Parlux Fragrances Inc. (NDAQ:PARL) may soon find itself in trouble as 12.2% holder Glenn H. Nussdorf steps up his efforts to turn around the company. Many may remember our coverage of this story in October, after Nussdorf said he is interested in potentially acquiring the company. His most recent filing today is aimed at speeding up this process by removing the Board of Directors and reinstating his own members in an effort to unlock shareholder value through a potential sale of the company.

According to the 13D/A filing:

"As the beneficial owner of a substantial percentage of the outstanding shares of Parlux, I believe that much can be done to increase shareholder value and that it is time for immediate change at both the Board and management levels. The decline in the Company's share price from a high closing price of $18.96 earlier this year (after adjusting for a 2-for-1 split in June 2006) to the current $6.26 level (a decrease in shareholder value of 67%), the Company's recent disclosure of decreased sales and earnings for the quarter ended September 30, 2006, and the allegations in the recently amended class action lawsuit that the Company improperly recognized revenues on sales to related parties, have led me to conclude that the Board of Directors is failing to act in the best interests of the Company's shareholders and is not exercising appropriate oversight of management. I am convinced that a continuation of the status quo risks a further destruction of shareholder value and, accordingly, I intend to protect the value of my significant investment in the Company through a consent solicitation to replace members of the Board of Directors.

As I have publicly disclosed in my Schedule 13D filing, I am exploring the possibility of making an acquisition proposal to acquire the Company in a business combination transaction. While I have not made a decision at this time whether to pursue such a proposal, I strongly urge the Board not to take any action (such as the previously announced and subsequently abandoned sale of the Perry Ellis brand) which would materially modify or impact the Company's business, products or assets and could adversely effect the Company's value. In addition, the consent solicitation will present Parlux shareholders with a unique opportunity to express their views on the future direction of the Company." (Read More)

A lot of people have incurred substantial losses on PARL and Mr. Nussdorf contends that the only way to bring the company back is through replacing the Board of Directors. Although proxy battles can be long an arduous, shareholders will finally be able to take action against the Board of Directors that has watched this company decline for so many months. This is definitely a stock to watch; however, it is important to remember that the turnaround process takes a long time to complete, so it may be best to stay on the sidelines until the picture clears up.

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Pogo Producing Co. (NYSE:PPP) moved up over 6% in today's trading after Daniel Loeb's activist hedge fund Third Point LLC disclosed a 7.2% stake in the company. The hedge fund most recently succeeded in its attempt to gain a seat on the board of Nabi Biopharmaceuticals (NDAQ:NABI) after it threatened management with a proxy battle.

Pogo also saw interest from Texas billionaire Robert Rowling who disclosed a 9.21% stake in the company on October 6th of this year. Although Third Point's 13D filing does not mention any particular plans as of yet, the hedge fund is very well known for taking an active role in unlocking shareholder value. Typically activist hedge funds focus on selling the company, selling off specific assets, returning excess cash to shareholders, and/or working with management to improve the company's bottom line. This makes PPP a stock worth watching closely over the next few months.

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Brinks Co. (NYSE:BCO) may find itself in hot water soon as Pirate Capital suddenly took a more active role in its investment. In a 13D/A filing with the SEC today, the 8.5% holder demanded that the company (i) take immediate steps to unlock long-term shareholder value by retaining an investment bank to explore the sale of the company and initiate a large Dutch tender offer for the shares, and (ii) immediately appoint Thomas R. Hudson Jr. to the board. This move comes after Brinks failed to listen to Pirate's past requests to retain an investment bank and instead announced plans for its own acquisitions.

According to a letter attached to the filing:

"The purpose of this demand is to enable the Fund and its affiliates to communicate with the Company's shareholders on matters relating to their interests as shareholders or beneficial owners with respect to a shareholder proposal set forth in the Fund's notice to the Company of even date herewith and, possibly, to facilitate and support a proxy solicitation of the Company's shareholders to elect one or more members of the board of directors of the Company, including the undersigned, which the Fund is contemplating but has not decided upon." (Read More)

Nobody wants a proxy battle, as they are a long and expensive process (and Pirate has a lot of experience!). Therefore, it is likely the company will take this as a hint and start a dialog between the two parties. In the end, it is likely that hedge fund will receive a spot on the Board and head a committee to explore strategic alternatives. If the company is indeed undervalued and this idea has merit, then this proposal will be put to a shareholder vote at an annual meeting. Although this is all a very long process, it definitely makes BCO a stock worth watching, since any buyout comes at a premium to market prices.

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Carmike Cinemas Inc. (NDAQ:CKEC) revealed today in a Form 4 filing with the SEC that Chairman/CEO Michael Patrick purchased 48,100 shares in a transaction valued at over $900,000. This transaction brought his stake in the company to 360,313 shares. We first started covering this company back in September, when we noticed Watershed's interest in the company. Since then, the stock has moved up over 15% as the company recently announced plans to raise refreshment and ticket prices at its theaters in an effort to increase revenues. The company also said that its pre-showing advertising revenues rose, while they are implementing new technologies to help the ease of switching show times and movies. Investors were also pleased to hear that there would be no more fees from restatements, which plagued the company's earnings for several quarters in the past. News of the insider's purchase helped the stock move up over 4% today in intraday trading.

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The exchanges continued their move higher today as Nasdaq Stock Market Inc. (NDAQ:NDAQ) made yet another bid to acquire the London Stock Exchange (LON:LSE), revealed in an 8K filing with the SEC. The world's second largest stock exchange upped its bid by 25% to $1.5 billion in an attempt to create the world's largest trans-Atlantic exchange, however the LSE again rejected its bid as inadequate. But the Many are saying that the LSE is holding out for a white knight that will acquire the company; however, the Nasdaq recently upped its LSE holdings by an additional seven million shares, which makes rival bids even more unlikely. At this point, it is likely that the LSE will solicit other bids for the company from other potential candidates and/or demand a higher premium from Nasdaq. The company refused to comment, but said it would issue a press release later today on the matter.

This move comes as many of the exchanges have been making moves to consolidate, driving up prices to new record highs and helping the Nymex Holdings Inc. (NYSE:NMX) set a new record on its IPO. Stock exchanges in particular have been looking to expand overseas as an increasing volume of new issues are taking place outside of U.S. borders. While Nasdaq has been targeting the LSE, NYSE is in the process of acquiring Euronext (based in Paris), which it struck a deal with earlier this year, pending shareholder approval. It is likely that this consolidation will continue, driving up the exchanges even more going into 2007. These are all definitely stock to keep a close eye on!

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Triad Hospitals Inc. (NYSE:TRI) received yet another letter from TPG-Axon Capital Management encouraging the board to implement changes to help increase shareholder value. This new letter expands on what the fund previously stated ahead of its talks with management to take place later this year.

In the letter, the fund states:

"We are focused on the company's strategy and execution, which RELATIVE to industry peers has delivered sub-par returns. We believe Triad's hospital assets are high quality, and generally well-positioned. As such, the company should trade at favorable valuations to industry comparables. HOWEVER, INSTEAD, TRIAD HAS REGULARLY TRADED AT A SIGNIFICANT DISCOUNT TO INDUSTRY PEERS, AND CURRENTLY TRADES AT THE LOWEST VALUATION IN THE INDUSTRY. Why? In stark contrast to its peers, Triad has achieved poor return on investment and diluted its shareholders. Unfortunately for shareholders, capital spending and management compensation have been high relative to the industry, but growth (per share) and returns have been low. We believe that it is time to put an end to this dilutive strategy, and that the Directors and management must finally begin to show discipline, and focus on creating value for shareholders." (Read More)

To accomplish these goals, the fund created a more indepth outline of what needs to be done:

• Significantly amending the composition of the board, in order to improve the depth of financial sophistication, and also to include representation from shareholders. The current board is simply not credible as a guardian of our capital.
• The company should focus on improving and optimizing existing assets. It is critical that focus be placed on improving the company's analytical tools and controls. Margins must be improved, capital expenditures must be rationalized, and issues like bad debt must be analyzed carefully. Ultimately, until the current assets have been optimized and management control has been enhanced, it does not appear sensible to continually expand, and increase complexity.
• Capital usage strategy should be dramatically altered. Instead of aggressive spending on capital expenditures and acquisitions, the company should reduce expenditures to levels needed to optimize existing assets. Excess cash flow should be returned to shareholders, via dividends or share buyback.
• The company has the flexibility to increase leverage significantly without impairing operating flexibility, or increasing risk to imprudent levels. Rather than keeping this capacity as a 'war chest', the company should instead use it to optimize the capital structure, and generate return for shareholders. With these steps, the company could comfortably implement a capital reduction of $1.0 to $1.25 billion, and still have leverage ratios and coverage metrics that would be prudent and manageable.

If the company listens to Axon and successfully executes these strategies, it could mean significant share appreciation in the long-term. Again, the company is trading below enterprise value with strong cash flow and a PEG of right around 1 - well below the industry average. This is definitely a stock to keep an eye on.

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Ampex Corporation (NDAQ:AMPX) shareholders applauded management's move to retain the company's assets after a buyout offer from ValueVest High Concentration Master Fund. We covered this unofficial buyout offer in a previous article on November 14th, where we stated that ValueVest intended to discuss this matter with management at the next annual meeting. The company responded sooner, however, stating that they are not interested in a buyout but are willing to discuss other possible ways to increase shareholder value.

In a 13D/A filing yesterday, ValueVest said:

"On November 14, 2006, the Investment Manager received by facsimile a letter dated November 6, 2006 from the chairman and chief executive officer of the Issuer. The letter confirmed that the Investment Manager's letters of September 13 and 21, 2006 had been discussed by the Issuer's board of directors at their meeting in early November and that the Issuer's board of directors had concluded after that discussion that it would not be in the best interest of the Issuer or its shareholders to offer the Issuer's Data Systems business for sale at this time.

On November 15, 2006 the Investment Manager contacted the Issuer's chief financial officer by telephone and once again offered to meet with representatives of the Issuer to discuss the ways in which the Investment Manager might be able to help increase shareholder value and the commercial utilization of the Issuer's intellectual property assets. The chief financial officer agreed to meet with Messrs. Bakar and Cariani at the Issuer's offices in New York in the next week." (Read More)

The stock is trading up over 2% today on the news. Certainly, any licensing deals involving the company's intellectual property rights could entail further improvement in the company's bottom line. This remains a good stock to watch as the the fund meets with managment in New York next week to discuss possible ways to unlock shareholder value.

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U.S. Steel Corp. (NYSE:X) moved higher today by over 9% after a Bloomberg report said that Russia's biggest steel maker, OAO Severstal, is in talks with investment bankers to merge with local iron miners to create a $20 billion company, all in an effort to bid for the $8 billion U.S. Steel. The two potential local acquisitions are said to include ZAO Gazmetall and ZAO Metalloinves, which are controlled by billionaire Alisher Usmanov. The rumors stemmed from the Russian newspaper Kommersant, which quoted anonymous analysts at investment banks reporting that Severstal owner Alexei Mordashov is interested in buying U.S. Steel. This rumor is also supported by strong existing consolidation within the steel industry - particularly, the Mittal takeover of Arcelor which formed the world's largest steel company earlier this year. Finally, a spokesman for U.S. Steel didn't dismiss the rumor, saying: "We favor consolidation if it builds value for our shareholders, but we don't discuss any actions we may or may not be taking until the appropriate time." The rumor also helped other steel stocks climb sharply in morning trading. Combined, these factors make such an acquisition a possibility; however, there is still a lot of obstacles in the way. Regardless, this is definitely a stock to keep an eye on as the picture clears up in coming months.

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NYMEX Holdings, Inc. (NYSE:NMX) skyrocketed at open today as one of the hottest IPOs this year began trading. The company priced above its already-raised expected range last night at $59 per share, but this proved to be far less than investors were willing to pay as the stock rocketed over 100% in morning trading to over $140 a share. Many investors are driven to buy Nymex after seeing red hot performance and M&A activity amongst other exchanges: The NYSE IPO'd not long ago and performed extremely well; the LSE was the subject of a bidding war; the CME and CBOT were involved in a merger/buyout; and the NASDAQ has been red hot since it went public. Here's a chart showing three of the largest exchanges that have clearly outperformed the market during the past few years:



Investors appear confident that the Nymex will perform similarly, and some are even speculating the Nymex could be the subject of a buyout as consolidation within the industry continues. This stock is definitely one to watch as exchanges continue to outperform the rest of the market.

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Clear Channel Communications, Inc. (NYSE:CCU) announced its acceptance today of a definitive merger agreement with Thomas H. Lee Partners and Bain Capital Partners. The $18.7 billion buyout is to take place at $36.70 per share pending shareholder approval - the company expects the transaction to be completed by the end of 2007. This news comes after the company announced that it had retained advisors to assist it in a possible sale of the company back on October 27th. In another announcement, the company revealed that it intends to sell 448 radio stations outside the top 100 markets, as well as its television division. However, it noted that the merger is not conditioned on the sale of these assets. Why are they doing this? According to the company:

"Our TV division and departing radio stations have consistently turned in industry-leading performance. However, these assets account for less than 10% of the Company’s revenues and earnings. Change is a necessary part of success. We are adapting our business model to accommodate the rapid and substantial changes in the markets in which we operate. These are difficult decisions, but we believe they are the right ones, and necessary for our future success." (Read More)

It also makes the buyout signficantly cheaper for the acquiring private equity firms; in fact, some investors are angered that the company waited until after the merger agreement to reveal this information in detail. If it had been the other way around, any upside from these sales could have benefited shareholders instead of private equity.

The company also addressed rumors regarding layoffs, stating:

"We do not expect this privatization to result in any significant reductions to our core workforce. While future employment is never guaranteed, reductions in force are typically associated with so-called strategic mergers in which two companies and their employees are combined, rather than with transactions that are more properly characterized as financial investments such as this one. The private equity group is making a very large investment in our company, and it is in their best interest for the company to continue having the right people with the right tools to grow and prosper." (Read More)

This buyout is the latest in a series of massive LBO transactions this year by private equity, including that of casino giant Harrahs Entertainment. The deal also affects investment banks, who stand to make more than $130 million on the deal in advising and legal fees. These institutions include Morgan Stanley, Goldman Sachs, and others who have benefited from the near-record $3 trillion in deals this year alone. Clear Channel stock is currently trading at $35.36 per share, roughly 6% below the buyout premium.

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