Wilshire Enterprises (AMEX:WOC) may find itself in trouble soon as Bulldog Investors is more actively attempting to remove the company's poison pill. Poison pills - now more commonly referred to as "Shareholder Rights Plans" - are tools used by management to avoid hostile takeovers. They come in the form of provisions written into a company's charter that allow the company to dilute ownership, increase debt, grant options, or take a variety of other actions to make takeovers targets less attractive to potential acquirers. While these are useful in some cases, they are often seen as a tool to help managment and the board protect their jobs at shareholder expense. Bulldog Investors alleges that this is the case; they believe the company's current poison pill is too restrictive and should be removed in order to best serve shareholders.

In a letter attached to a recent 13D/A filing, they stated:

"As you know, Full Value Partners L.P. is a member of a group that owns almost 15% of the outstanding common stock of Wilshire Enterprises, Inc. (WOC) and is its largest outside shareholder.

When we met on September 26, 2006 I requested that the board either eliminate or raise the threshold of WOC's poison pill.  In general, we believe that poison pills act to insulate and entrench incumbent boards and managements thereby making them less accountable to shareholders.  The situation at WOC is particularly disturbing in that your father's estate owns over 21% of WOC stock, well in excess of the 15% threshold at which the poison pill would be triggered by any other shareholder.

During a subsequent telephone call we again asked you to recommend that the board eliminate or raise the threshold of the poison pill.  We have yet to get a response.

Our patience is not boundless.  Therefore, we have decided that unless the board acts by December 5, 2006 to eliminate or lift the threshold for WOC's poison pill to 21%, we intend to (1) present a proposal at the next shareholder meeting to eliminate the poison pill and to elect directors that will support that proposal; and (2) commence litigation to eliminate the poison pill.

It is unfortunate that one result of these actions will be that WOC will incur costs it can ill afford given its tiny size.  But what choice do we have given your failure to respond to our previous requests to address our concerns?" (Read More)

If the poison pill provisions are removed or lowered, it could mean potential bids for the company. This makes WOC a stock worth watching in the following months.

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Medtronic Inc. (NYSE:MDT) announced that it authorized the spin-off of its defibrillator unit to create a new publicly traded company, to operate under the name of Physio-Control, Inc. While the company's press release contains the only details we know to date, the company will eventually have to file a 10-12B with the SEC that will shed much more light on this new entity (watch for it). Let's take a look at what this deal entails...

According to their press release:

"Physio-Control will be the world’s leader in the $1 billion market for external defibrillation products, including automated external defibrillators (AEDs) and manual defibrillators used by hospitals and emergency response personnel. The new company will offer the current portfolio of external defibrillation and emergency response systems, data management solutions and support services, including the popular LIFEPAK® family of external defibrillators. The company will have approximately 1,200 employees and will operate in more than 100 countries around the world. The new company will continue to be headquartered in Redmond, Washington.

The spin-off is intended to take the form of a tax-free distribution to Medtronic shareholders of all the shares of Physio-Control, which will then trade as a new public company in the United States. The intended transfer of employees and assets to Physio-Control will be structured globally according to all applicable logistical, tax and legal requirements. Medtronic plans to structure the transaction to meet all of the requirements for a tax-free distribution and list Physio-Control’s shares on the New York Stock Exchange. The expected stock distribution ratio, including the record date for determining shareholders of record entitled to receive the distribution dividend, will be determined at a later date. Medtronic has retained Goldman Sachs to advise it on the transaction, which is expected to be completed in the first half of Medtronic’s fiscal year 2008."

Now this transaction is interesting for several reasons. First of all, spin-offs generally represent great investment opportunities for value investors. Tax-free spin-offs like this involve shares being distributed to parent company shareholders as opposed to a more traditional IPO process (roadshow, investment bankers, etc). It is this process that creates the value often seen in spin-offs. Many parent company shareholders may not have any interest in holding Physio-control shares and will sell them as soon as possible. Moreover, many mutual funds may not be authorized to hold these shares, and again may be forced to sell them. This downside pressure combined with the lack of an "IPO craze" creates a great buying opportunity for value investors. This is especially true for companies like this one, which are born as market leaders with a strong cash flow.

The second interesting part of this transaction has more to do with Medtronics. The company said they were spinning off this division in order to focus more on treatments of chronic medial conditions. Now, awhile ago there was speculation that Medtronics may be interested in acquiring Cyberonics, Inc. (NDAQ:CYBX) - a company that not only operates in this area but also has an angry activist shareholder on its back. While CYBX has appreciated in price significantly since the last mention of this rumor, the market still believes there is potential as the stock moved up over 3% in today's trading. These are definitely two stocks to watch as this situation unfolds.

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Ampex Corporation (NDAQ:AMPX) may find itself in hot water soon after ValueVest disclosed an 8.9% stake in the company and encouraged the company to explore ways in which it could unlock shareholder value. The hedge fund first began acquiring shares in the company back in October of 2005 and continued accumulating shares for over a year before making a buyout offer for the company last month, which was immediately rejected by the board of directors. ValueVest now appears to be seeking other ways in which the company could commercialize its intellectual property rights that it has been sitting on for so long.

According to the most recent 13D/A filing:

"On November 28, 2006, Messrs. Bakar and Cariani of the Investment Manager and David Martin, the chief executive officer of MoCAM, met with Messrs. Bramson and McKibben, the Issuer's chief executive officer and chief financial officer, respectively, at the Issuer's offices in New York. At the meeting, the Investment Manager expressed its continuing belief that the market price of the Company's Shares does not fully reflect the underlying value of the Issuer's assets and businesses.

The Investment Manager indicated that it has identified specific actions and possible strategic relationships that could materially increase the Company's revenue stream from its intellectual property assets. Such plans could involve the consulting and advisory services of M.CAM and Dr. Martin. In addition, the Investment Manager indicated a need to consider the management team and possible changes to the composition of the Board of Directors. The Issuer agreed to discuss these matters with its Board of Directors and is prepared to work with the Investment Manager on exploring a new strategic plan for the Issuer along the lines outlined by the Investment Manager. The parties agreed to meet again in December to review possible nominees for the Board of Directors and to discuss in detail ways to further monetize the patent portfolio." (Read More)

The hedge fund has consulted with M.CAM and other IP professionals and determined that the value of the company's intellectual property assets are far greater than what is reflected in the current market price. These consultants produced the following report, which was attached to ValueVest's original 13D filing with the SEC:

"Licensing stream securitization: M.CAM to attempt to perfect the interests in the royalty streams that are current in Ampex and build a cash-backed securitization This has an opportunity to infuse NPV working capital into Ampex
for strategic use in IP enforcement and could be pooled with 3rd party licensing revenue for larger investment banking opportunity returns.

Immediate Notice: M.CAM to oversee and coordinate the sending of infringement notice letters on both the Ampex patents as well as the operating code to all existing licensees as well as the over 190 companies and entities identified as currently encroaching on the Ampex portfolio. The near and long term intents
are:

• Capture greater value from existing licensees by migrating from a patent-only model to a patent and copyright model;
• Build the basis for a transferable and poolable licensing consortia on digital image capture, transmission, storage, and reconstruction (for internal leverage or for partnership leverage with Kodak, Sony, Samsung, etc.);
• Begin capturing revenue for non-aligned sector deployment; and,
• Construct a template for more assertive licensing value expectations with licensees.
  

Company to pay a 10% commission on all renegotiated and re-priced licenses and a 25% commission on all new licenses from currently un-licensed principal patents.

Public Sector Realignment: An immediate review of all existing long-term government contracts to assess their viability for migration to data form a homogenization services in addition to, or in lieu of, existing technology
supply contracts. Insofar as this exercise is successful, M.CAM would propose taking an OS standard approach to building future value. Commissions would be negotiated as above.

Teaming: M.CAM has identified and qualified one third party with whom it may be able to create significant patent licensing pools. This third party has considerable financial interest in parties known to, but not doing business with Ampex. M.CAM proposes the immediate entrance into dialogue with this party to arrange a licensing pool structure (with pari pasu revenue sharing) between the parties. This licensing pool could roll into the securitization model above or simply add cash flow to Ampex." (Read More)

Clearly, there is additional shareholder value that could be realized here, it is simply a matter of convincing management to implement measures to take advantage of their IP assets. Moreover, ValueVest's initial offer to purchase the company outright illustrates a strong belief that these assets are indeed worth a significant amount of money. This stock is definitely one to watch closely as ValueVest works closely with management to unlock shareholder value.

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Station Casinos, Inc. (NYSE:STN) announced a management-led buyout offer in a 13D/A filing today at $82 per share, in a transaction valued at around $4.7 billion. Although the offers comes at a 20% premium over yesterday's close, investors are anticipating a future raised bid with shares currently trading at around $83.10. While the stock is still trading at a 48% discount to enterprise value, it is worth noting that the company trades at higher multiples than comparable companies within its industry. The company's PEG ratio stands at 2.09 versus an industry 1.75, while its PE ratio is 39x versus 30x. However given the recent M&A speculation within the casino industry (ever since Harrah's $15 billion buyout in October and Tracinda's recent MGM bid) it is difficult to rule out anything. Moreover, the board's special committee said it would entertain other offers.

Share of Boyd Gaming Corp. (NYSE:BYD) and Penn National Gaming (NYSE:PENN) also moved up in today's trading by 4% to 5% on renewed M&A speculation. The gaming industry is still one worth watching as private equity and hedge funds continue to scoop up the major players.

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Pogo Producing Company (NYSE:PPP) may find itself under increasing pressure after Daniel Loeb's activist hedge fund, Third Point, sent another letter to the company's president and CEO in a 13D filing with the SEC on Friday afternoon. In the letter, the 7.2% holder demands that the company put itself up for sale immediately and threatened a proxy war during the next shareholder meeting if the company didn't take action. In the letter, Third Point outlines the problems with the company:

"We appreciate your taking the time to meet with us following the Company's presentation at the Friedman Billings Ramsey investors conference on November 29th. We approached the meeting with an open mind and the sincere hope that you would answer our questions in a way that might help dispel your poor reputation among your peers, energy analysts and investors. While the meeting reinforced our positive view of the Company's underlying asset value, it also contributed to investor concerns that Pogo's management has failed to pursue cohesive exploration, development, acquisition and financial plans.

Over the past ten calendar years, the share prices of your peers comprising the S&P Midcap Oil & Gas Exploration & Production Index have appreciated at a compound rate of 11.7% while your stock price has appreciated only 5.8% annually, less than half the rate of your peers. Lest you think we chose an unfavorable time frame to evaluate your performance, the table below shows that Pogo has underperformed on a cumulative basis for every time period over the past decade!

Unsurprisingly, the underperformance has continued this year. Through November 20th, the stock had declined 4.1% year-to-date as compared to a 4.7% increase for your peers. In fact, the only recent time period during which the stock has outperformed the index has been in the period since we filed our initial Schedule 13D with the SEC on November 20th.

In the one and a half decades you have run Pogo, shareholders have suffered subpar returns. Your track record is long and meager, and it is time for change. Accordingly, we demand that the Board immediately initiate a process to sell the Company in whole or several parts to the highest bidder or bidders. To underscore our commitment to this process, we are advising you today that we intend to conduct a proxy contest at your 2007 annual meeting of shareholders that will allow us to elect new directors comprising a majority of the Company's board of directors." (Read More)

Third Point believes that the asset value of the company surpasses the value that management is able to extract for shareholders. Management's actions have stifled this value; transactions like the Northrock Resources acquisition. The hedge fund elaborates on this questionable acquisition in their letter:

"One particularly vexing transaction, the Northrock Resources acquisition in Canada, typifies the inopportune type of capital allocation decisions made by the Company. On July 11, 2005, you announced the acquisition of Northrock for $1.8 billion in cash, a significant transaction for Pogo, exceeding half of the then $3.2 billion market capitalization of the Company. At the time, you commented that "Pogo is a very particular and discriminating buyer of assets." Unfortunately, the results realized since the acquisition belie your contention.

In the year since the acquisition closed, you have spent over $350 million - approximately 20% of the purchase price - in capital to improve these assets, yet production has actually declined 10% from 30,000 barrels of oil equivalents per day ("boepd") to 27,000 boepd. Given the significant scope of the acquisition and poor performance of the assets to date, we were hoping your answers to our questions would help us understand the strategic thinking behind the acquisition and what return on capital the Company expected to achieve. Your answers were not satisfactory. When we asked you about the natural annual decline rate of the assets, you responded "7 to 8%," which seems unlikely given the 10% annual decline experienced during your first year of ownership while you invested significant capital attempting to increase production. This is especially troubling and gives credence to reports by industry participants that Pogo's management did only minimal due diligence before consummating the transaction last year." (Read More)

If Third Point is successful in forcing a sale of the company, there could be significant upside in any buyout. While proxy battles are a long and expensive process, they are one of the best ways to catch managements attention and get a hedge fund's agenda accomplished. This makes PPP a stock worth watching as this situation unfolds. The stock moved down almost 2% in today's trading on the news.

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Lone Star Steakhouse & Saloon, Inc. (NDAQ:STAR) said today that it received a higher buyout offer from Dallas-based private equity firm Lone Star Funds. The PE firm raised its bid from $27.10 to $27.35, which represents a 1% rise in the offer. The Company also said it pushed back the meeting of shareholders to vote on the proposed merger from November 30th to December 12th.

There are several large shareholders that plan to vote against the merger, including Barington Capital, Deutsche Bank and Millenco LP, all of whom believe the offer significantly undervalues the restaurant chain. Although these funds have yet to comment, it is unlikely that the 1% raise will affect their sentiment. In a previous article, we also noted that Barington Capital said it has identified several other parties that may be interested in purchasing the company at a price greater than $27.10 per share, contingent upon their ability to review non-public information. However, the company said it still plans to support the merger agreement with Lone Star Funds. If these funds succeed in preventing the sale at this price, it could mean an increased bid or opportunity for the company to receive other bids. This makes STAR a stock worth keeping an eye on over the next few months.

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Advanced Micro Devices Inc. (NYSE:AMD) revealed today in a form 4 filing with the SEC that James Fleck - a new director from AMD's acquisition of ATI - purchased 25,000 shares on the open market at $22.15. This is the first purchase he has made since he was appointed as a director on October 25, 2006. AMD's stock has fallen significantly this year from a high of $42 to its current levels in the mid-20's. This drop largely stems from a reduced outlook and increasing spending on acquisitions, including the ATI purchase for $5.4 billion. With company insiders beginning to purchase at these levels, it may be a sign that things are ready to improve, and this makes it a stock worth watching over the next few months.

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Triad Hospitals Inc. (NYSE:TRI) may see itself in more hot water today after Axon again increased its stake in the company, which is now at 7.4% according to their latest 13D/A filing with the SEC. The hedge fund also attached a previous letter it had sent in early November to this filing, which highlighted the changes it was seeking.

These changes included:

• 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.

Axon also said the company should amend the composition of the board, focus on improving and optimizing existing assets, return excess cash flow through dividends and they increase leverage significantly. In the end, the hedge fund believes the fair value of the stock is 25 to 50% higher than current levels. This makes TRI a stock to keep an eye on as the fund works to implement these changes. The stock is currently trading down 2% in morning trading.

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General Motors (NYSE:GM) may see increased downward pressure today as Tracinda revealed in a 13D/A filing that it sold another 14 million shares in a private transaction at $28.75 per share - a few points below the current market price. This move brings the hedge funds stake down to 4.95% from 7.4% just a few days ago on November 22nd and 9.9% earlier this year. Tracinda began selling its stake in GM after Jerome York - the funds representative on GM's board - resigned after partnership talks between GM and Nissan-Renault broke down in October. GM shares are down almost 1% in mid-day trading today.

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Brocade Communications (NDAQ:BRCD) revealed in a form 4 filing with the SEC after the close yesterday that the company's CEO exercised 1,079,943 options at between $4.55 and $6.00, and then sold 1,679,943 shares at $8.97.

Carriage Services Inc. (NYSE:CSV) revealed in a form 4 filing with the SEC yesterday that the company's chairman purchased 27,100 shares between 11/27 and 11/28 at prices between $4.93 and $5.00, bringing his stake to 952,965 shares.

Home Solutions of America Inc. (NDAQ:HSOA) revealed in a form 4 filing with the SEC yesterday that the company's president purchased 20,000 shares on the open market at $5.48, bringing his stake up to 218,930 shares.

TD Ameritrade Holding Corporation (NDAQ:AMTD) revealed in a form 4 filing with the SEC yesterday that the company's director purchased 10,000 shares on the open market on November 27th at $17.10, bringing his stake to 25,200 shares.