, the ICOS share price has suffered short-term downward price movements. Both times, Eli Lilly has approached ICOS in an attempt to purchase the assets of Lilly ICOS LLC as well as the whole of ICOS.

We are also very troubled by the 'Amended and Restated Change in Control Severance Agreement' (the 'Amendment') as well as the 'ICOS Corporation Retention, Sale and Special Recognition Bonus Plan' (the 'Special Bonus Plan') filed with the SEC on October 20, 2006. This 'Amendment' and 'Special Bonus Plan' effectively provides greater financial gains for senior management as a result of the anticipated sale of the Company, to which management was not previously entitled.

These changes result in ADDITIONAL COMPENSATION  for senior executives in excess of $13.6 million simply for completing the transaction. Specifically, Paul N. Clark, Chief Executive Officer, will receive a minimum of $4.3 million of additional new benefits bringing the already handsome sum he will receive to more than $30 million. Similarly, other senior executives will receive substantial financial benefits on top of the amounts they are scheduled to receive. We cannot imagine how the Compensation Committee could have possibly justified this audacious hand-out or how the Board of Directors failed to stop it. We remain confused as to how the Board of Directors of ICOS can so generously calculate the value of management performance yet simultaneously so conservatively undervalue the assets of the Company that is being managed by this same group." (Read More)

Clearly there is a lot going on here. Eli Lilly controls 50% of the company, which to date has been a joint venture. LLY has also attempted to buy the company several times in the past when share prices were depressed. Now, they are offering management more than $30 million to go through with the transaction while again failing to solicit other bids for the company or consider whether the buyout price is sufficient for investors (some of which are sitting on a 30% loss). If HealthCor is successful in raising awareness of these issues and is able to derail this merger, ICOS may be a stock worth watching.

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Biomet Inc. (NDAQ:BMET) moved up 3% today after Smith & Nephew (NYSE:SNN) addressed rumors that it was contemplating a merger/buyout of the company. According to a 6K filing made with the SEC:

"Smith & Nephew plc (LSE: SN, NYSE: SNN) is constantly looking at opportunities to maximise shareholder value, including looking at potential strategic acquisitions. In response to recent press speculation, the Company can confirm that it has held very preliminary talks with the US medical devices company, Biomet Inc. No agreement has been reached, and there can be no assurance that any transaction will be proposed or completed.  Smith & Nephew does not intend to make any further comment, or respond to any enquiries, unless or until there is further information to report." (Read More)

Meanwhile, Biomet said that it remains divided on any third party deals, after hiring Morgan Stanley & Co. to explore strategic alternatives last April. If the company does decide to go through with a merger, it would likely be at a premium to today's prices. This makes Biomet a stock worth watching over the next few weeks as the companies mull over the details of a possible merger.

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Triad Hospitals Inc. (NYSE:TRI) found itself under pressure yesterday by TPG-Axon Capital Management, who disclosed a 6.5% stake in the company and made several demands yesterday in a 13D/A filing with the SEC.

In the filing, Axon said:

"The Reporting Persons believe that the Common Stock is significantly undervalued and represents an attractive investment opportunity. The Reporting Persons believe that the Issuer has valuable and well-positioned assets, whose value is  significantly greater than the current market capitalization  of the company. However, the valuation of the company, and of those assets, is being depressed and diluted by poor capital discipline. The Reporting Persons believe that in order to avoid further  dilution of shareholder value, the Issuer must substantially improve its capital discipline and focus on maximizing return on capital.

Since the merger with Quorum Health Group in 2001, the Issuer has spent all available funds on expansion,  resulting in negative free cash flow and dilution to shareholders. The Issuer has been unable to analytically demonstrate that this acquisition strategy is in the interest of shareholders, and does not appear to have sufficient focus on calculating  return on investment, and ensuring its adequacy. As a result, growth of cash flow, EBITDA and net income, MEASURED ON A PER SHARE BASIS, have significantly lagged behind comparable companies.

The Reporting Persons believe the Issuer should take actions to increase shareholder value, including, but not limited to, the following:

1. significantly reduce capital expenditures and acquisitions;
2. implement rigorous analytical standards for capital expenditures;
3. increase its focus on margins and efficiency of existing assets; and
4. significantly increase stock buybacks, in place of risky and unproven
   gambles on acquisitions and new facility construction." (Read More)
   

The company is trading below enterprise value with strong cash flow and a PEG of right around 1 - well below the industry average. Investors applauded these moves as the stock rose today almost 2% in morning trading. This is definitely a stock to keep an eye on as management decides whether or not to implement these changes.

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Lone Star Steakhouse & Saloon Inc. (NDAQ:STAR) is facing pressure again from Barington and other shareholders who are demanding that the company take the time to revalue the company before any definitive transaction is announced. These shareholders have stated on multiple occasions that they believe the buyout premium put forth by a Dallas private equity group seeking to buy the company is simply not enough. The Board, however, has remained silent on the issue prompting Barington to send yet another letter (in a 13D/A filing today) in which they stated:

"We question the judgment of the Board in approving the transaction without having first obtained an appraisal of the real estate holdings of the Company. We estimate that the value of the Company’s extensive real estate assets (including land and buildings) exceeds $400 million and believe that it is misleading for the Company to disclose on page 28 of the Proxy Statement that the actual market value of the Company’s owned real estate holdings could be 'higher or lower' than such assets’ net book value of approximately $245 million. We also note that neither of the two financial advisors that opined as to the fairness of the proposed transaction made an independent appraisal or valuation of the Company’s real estate holdings or were furnished with an appraisal of such assets (as disclosed on pages 30 and 36 of the Proxy Statement), causing us to question the ultimate utility of the fairness opinions that have been rendered.

Furthermore, we question the thoroughness of the sale process, including the decision of the executive committee of the Board to only conduct a 'targeted' market check of six potential purchasers, as opposed to a more thorough assessment of interest from a broad range of potential financial and strategic buyers. We also question the effectiveness of this 'targeted' marketing process when the six potential purchasers were given less than a month’s time to review non-public information concerning the Company. It is our belief that it is unreasonable to expect a potential purchaser to complete its due diligence review of the Company in such a short time period ... It is therefore no surprise to us that once these potential purchasers had the sale process abruptly shut down on them in March 2006, none of them had an interest in further pursuing a transaction with the Company when contacted again in August 2006.

In light of the sale process that was conducted by the Board and the modest merger consideration being offered, please be advised that it is our intention to vote against the merger and that we may seek appraisal rights in connection with the transaction." (Read More)

This comes about a month after the hedge fund sent its first demands to the company back in September. So far, both Barington and Deutsche Bank have expressed their dissatisfaction with the company's sale process. Combined these two hold about 20% of the company's outstanding shares and they both plan to vote against the transaction unless their demands are met. If the two are able to convince other shareholders to vote similarly, it could put a significant road block in the way of STAR's planned merger.

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Evergreen Energy, Inc. (NYSE:EEE) reported wider than expected losses today in their 10Q filing with the SEC due to plant startup costs and higher operating expenses. The losses totaled $17.4 million (or $0.22 per share) compared to last years loss of only $4.9 million (or $0.07 per share). The company said it spent $17.2 million in plant startup costs (bringing the total spent to over $166 million of the years) and $31.3 million in capital expenditures in the nine months ended September 30, 2006. After all of this, its new fuel only generated $192,000 in income for the company. The company also announced that its deal with Arch Coal Inc. (NYSE:ACI) had expired. The stock is trading down 22% today after the company held its conference call.

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