New York Times Company (NYSE:NYT) shares fell $0.37, or 1.55%, to $23.47 today after Morgan Stanley indicated their disappointment with the company's decision to retain their dual-class voting structure. Morgan Stanley's Schedule 13D filing with the SEC noted that "by excluding the proposal from the proxy, the company has left the Class A shareholders with limited avenues for expressing their dissatisfaction with the poor performance of the managers of their business." Investor concerns about this dual-class voting structure are not new; in fact, during last year's annual meeting 30% of the company's Class A votes were withheld in protest.

Why is this such a major concern? Well, Morgan Stanley insisted in its letter that many independent analysts believe NYT is worth 50% more than the current stock price suggests; moreover, they contend that the difference between the company's intrinsic value and share price is due to mismanagement and poor governance. As a result, Morgan Stanley said that after patiently holding the stock for more than ten years, they don't think that they would be best serving their clients interests if they sold their stake at such a substantial discount to fair value. The fund said that if the company failed to act they may consider withholding their votes in future annual meets in protest. If shareholders succeed in eventually correcting the mismanagement, it could mean significant share appreciation for NYT investors. This makes NYT a company worth watching over the next few months.

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Electro Scientific Industries, Inc. (NDAQ:ESIO) shares rose $0.45, or 2.19%, to $21.02 today after 11.6% holder Nierenberg Investment Management filed a Schedule 13D/A with the SEC that commented on Third Avenue Management's recent proposals along with the company's current actions. The hedge fund said that it was pleased with management's willingness to act on the proposals and was impressed by TAM's suggestion of a combined share repurchase and dividend program. Nierenberg also noted the fact that United Microelectronics Corp. (UMC) recently said that it would use its excess cash to retire 30% of its outstanding shares and pay shareholders a one-time cash dividend - actions similar to those proposed by the two hedge funds.

Nierenberg also offered an extension to TAM's plans:

"As Mr. Jensen's letter points out so powerfully, there are other perfectly acceptable ways to use excess cash to build shareholder value. If, for example, ESIO's Board and advisors were to conclude that the best way to improve ROE were to repurchase shares, we could support that decision with just two conditions. First, we would want the size of the repurchase program to be large enough that it would meaningfully boost both ROE and earnings per share, like we believe UMC's program will. And, second, we would like ESIO to make a continuing commitment to use excess cash flow to repurchase a significant percentage of shares on an ongoing basis. To illustrate the size of programs which could be acceptable to us, we could support a one time repurchase of six million shares, which is over 20% of the outstanding share count, succeeded by a continuing program to repurchase at least one million more shares annually."

Clearly, there are many ways in which the company could utilize its excess cash to benefit shareholders. The most important thing to watch, as Nierenberg pointed out, is the scale on which repurchases or dividends are handled. Many times companies will try and silence concerned shareholders by initiating insignificant share buybacks or small cash dividends, which ultimately do very little to deliver shareholder value. A program like UMC's, however, would significantly reduce the number of outstanding shares and consequently boost the company's EPS significantly. Moreover, the cash dividend would rid the company of its idle cash, which can actually be dangerous to have in some cases. Overall, this is definitely a stock to watch as management works to craft a meaningful response to these proposals.

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Altria Group, Inc. (NYSE:MO) shares rose $0.26, or 0.3%, to $88.02 in early morning trading after Merrill Lynch raised its price target from $92 to $98. This follows several other analyst recommendations, including Goldman Sachs who recommended buying the stock before the details of its Kraft spin-off are announced on January 31st. These analysts believe that Kraft spin-off combined with an improving international tobacco market will help propel the stock to new highs now that the company has cleared its legal plate.

But why is this such a great deal for shareholders? Well, the Kraft spin-off is expected to generate approximately $34 billion in cash, which the company could use to buyback a quarter of its outstanding shares, raise its dividends, or use to expand into international markets. Secondly, Altria shareholders will automatically receive shares in Kraft (NYSE:KFT), which have performed exceptionally well in 2006 moving up 22%. Finally, we know that Altria has always been a robust company; even in the face of several mega-lawsuits, the company has still managed to almost triple in value since 2000 while also paying a nice dividend. Combined, these factors make MO a stock worth keeping a close eye, especially on January 31st when the details of the spin-off are released.

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