PACCAR Inc. (NDAQ:PCAR)
Announced a $300 million buyback program

Peoples Bancorp of North Carolina, Inc. (NDAQ:PEBK)
Announced a $2 million share buyback program

Rockwell Automation, Inc. (NYSE:ROK)
Raised buyback from 9 million to 12 million shares

Verizon Communications Inc. (NYSE:VZ)
Raised buyback from $1.5 billion to $1.7 billion

Friendly Ice Cream Corp. (AMEX:FRN) may soon find itself embroiled in a proxy battle as The Lion Fund vowed to solicit proxies at the company's next annual meeting in 2007 to institute two of its nominees onto the company's board of directors. The 14.92% holder has been engulfed in this battle with the board since August. Sardar Biglari, Managing Partner of The Lion Fund, also addressed shareholders in a letter attached to his 13D/A filing with the SEC yesterday. In this letter, he outlined the fund's frustrations with the company's performance and his intent to nominate new board members at the company's next annual meeting:

"The optimal avenue to achieve good corporate governance and to envision wise means to enhance long-term value is to place very significant shareholders on the board to ensure a proper alignment of interests between the board and the shareholders.

Our concerns over Friendly’s arise from its poor corporate governance, poor operational performance, poor stock performance, and its weak balance sheet. To illustrate, the company’s escalating legal costs directly result from poor judgment on corporate governance issues, which has led to extensive litigation. Good corporate governance contributes to good corporate health. If you are a long-term stockholder, you care about the health of the corporation, which cares about all of its constituencies — franchisees, employees, creditors, customers, and shareholders. Good corporate health will support long-term shareholder value creation, the ultimate objective of a company. Friendly’s must make better capital allocation decisions and improve its capital structure if it is going to survive and then thrive.

We seek alteration in the composition of the Board of Directors to provide greater presence of directors who are autonomous and who therefore are able to represent the best interests of all stockholders. As directors, Phil and I would be technically and psychologically independent.

Over the coming months we will be communicating with you regarding our ideas for Friendly’s. Our Web site, www.enhancefriendlys.com, will be the prime source of information that we will communicate to you on important matters. Our guideline is to tell you the facts that we would want to know if our roles were reversed. We are applying this principle in our communications with you now and will apply no lower standard when we serve as stewards of your capital in our role as board members. Shareholders are entitled to no lesser standards and consideration; all shareholders of Friendly’s should be treated equally. We encourage shareholders to visit our Web site regularly and to share their thoughts with us about Friendly’s." (Read More)

Although Friendly's stock has increased significantly so far this year, it can be partially attributed to the strong buying by The Lion Fund and other shareholders seeking changes in the company's direction. The company's relatively small float makes the share price vulnerable to this amount of buying or selling. If The Lion Fund is successful in obtaining board seats and implementing their solutions for the company, it could mean a justification for these prices and an even larger return in the long run. This makes FRN a great stock to keep an eye on into the 2007 shareholders meeting.

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Barners and Noble, Inc. (NYSE:BKS) moved higher by over 4% today after Credit Suisse upgraded the company from Underperform to Outperform citing valuation and possibility of a LBO. The stock has also seen accumulation lately from a number of notable investors, including Perishing Square Capital who disclosed an 8% stake in a 13G filing on November 13th. Billionaire investor George Soros also initiated a small 0.14% stake in the company a couple of months ago while Charles de Vaulx added to his position, which currently stands at 0.47%. The stock has been on an uptrend since August, rising from $32 to over $40 - a 25% increase. This is definitely a stock to keep an eye on as the LBO possibility and interest by Soros and others continue to propel the company to new highs; however, an upcoming internal review of the company's stock option practices along with mediocre quarterly results are some possible roadblocks.

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Deere & Co (NYSE:DE)
SEC Filings Watch
Citigroup analyst, David Raso, met with the company's management in which they held a discussion focused on potential areas for acquisitions/business build outs. Shares of Deere & Co., which is the world's largest agricultural equipment manufacturer, rose more than three percent today after the reports that the company had received and rejected a private buyout bid.

Ultra Clean Holdings (NDAQ:UCTT)
8K Filing by the Company
Leonard Mezhvinsky, President, and Deborah Hayward, Vice President, of the company entered into a Rule 10b5-1 trading plan to sell ordinary shares of the company that are owned or will be acquired on the exercise of stock options. Between the two, they plan on selling up to 725k in shares.

Veritas DGC Inc. (NYSE:VTS)
10Q Filing by the Company
Veritas reported Q1 EPS of $0.68, above the consensus of $0.47. Revenues came in at nearly $231 million versus the consensus of $193.5 million. At the end of October of this year, the company's backlog was up to a record $550 million compared to $456 million at the end of July. Investors applauded the numbers as VTS stock rose on today's trading session.

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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