Lear Corporation (NYSE:LEA) shares moved down $1.01, or 2.52%, to $39.06 today after the company formally accepted Carl Icahn's offer to purchase the company for $36/share in cash. Why is Lear trading significantly above the buyout premium at over $39 per share? Well, many investors are saw the statement from Deutsche Bank analyst Rod Lache, where he said he believes the deal undervalues Lear and that he found it surprising the company agreed to sell itself at a discount from its current price. Other point to strong opposition voiced by Pzena Investment Management, who said a couple of days ago that the company's real value is closer to $60 a share with earnings likely to recover to $4 a share in the next few years.

According to the Schedule 13D/A filed by Carl Icahn today:

On February 9, 2007, newly-formed subsidiaries of AREP entered into an Agreement and Plan of Merger with Lear Corporation ("Agreement") calling for a merger of Lear and one of such subsidiaries pursuant to which Lear will become a subsidiary of AREP and stockholders of Lear will receive $36 per share in cash. The Agreement provides that Lear will immediately commence a "go shop" period of 45 days pursuant to which it will seek buyers for Lear who may offer better terms and conditions from a financial point of view. The Agreement provides that in the event of termination of the Agreement under certain circumstances, the subsidiaries will be paid a breakup fee by Lear. Consummation of the Agreement is conditioned upon a favorable vote of the Lear stockholders, regulatory filings and approvals and customary closing conditions.

The key clause to take out of this is the section mentioning that Lear will immediately commence a "go shop" period of 45 days where they will attempt to find a buyer who may offer better financial terms and conditions. While this is a positive for many investors, finding another bidder would still be a long shot. Carl Icahn's large existing stake in the company combined with the high failure rate of "go shop" periods greatly diminishes the liklihood of another bidder surfacing. Either way, this is definitely a stock to keep an eye on over the next couple of months as the company shops around for other potential bidders.

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Fortress Investment Group (NYSE:FIG) shares opened at $35, up 86%, in their debut on the New York Stock Exchange. The IPO marks the first hedge fund to go public and could mark the start of a new trend as hedge funds look for ways to attract more and more capital. Fortress's IPO priced at $18.50 a share late Thursday, at the top end of a previously disclosed range of $16.50 to $18.50. The IPO offering raised $634 million for Fortress.

According to the fund's S-1 filing with the SEC:

Fortress is a leading global alternative asset manager with approximately $29.9 billion in assets under management as of September 30, 2006. We raise, invest and manage private equity funds, hedge funds and publicly traded alternative investment vehicles. We earn management fees based on the size of our funds, incentive income based on the performance of our funds, and investment income from our principal investments in those funds. We believe our funds have produced consistently superior investment returns. We intend to grow our existing businesses, while continuing to create innovative products to meet the increasing demand of sophisticated investors for superior risk-adjusted investment returns.

Fortress will be the first global alternative asset manager listed on the New York Stock Exchange (NYSE: FIG). Fortress Operating Group will continue to own all of the businesses created by Fortress since 1998. We believe this offering is a unique opportunity to become aligned with our principals: Wesley Edens, Peter Briger, Robert Kauffman, Randal Nardone and Michael Novogratz. Our principals’ investing success has enabled us to grow rapidly while diversifying our management fee and incentive income streams. Our net income grew from $40.3 million for 2003 to $192.7 million for 2005, a 119% compounded annual growth rate ... We have grown our assets under management significantly, from approximately $1.2 billion as of December 31, 2001 to approximately $29.9 billion as of September 30, 2006, or a 96.8% compounded annual growth rate.

These are clearly impressive growth rates that warrant a close look at the stock. Given that this is the first hedge fund to ever IPO, the stock may experience volatility as investment professionals struggle to find a proper valuation. Meanwhile, this is definitely a stock to keep a close eye on!

The Brink's Company (NYSE:BCO) said that it had reached an agreement with Pirate Capital in which Thomas Hudson would receive a seat on the board in exchange for withdrawing his hostile proposals. The company said Hudson will serve on the strategy, pension and finance, and executive committees. This move marks a turning point in a long-standing battle between the two parties after Pirate amassed an 8.5% stake (their second largest) in the company and demanded that they retain an investment bank to explore a possible sale of the company. The hedge fund argued that the company would be worth between $68 and $72 per share in the event of a buyout.

Their efforts gained traction last December of last year when MMI Investments joined Pirate in the fight, saying: "Another large stockholder has raised the question of BCO pursuing a strategic alternatives review and indicated that it intends to submit a stockholder proposal to that effect at BCO’s 2007 annual meeting of stockholders. As we understand the proposal described in their Schedule 13D amendment, we are in support of it." With the new board seat, Pirate will likely be able to establish a committee to explore strategic alternatives which could result in an LBO, sale to a strategic suitor, tax-free split-up of the company, leveraged recapitalization, or another significant stock repurchase. Either way, BCO is definitely a stock worth keeping an eye on over the next few months!

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News Corporation (NYSE:NWS) shares moved up $0.44, or 1.78%, to $25.14 today after the company posted strong revenues supported by movie sales and MySpace. The company reported that MySpace’s sales had tripled from a year earlier as the company said profit margins should conservatively top 20% in fiscal 2008. President Peter Chernin also told analysts on a conference call that the company believes the segment would “over-deliver” on the $500 million in annual revenues projected three months ago. Meanwhile, operating profits in News Corp’s television business fell from $183 million to $112 million, hurt by both MyNetworkTV and Fox Broadcasting, where profits dropped 36%. The company did, however, experience great success in the hit movie “Borat” and expects the return of hit television series “24” and “American Idol” to boost future revenues in future quarters. Murdoch also said today that his company will launch their long awaited cable business news service this fall, built to rival CNBC. Combined, these factors make NWS a stock that is definitely worth watching - even if it has already moved over 50% this year.

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EMC Corporation (NYSE:EMC) shares moved up $1.06, or 7.79%, to $14.66 in early trading today after the company announced that it would spin off 10% of its VMWare unit. EMC acquired VMWare in 2004 for $625 million in cash and reported revenues of $709 million in 2006, up 83% year over year. EMC said it would retain ownership in the remaining 90% of VMWare and doesn't intend on divesting its share of the company. According to David Goulden, CFO, EMC plans to file a registration statement with the U.S. Securities and Exchange Commission in late March or early April for the planned IPO, and the shares could be available for sale sometime in the second quarter.

This is definitely a situation to keep a close eye on as spin offs can present great opportunities for investment. VMWare has posted very solid growth over the last three years that it has been held by EMC, and continues to outperform the market. It is also worth noting that statistically spin offs have outperformed the overall market by a wide margin during their first year. This is primarily attributable to the fact that spin offs are often companies that benefit from standing alone due to a lack of synergies with their parent company. Moreover, there is occasionally an opportunity to pick up spin off shares at a discount as parent company shareholders occasionally sell their stakes in a spin off immediately after receiving it. Combined, these factors make EMC a stock worth watching as their summer spin off approaches.

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Earlier this week, American Real Estate Partners, an affiliate of activist investor Carl Icahn made a $2.43 billion, or $36 a share, offer for Lear (NYSE:LEA). However, the company would not comment on what news is pending, or when it might be released. Lear shares were trading at $40.06, before they halted today after the company wouldn't release further information about the buyout. Lear shares surged 12% on the news that day, indicating that some investors expected either Icahn would raise his offer or another company might enter the bidding. Icahn's offer represented a 3.8% premium to Lear shares' closing price the day before the offer became known. However, the stock had climbed some 60% since Icahn disclosed in October he had increased his stake in the company to 16% of its shares outstanding.

Crude oil futures jumped more than $2 this afternoon, after a fire forced Occidental Petroleum to declare force majeure at one of the largest gas and oil fields in California. On the New York Mercantile Exchange, March crude settled up $2.00, or 3.5%, at $59.71 a barrel, the highest settlement price of the year.

U.S. movie theater advertiser National CineMedia opened up 21% in its market debut, a day after pricing above a forecast range. The centennial, Colorado-based company raised $798 million with a 38 million share initial public offering that sold for $21 a share compared with an $18 to $20 forecast.

Luxury home builder Toll Brothers (NYSE:TOL) expects to report a 19% drop in home-building revenue. The company said preliminary results showed that home-building revenue fell to $1.09 billion in its fiscal Q1. The value of the contracts Toll signed during the quarter fell 34% to $749 million, and the backlog of homes on order and waiting construction fell 30% to $4.15 billion.

Eastman Kodak (NYSE:EK) expects to complete their three-year restructuring program by the end of 2007, including additional job cuts, that will help it sustain profitability. Kodak is aiming for gross profit margins of 28% to 29%, with earnings from operations at 8% to 9% of revenue in 2009. Kodak expects total restructuring costs of $3.6 billion to $3.8 billion from the program, with job cuts of 28,000 to 30,000 positions. As of the Q4, Kodak had eliminated 23,400 jobs under the plan.

Weyerhaeuser (NYSE:WY) is expected to see earnings fall 21% to $0.75 a share on sales of $5.36 billion. In the year-ago period, the company reported a profit of $0.94 a share on revenue of $5.87 billion.

Walt Disney (NYSE:DIS) said that its Q1 earnings more than doubled from a year ago. Shares of Disney rose as much as 2.5% in after-hours trading Wednesday. Disney reported quarterly earnings of $0.50 a share, easily surpassing expectations. The company was expected to post fiscal Q1 earnings of $0.39 a share, up from $0.35 last year. Disney said net income rose to $1.7 billion, or $0.79 a share, from $734 million, or $0.37 a share in last year's Q1. Revenue rose 10% to $9.7 billion, topping the consensus of $9.5 billion.

PepsiCo's (NYSE:PEP) Q4 earnings rose 61%, fueled in part by strong sales gains at its international and Frito-Lay businesses. The company also raised its 2007 earnings forecast. The company's net income in the quarter ended Dec. 30 rose to $1.78 billion, or $1.06 a share, up from $1.11 billion, or $0.65 a share, a year ago. Revenue rose 2.8% to $10.38 billion from $10.01 billion a year ago. In the latest quarter, PepsiCo earned $0.72 a share, compared with earnings of $0.65 a year ago.

GlaxoSmithKline (NYSE:GSK), Europe's biggest drug maker, reported a 16% rise in annual profit. However, the company expects that 2007 growth will slow as it awaits pipeline renewal. Q4 profits before tax was $2.2 billion, up from $2.08 billion in the same three months ending December in 2005. Q4 sales rose to $7.79 billion from $7.66 billion, helped by strong U.S. demand.

Waste Management (NYSE:WMI), the nation's largest garbage hauler, reported that its Q4 earnings fell 15% from a year ago, when the company had heavy business from hurricane cleanups and one extra work day. Revenue in the most recent quarter fell to $3.28 billion from $3.37 billion a year ago.

Tribune (NYSE:TRB), which has been fielding offers for its newspaper and broadcastiong operations, experienced a Q4 profit surge of 81%, benefiting from multiple gains and higher revenue. Net income after paying preferred dividends jumped to $239.1 million or $0.99 a share, from $132.3 million, or $0.43 a share, during the same period a year ago. The company earned $0.68 a share in the latest period, higher than the consensus of $0.61.

Kintera, Inc. (NDAQ:KNTA) shares moved up $0.06, or 4.84%, to $1.30 today after Coghill Capital Management LLC voiced its support to an increasing clamor for change in control of the company. Steven Becker, a 5.8% shareholder, first expressed concern on January 26th over Chairman and CEO Harry Gruber's inability to move the company forward. Specifically, he was concerned over Kintera’s pattern of losses, progressively dilutive financings, inaccurate guidance, and plunging credibility within the investor community. Becker insisted that Gruber's inexperience with Wall Street and tendencies to run the company as more of a "family business than a value-maximizing public company" have led to steep losses for shareholders. After reaching a high of $17.29 during the months following the IPO, Kintera’s share price has plummeted to the $1.25 levels, which has caused serious concern in amongst shareholders. Consequently, Becker maintains that the company could achieve much higher returns if it were run by a compotent manager that is more experienced with Wall Street.

Coghill Capital Management LLC, a 9.9% holder, said today that it would support a CEO change in a Schedule 13D filing with the SEC. The hedge fund also voiced its concerns over company policies that forbid independent board members to hold talks with investors without the CEO's oversight. This policy along with the fact that Harry serves as both Chairman and CEO, leads to undue influence over the strategic and operational decisions without meaningful checks and balances. These decisions, Coghill contends, are what has been driving the stock price down. Consequently, they believe it necessary that Harry Gruber be replaced as head of the company by a professional manager in order to drive Kintera to sustainable profitability and deliver shareholder value.

A combined 15% of the outstanding shares have now voiced concern, which should be enough to warrant a response from the company. Despite the fact that Gruber has significant influence over the board of directors, the independent directors still have a fudiciary duty to act in the best interest of shareholders. It is likely that the company will at least respond to the dissident shareholders over the next few weeks, which should give some clues as to future actions. It is also worth noting that shareholders appear to support this directive as well, as shares rose almost 5% today on the news. Combined, these factors make KNTA a stock worth watching!

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Integral Systems, Inc. (NDAQ:ISYS) has recently come under fire by Fursa Alternative Strategies LLC, who demanded an immediate declassification of the board and a leveraged recapitalization of the company. The demands came after the company's failure to find a strategic buyer after over three months of searching, which has caused widespread frustration among shareholders. The hedge fund argued in their Schedule 13D/A filing with the SEC that the company's substantial amount of cash and unutilized debt capacity could be used to finance a stock repurchase as an alternative means to unlock shareholder value. Moreover, Fursa expressed concern over the company's treatment of ex-CEO Steven Chamberlain, who continues to receive pay from the company despite no longer working for the company! These concerns were unaddressed until the hedge fund began to take the preliminary steps necessary to partake in a proxy fight.

Finally, the company caved in yesterday by offering Mr. Harley (an associate of Fursa) a seat on the company's newly-declassified board of directors. Fursa said that they were pleased with the appointment and would begin exploring strategic alternatives to enhance shareholder value. It is likely that Harley will attempt to push for a recapitalization of the company along with a special dividend or share buyback program. Combined, these things will likely push up Integral Systems' stock price and distribute their excessive cash to shareholders. This makes ISYS a stock that is definitely worth watching over the next few months!

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Ceridian Corporation (NYSE:CEN) shares remained roughly even during the past two days after activist investors Bill Ackman's Pershing Square and Relational Partners LLC stepped up their efforts to convince the company to unlock value through a Comdata spin off and stronger focus on the company's grossly underperforming HR business. The most recent development began on January 18th when Ackman filed a DEF14A consent solicitation (the first step in a proxy battle) aimed at replacing the company's board during the next annual meeting. This came after Ackman held a three hour meeting with the new CEO in which she effectively shot down Ackman's proposal to spin-off Comdata and seemed unconcerned about the possible loss of Mr. Krow - a key figure in the company. Immediately after this DEF14A was filed, the company responded with a letter stating they were "very surprised" by the concerns in their letter and called the solicitation "unfounded and unwarranted". However, this appears to be too little, too late as Ackman continued to acquire substantial blocks of shares (revealed in a recent Form 4 filing with the SEC).

Relational Investors fired their own shots today in a letter saying that they had tried to contact management for over four months without success, and had begun selling their stake in the company as a result. The fund also voiced their support for Bill Ackman saying: "We want to make sure that the Board knows that we unequivocally support each of the points made in Pershing Square's letter. In particular, we think it was a major error to bring in a Chief Executive Officer who would stifle and frustrate the entrepreneurial and highly successful management team at Comdata instead of focusing on the woefully under performing HR business. We believe, as we have explained before, that Comdata should be liberated from the Ceridian business solution and that all focus, including the Board's, should be on restoring operational excellence to the HR business. We intend to vote our remaining shares in support of Pershing Square or other shareholders' efforts to correct these errors."

So where does it go from here? Well, sometimes activist hedge funds will make consent solicitations in order to get things accomplished faster than they would be through other meetings. An example of this strategy occurred today when Nussdorf acquired seats on Parlux's board without having to go through with a proxy battle. However, other times a proxy battle is the only way to get things done. Regardless, we will know whether or not Ackman successfully obtained board seats by the company's next annual meeting. If he is successful, we could very well see a spin off of Comdata as well as renewed focus on the company's HR division - developments which should increase CEN's shares substantially over the next year or two!

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Parlux Fragrances Inc. (NDAQ:PARL) shares moved up $1.08, or 17.22%, to $7.35 today after the company issued a press release stating that it had reached an agreement with Glenn Nussdorf. The history between these dates back to last September when we noted that Glenn Nussdorf had acquired a 15% stake in the company. Shortly after, Nussdorf expressed interest in acquiring the company (most likely for his E Com Ventures). Later that year in November, the activist shareholder expressed interest in obtaining board seats in order to prevent the company from materially modifying the company (in case he decided to acquire it) and make "immediate" changes at both the board and management level. And finally, in December he filed preliminary consent forms aimed at actively replacing the board through a proxy battle.

Today, the company finally bent to meet Nussdorf's demands. Under the terms of the new agreement, all lawsuits would be dropped between the two parties, the consent solicitation would be abandoned, CEO Ilia Lekach would immediately resign, and Nussdorf's nominees would be appointed to the board of directors. Regarding the agreement, Nussdorf commented: "My consent solicitation was about performance at Parlux, and the value of the shares which I and every other Parlux stockholder own. It was never about me. With a reconstituted Board of Directors and with Neil Katz serving as interim CEO, I am satisfied that I have achieved our goals. Our settlement agreement demonstrates the commitment of the Parlux Board to addressing stockholder interests in a positive way."

Under new management and direction, shareholders are hoping that the company will be able to return to its prior highs after falling almost 50% this year alone. The possibility also remains open that Nussdorf could orchestrate the buyout that he has talked about so much in the past. Combined, these two factors make PARL a stock that is definitely worth watching over the next few months!

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