Parlux Fragrances Inc. (NDAQ:PARL) may soon find itself in trouble as 12.2% holder Glenn H. Nussdorf disclosed he filed a preliminary consent statement in a 13D/A filing with the SEC today. This move comes after several attempts by the activist investor to institute changes within the company. While no additional details were provided in this filing, Nussdorf did outline his plans in past filings with the SEC. According to his initial 13D filing with the SEC:

"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)

Clearly, Nussdorf's most recent move indicates his continued conviction as to the company's intrinsic value. While he failed to give additional details as to his recent plans, he did indicate in the past that he would be seeking to replace the board (which is happening now) and would consider placing a bid to take over the company. Given the strong M&A market and the continued depressed PARL prices, this remains a possibility. This makes PARL a stock worth watching over the next few months.

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InFocus Corporation (NDAQ:INFS) shareholder Caxton Associates revealed that they increased their stake in the company from 8.9% to 9.9% in a 13D/A filing with the SEC. The activist hedge fund has long maintained that the company's intrinsic value and buyout prices are substancially higher than the current market prices. Although this filing gave no additional details, the fund did outline its argument in their intial October 13D filing:

"The Reporting Persons believe that the intrinsic value of the Company, and the amount a strategic or financial buyer would pay to acquire the Company, is significantly greater than the current market value of the Common Stock.  The Reporting Persons believe that this gap in value has resulted from the implementation by the Company's Board of Directors (the "Board") of a flawed business plan that has been detrimental to shareholder value. The Reporting Persons accordingly believe that the following steps should be taken promptly in order to preserve and maximize shareholder value:

1. The Reporting Persons believe that the Company's poor performance is the result of mistakes made by management and the Board's failure to grasp the strategic realities of the environment in which the Company operates.  At this time, we believe that the Company's operating management is capable of effectively executing the Board's strategic vision should it be given adequate guidance and oversight.  We do not, however, believe that the Board, as currently constituted, is providing the necessary strategic thinking.  Therefore, we believe that, unless significant changes are made promptly, changes in the Board are in the best interests of all shareholders.

2. The Board should include individuals with strong ties to large shareholders, as well as industry, legal and/or financial markets expertise, which have a firm grasp of the realities of the markets in which the Company operates.  Unless significant changes are made, the Board should be restructured to consist of Mr. Ranson, at least two individuals drawn from among the Company's largest shareholders, and other independent directors with relevant industry backgrounds.

3. As part of the Company's announced exploration of strategic alternatives, the Board should develop an operating strategy that not only protects and enhances the hard asset value of the Company, but also will allow the Company to be cash flow positive under any foreseeable circumstances.  The Board should immediately work with management to develop a business plan that, among other things, permits revenue growth only at a reasonable cost, fixes or exits money-losing operations, and leverages the Company's valuable brand name franchise and considerable intellectual property assets.  This new business plan should be assessed against other available alternatives, including the possibilities of a sale or restructuring of the Company.

The Reporting Persons continue to examine all of their options with respect to the possibility of taking actions that they believe will enhance shareholder value, including the option of actively seeking to replace members of the Board." (Read More)

While Caxton did not issue any additional comments, the fund's buying does indicate that it is still committed to unlocking shareholder value. Since their intial involvement with the company's the stock has been nearly flat, while the board's reponse to the fund's demands have been limited. Consequently, the possibility remains that the company could seek to replace members of the board. This makes INFS a stock worth watching over the next few months.

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TLC Vision Corp. (NDAQ:TLCV) may find itself in hot water soon after one of its largest holders changed its filing status from 13G to 13D, indicating a more activist stance. Sowood Capital Management, an 8.1% holder in the company, filed a 13D today stating that they are "filing this Schedule 13D because Sowood anticipates seeking to engage in discussions with management of the Issuer." This news comes as the company's stock has moved down from $7 per share in early 2006 to a low of $4 per share just a few weeks ago. Clearly, changes are needed in this company and shareholders are betting that Sowood has the answers, as the stock moved up over 5% in early morning trading today. While we do not know any details, this is definitely a stock worth watching in the next few months.

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ADTRAN, Inc. (NDAQ:ADTN) guides are below street estimates. The Q4 revenue is expected to range from $108 million to $112 million. GAAP earnings per share for the quarter, assuming dilution, are expected to range from $0.22 to $0.24. Non-GAAP earnings per share for the fourth quarter of 2006, assuming dilution, are expected to range from $0.24 to $0.26. The consensus is $126.5 million and $0.30, respectively.

Walgreen Co. (NYSE:WAG) reports Q1 EPS of $0.43, two cents better than estimates. Revenues were $12.7 billion versus $12.55 billion consensus.  Total sales in comparable stores (those open more than a year) were up nearly ten percent in the quarter, while front-end comparable drugstore sales rose almost six percent in the quarter.

El Paso Corporation (NYSE:EP) announced the sale of ANR Pipeline Company, its Michigan storage assets and its 50-percent interest in Great Lakes Gas Transmission to TransCanada Corporation and TC PipeLines, LP for $4.135 billion, including the assumption of $744 million of debt.  The company expects its after-tax cash proceeds to be roughly $3.3 billion, utilizing tax loss carryovers in this transaction.  In addition, El Paso expects to have approximately $1 billion of tax loss carryovers remaining after the close.

Shares of Pinnacle Airlines Corp. (NDAQ:PNCL) are higher this morning after the company announced that it has reached agreement with Northwest Airlines, Inc. (OTC:NWACQ) for an amended and restated Airline Services Agreement between the two parties, subject to confirmation by the bankruptcy court.  The agreement provides, among other things, that Pinnacle will continue to be a long-term partner of Northwest through at least 2017. In addition to reaching terms on an Amended ASA, Northwest and Pinnacle have also reached an agreement on certain corporate governance issues and agreed that Pinnacle will receive an allowed unsecured claim of $377.5 million (subject to adjustment in certain circumstances) in Northwest's bankruptcy proceedings in settlement of all claims that Pinnacle may have against Northwest. Once approved, the Amended ASA and related agreements will become effective January 1, 2007.  Shares of Pinnacle Airlines are 40% higher to $15 as of this morning prior to opening.  

News Corporation (NYSE:NWS) announced that it had signed a share exchange agreement with Liberty Media Corporation (NDAQ:LCAPA).  Under the terms of the agreement, Liberty will exchange its entire 16.3% economic position (324.6 million Class A and 188 million Class B shares) in News Corporation for a 38.4% stake (470.4 million shares) in The DIRECTV Group (NYSE:DTV), three Regional Sports Networks (FSN Northwest, FSN Pittsburgh and FSN Rocky Mountain) and $550 million of cash, subject to a working capital adjustment.

ADESA, Inc. (NYSE:KAR) has entered into a definitive merger agreement to be acquired by a group of private equity funds consisting of Kelso & Company, GS Capital Partners, an affiliate of Goldman Sachs, ValueAct Capital and Parthenon Capital.  Under the merger agreement, each outstanding share of ADESA common stock will be converted into the right to receive $27.85 per share in cash, representing a premium of approximately 10% to ADESA's closing share price of $25.40 on December 21st.  

TNS, Inc. (NYSE:TNS) moved higher today after founder and former CEO John J. McDonnell, Jr. offered to take the company private at $20 per share through a new blank check company, Dunluce Acquisition Corporation. While the premium isn't as much as other recent acquisitions, Mr. McDonnel's past involvement with the company as founder give this transaction a good likelihood of going through quickly.

According to a letter attached to the 13D filing:

"We are pleased to present this offer to acquire all of the outstanding shares of common stock (the Common Stock) of TNS, Inc. (the Company) at a cash purchase price of $20.00 per share through a new acquisition vehicle, Dunluce Acquisition Corporation (Dunluce), a Delaware corporation.  We believe that our offer is fair and in the best interest of the Company and its stockholders. This offer is fully financed and contemplates all-cash consideration predicated on all stockholders being treated equally.  Our offer represents a significant premium over the trading values of the Company’s Common Stock on a 1-day (16.8%) and 30-day average closing price (17.0%) basis. This offer is made without condition, except for the negotiation of definitive documentation and the satisfactory completion of confirmatory due diligence.

Dunluce has received commitments to underwrite the entire purchase price through a combination of debt and equity.  The equity for the transaction has been committed to, in its entirety, by ABRY Partners, LLC (ABRY). With $2.8 billion of capital under management, ABRY is one of the most experienced and successful private equity investment firms in North America focused on investing exclusively in the media, communications and business services industries.  Since 1989, ABRY has completed over $18.0 billion of leveraged transactions and other private equity and mezzanine investments, representing investments in more than 450 media, communications and business services properties. Additionally, we have secured debt commitments from each of JP Morgan, Morgan Stanley and SunTrust to fully underwrite the debt upon closing of the transaction. Commitment letters from ABRY and each of the lenders are enclosed herewith.

Given my longstanding involvement in the Company as its founder and CEO, our financing group will be in a position to complete confirmatory due diligence and finalize a merger agreement in an expedited manner. I am aware of the Board’s desire to minimize distractions to the Company and its management and have spent considerable time with each of the financing sources discussing the business.  Furthermore, each of the financing sources has performed significant due diligence from publicly available information.

At this point, all that is left to be done is to enable our financing sources to complete their confirmatory due diligence.  The legal and accounting advisors to ABRY and our lenders stand ready to begin their work immediately.  Additionally, we are prepared to negotiate a merger agreement concurrently with the confirmatory due diligence period." (Read More)

The transaction represents a 16.8% premium over yesterday's market price, and comes after a very volatile year for the stock; however, TNS traded as high as $22 earlier in 2006. While additional offers are not likely, shareholders may want this price to be higher. This stock is one to keep an eye on just incase such demands are made.

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RedHat, Inc. (NYSE:RHAT) said today that it sees Q4 sales of $112 to $113 million, versus the consensus of $111.15 million. It also noted that it sees Q4 adjusted EPS of $0.14 to $0.15, versus the consensus of $0.13. The stock moved up 12% in today's trading.

Micron Corporation (NYSE:MU) reported Q1 EPS of $0.25, which was $0.05 cents better than estimates. Revenues came in at $1.58 billion versus a $1.64 billion consensus. The company noted increases in its memory (DRAM and NAND) and imaging products.

Research in Motion (NDAQ:RIMM) reported Q3 GAAP EPS of $0.93 versus a consensus of $0.92. Meanwhile revenues came in at $835.1 million versus a $808.24 million consensus. The company said that it sees Q4 EPS between $0.92 and $0.99 versus a consensus of $0.96 and revenues between $900 and $940 million versus a $815.7 million consensus.

MAIR Holdings Inc. (NDAQ:MAIR) moved 18% higher today on news that Northwest Airlines (OTC:NWACQ) was interested in acquiring its bankrupt Mesaba Airlines unit. Mesaba Airlines currently operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The company followed Northwest's into bankruptcy in the fall of 2005.

Griffon Corp. (NYSE:GFF) received some advice today from the Clinton Group who revealed a 5.2% in the company along with a series of recommendations to unlock shareholder value. The activist hedge fund said that the current stock price does not reflect the value of the company's operating subsidiaries, which is a notion that the company has also acknowledged. Consequently, the Clinton Group offered to help the company explore strategic alternatives, which include a potential tax-free spin-off of some or all of the companies subsidiaries or privatization of the company.

The hedge fund elaborated in a letter attached to their 13D filing:

"We greatly appreciate you and Mr. Edelstein taking the time to discuss with us Griffon Corporation  (Griffon or the Company) and its prospects, and we are pleased with management's willingness to listen to shareholder ideas and opinions. Currently, funds and accounts managed by Clinton Group Inc. (Clinton) beneficially  own in excess of 5% of the outstanding shares of the Company.

We have been impressed with the franchise that management has built, and continue to appreciate management's eye towards returning shareholder value through steady share repurchases. We have invested in Griffon because we believe the market price of Griffon shares fails to reflect the true value of the Company's operating subsidiaries, if they were to be valued on a stand-alone basis.

Given the apparent disconnect between each segment's intrinsic value and the Company's current stock price, we were pleased to hear on last quarter's conference call that management was proactively reviewing strategic alternatives with respect to the defense segment. We hope to work constructively with management to continue to evaluate multiple strategic alternatives, including, but not limited to, a tax-free spin-off or sale to strategic acquirors of one or more of Griffon's subsidiaries, or a going-private transaction for the Company. Given the market leading positions of Clopay Corporation's garage door division and  specialty films division, as well as Telephonics Corporation's well positioned and growing defense segment, we believe any of these initiatives, or a combination thereof, would unlock significant value for existing shareholders.

Based  on our due diligence, we firmly believe that competitors in each respective segment both hold the Company's subsidiaries in high regard and have tremendous strategic interest. Additionally, a publicly traded comparable company analysis as well as our due diligence supports the notion that ample demand would exist for Telephonics Corporation in the public market as a stand-alone company.

Our analysis ultimately suggests that fair value for Griffon's stock approximates $31-$35, prior to certain adjustments as footnoted below:

[Click Here to View Table in SEC Filing]

We enjoyed meeting with you and hope to continue an open and constructive dialogue. To that end, please feel free to call me at 212-377-4224 or Tobin Kim, Vice President, at 212-739-1830, anytime to discuss any and all issues further at your convenience." (Read More)

The Clinton Group's analysis (along with the company's own suspicions) is correct - the breakup value of the company is greater than the value currently reflected in the share price, based on industry valuations. With management already exploring ways to unlock this value and the Clinton Groups expertise in this area, there is good chance that this value could be unlocked in the near term. The company is currently trading at $25.66, after moving up over 6% today on the news. The valuation calculated by the Clinton Group suggests that the share price could reach $31 to $35, meaning a 20.6% to 36.2% premium over today's prices. While this process may take several months and there is no certain decision by the company's management, this stock is definitely one worth watching into 2007.

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Bill Ackman's Pershing Square disclosed an 11.3% stake in Ceridian Corporation (NYSE:CEN) today in a 13G filing with the SEC. The stock moved up more than 5% in early trading this morning on the news. Pershing Square is a well known hedge fund that tends to take an activist stance in the companies in which it invests - most recently, McDonalds and Wendy's. Currently, Perishing Square has only filed a 13G indicating that this is only a passive investment. However, activist hedge funds occasionally use this filing type to acquire shares quietly before taking a more active stance, since it does not require a "Purpose of Transaction". If and when Pershing Square takes a more active stance in the company, it will be forced to file a 13D with the SEC which will outline its investment objectives. Given Bill Ackman's background, this is a distinct possibility, and definitely a stock worth watching.

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3Com (NDAQ:COMS) reported a Q2 loss of $0.01 per share, including restructuring, amortization and stock-based compensation expense of $20 million, or $0.05 per share. The consensus stood at $0.00.

Ultratech Inc. (NDAQ:UTEK) lowered their guidance today. The company currently expects revenue to be down 25% to 30% sequentially from the third quarter 2006 compared to earlier guidance of revenue being down 8% to 10% sequentially as of October 2006. Q4 EPS is expected to be between $0.25 to $0.30 share. This compares with earlier guidance of $0.10 to $0.15 per share.

PMC-Sierra, Inc. (NDAQ:PMCS) now expects revenues for the fourth quarter to be between $100 to $105 million. The company's previous outlook was for a revenue range of $105 million to $112 million. The consensus stands at $108.9 million.

Cognos (NDAQ:COGN) reported Q3 EPS of $0.48 today - five cents better than estimates. Revenues were $247.8 million versus $241.11 million consensus. They predict Q4 revenues of $270 to $280 million versus the consensus of $276.4 million. They also foresee FY07 Non-GAAP EPS of $1.64 to $1.70 versus the consensus of $1.61. FY07 revenues are aimed to be around $965 to $975 million versus the consensus of $964.3 million.

Accenture (NYSE:ACN) reported Q1 EPS of $0.46, $0.04 cents better than estimates. Revenues were $4.75 billion versus $4.51 billion consensus. The company foresees Q2 revenues of $4.6 to $4.8 billion versus the consensus of $4.49 billion, while they raised their FY07 EPS outlook to $1.80 to $1.85, up from its previously expected range of $1.77 to $1.82. The consensus currently stands at $1.83.

Anheuser-Busch Cos. Inc. (NYSE:BUD) said its Board of Directors has approved a new, more aggressive leverage target to enhance shareholder value. The company intends to modestly increase leverage and reduce its cash flow to total debt target from the previous 30% to 40% range to the 25% to 30% range. In conjunction with the more aggressive leverage target, the Board of Directors of Anheuser-Busch Cos. Inc. has approved a new 100 million share repurchase program.

PHC, Inc., d.b.a. Pioneer Behavioral Health (OTCBB:PIHC) has finalized a contract with Behavioral Healthcare Options (BHO), a subsidiary of Sierra Health Services, Inc. (NYSE:SIE). The contract calls for Pioneer to operate four clinics in the BHO network in Las Vegas and northern Arizona, effective January 1, 2007. The contract is valued at $80 million, with an initial term of 10 years, or approximately $8 million annually. The contract more than doubles Harmony's annual revenues, from $5 million to approximately $13 million. The contract is expected to be accretive to the company during the first year of deployment.

M & F Worldwide Corp. (NYSE:MFW) and John H. Harland Company (NYSE:JH) announced that they have entered into a definitive merger agreement for M & F Worldwide to acquire Harland for $52.75 per share in cash, representing an approximate transaction value of $1.7 billion.

FedEx Corporation (NYSE:FDX) reported Q2 EPS of $1.64 versus the consensus of $1.76. Revenues came in at $8.93 billion versus the consensus of $8.91 billion, with Q3 EPS of $1.20 to $1.35 versus the consensus of $1.55. They foresee a Q4 EPS of $1.98 to $2.13.

CarMax Inc. (NYSE:KMX) reported Q3 EPS of $0.42, versus the consensus of $0.25. Revenues came in at $1.77 billion versus the consensus of $1.63 billion, with FY EPS of $1.75 to $1.85, versus the consensus of $1.55 to $1.65; the consensus stands at $1.64.

ElkCorp (NYSE:ELK) was a company that we first covered in early November, when we reported that the company considered putting itself up for sale. Since then the company moved up more than 25% after it accepted an offer from The Carlyle Group at $38 per share, outbidding Building Materials Corporation of America's $35 bid.

Now, there are rumors that Building Materials Corporation may be contemplating higher bid. The group currently controls over 10% of the company's outstanding shares, giving them excellent leverage in any battle for the company. Meanwhile, shareholders have jumped the price up over 5% to $40.90 in today's trading, giving substance to the rumors. This is definitely a stock worth watching as this situation unfolds; however, it remains a risky investment right now, trading above the sole accepted offer.

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