Ceridian Corporation (NYSE:CEN) shares added $0.23, or 0.69%, today as investors applauded the company's decision to explore a broad range of strategic alternatives to enhance shareholder value. We know that Bill Ackman's Pershing Square initially requested that the company spin off its Comdata unit, which was an idea later supported by Relational Investors. The spin off would enable Ceridian to unload debt and cash in on its Comdata stake, while allowing Comdata to realize its intrinsic value on its own. Now that the company has agreed to explore possible alternatives, investors are just waiting for the board's decisions.

Interestingly, Bill Ackman disclosed (in a Form 4) that he purchased a million Jan '09 $24.43 American-style call options on February 12th at $9.89 a piece. These in-the-money options are convertible into common stock at a price of $34.32. Why would Ackman want in-the-money options? Well, it could be his ticket to a huge payday if the spin off ends up taking place! For only $9.89 per option, Ackman is able to guarantee himself a large stake in the Comdata entity when it is spun off to shareholders while leaving enough room to liquidate the options if it falls through. The move also gives Ackman the ability to convert the options to shares in the event he needs an additional 1,000,000 votes (ie. if management ends up rejecting his proposals). Combined, this move makes CEN a stock that is definitely putting on the radar for the next few weeks.

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American Strategic Income Portfolio (NYSE:ASP) is a diversified closed-end management investment company that invests in mortgage-related assets that directly or indirectly represent a participation in or are secured by and payable from mortgage loans. Sit Investment Associates filed a Schedule 13D/A with the SEC today stating that they believe the shares of ASP have been trading at a significant discount to net asset value during the past several years. Consequently, Sit Investment Associates, Inc. ("SIA") and its subsidiary, Sit Investment Fixed Income Advisers, Inc. ("SIFIA"), have determined that it is in the best interests of certain of their clients to pursue with the company changes in the ASP's practices that, if adopted, would provide a limited opportunity to shareholders of the Issuer to redeem their shares at net asset value, or to pursue other means which would enable shareholders to realize the net asset value for their shares of the company.

Now, they successfully did this once before in 1999, when the company listened to their request and repurchased 10% of their outstanding shares at net asset value. However, the company did not make a similar offer in 2001, despite being pressured to do so. A little while later, the board of directors for the company approved a proposal to reorganize the company into a specialty finance company that would elect to be taxed as a real estate investment trust (REIT). Under that proposal, shareholders who did not wish to receive shares of the REIT would have the option, subject to certain limitations, of electing to exchange their shares for shares of a newly cormed closed-end management investment company with investment policies, restrictions, and strategies similar to that of ASP. After this was announced, SIA held discussions with management about the proposal.

Now SIA and SIFIA are asking the company to implement this proposal or other possible alternatives that would reduce or eliminate the discount at which the shares of the company will trade in the future. These alternatives include a possible share repurchase (like the 1999 one) or implementation of the aforementioned REIT strategy. SIA and SIFIA both seek a way for shareholders to liquidate shares of the company at the company's new asset value. However, they did note that they do not seek to influence or control the management of the company. But with a 32% stake in the company, they have a significant voice in what goes on! Combined, these factors make ASP a stock that is definitely worth watching over the next few months!

Wolseley plc (NYSE:WOS) shares rose $1.86, or 7.18%, to $27.78 today after UK newspaper CityAM reported that Cinven has been working with Goldman Sachs to identify a buyer for its Wolseley US operations. The private equity firm reportedly approached Home Depot (NYSE:HD) about a possible sale, but was quickly rebuffed. Many investors believe that Wolseley's weakened share price - as a result of the housing bubble - makes it an attractive target, while today's interest rate hike improves its future prospects. Combined, this makes for a great opportunity for someone to step in and make a bid for the company. While all of this is still unconfirmed speculation, it does make WOS a stock that is definitely worth watching over the next few weeks!

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Tier Technology, Inc. (OTC:TIER) may find itself in hot water soon after 9% holder Giant Investments LLC recommended that the company put itself up for sale in a Schedule 13D filing with the SEC. The hedge fund reasoned that the company lacked the necessary scale to continue as an independent public company - that is, the expenses of being public represented a large percentage of their income. Consequently, the company's value would be unlocked if it were able to find a suitor that would be able to lower these costs with economies of scale. This idea of hidden value through excessive costs of being a public company is extremely common in the OTC markets, and many large hedge funds are able to successfully execute their plans due to the limited liquidity and small market caps (making for an easier sale).

Interestingly, Giant also requested that the company sign a confidentiality agreement with them to evaluate strategic alternatives involving themselves or their affiliates. This implies that the hedge fund knows of parties that may be interested in acquiring the business, which is certainly a positive sign for shareholders. Meanwhile, they maintained that their primary interest is to have the value of the common stock maximized, regardless of whether or not their affiliates are involved. To seal the deal, Giant nominated their own Jim Stone to the company's board to assist in the process, saying they believe that Jim Stone would be a strong asset to Tier as a member of its Board of Directors and help shareholders maximize the value of their investment. This election is set to take place on February 28th of this year. Combined, these factors make TIER a stock that is definitely worth watching over the next few months!

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Alcoa, Inc. (NYSE:AA) shares jumped $1.90, or 5.76%, to $34.80 today on reports that BHP Billiton and Rio Tinto are each contemplating bids for the Pittsburgh-based aluminum producer. Alcoa is one of the largest players in the mining industry, valued at more than $28 billion. The Times of London newspaper initially reported on the developments (citing unnamed sources) saying that the two mining giants had were independently conducting feasibility studies for a possible acquisition of Alcoa.

Neither company has approached Alcoa's board and all companies declined to comment; however, given the rapid rise of BHP Billiton and Rio Tinto stock prices and the weak performance of Alcoa recently, this move certainly wouldn't be surprising. Moreover, Morgan Stanley noted that Hindalco's plan to acquire Novelis highlights the value of Alcoa's downstream operations. Many analysts are pegging the stock's value at between $36 and $38 per share, but perhaps more in the event of a leveraged buyout, especially if there are multiple bidders. While nothing is certain, this is certainly a stock to keep an eye on over the next few months!

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Applied Materials Inc. (NDAQ:AMAT), the top supplier of equipment for making microchips, released that their Q1 profit nearly tripled and that Q2  revenue could rise as much as 5%, sending its shares up 4.5%.  Sales are estimated to grow to $2.28 billion to $2.39 billion.

Kraft Foods (NYSE:KFT) could be planning to make an acquisition or two, due to their restructuring plan following its spin-off from Altria, that could open the door for the company to combine with a rival, extending the firm's global reach. HJ Heinz, Groupe Danone, and Cadbury Schweppes are potential targets. Kraft's estimated ratings and price target have both been increased.  

KB Home (NYSE:KBH) reported a loss in its Q4.  KB Home posted a loss of $49.6 million, or $0.64 a share, versus a profit of $304.4 million, or $3.44 per share during the same period in 2005. However, revenue rose 13% to $3.55 billion from $3.15 billion.
Alcoa Inc. is being targeted by two foreign mining giants who are each preparing $40 billion takeover bids for the aluminum producer, a British newspaper reported. Alcoa shares rose nearly 6%, although some analysts questioned whether such a deal was likely. Alcoa shares have already increased 20% year to date, against a market that has grown just 1.4%.

Time Warner Cable Inc. (NYSE:KBH) officially became a public company Tuesday after a judge cleared the way for a reorganization plan for Adelphia Communications Corp., which is being acquired by Time Warner Cable and Comcast Corp.; Time Warner Cable, the second-largest cable provider in the country after Comcast, said its shares would begin trading on the New York Stock Exchange as early as March 1 under the ticker symbol "TWC." Time Warner Cable will distribute 156 million shares of its stock, or about 16% of its total outstanding shares, to stakeholders in Adelphia. That stake is valued at approximately $6 billion.

The senior vice president of Dell Inc.'s (NDAQ:DELL) global online business and marketing division has decided to leave the computer maker rather than oversee the company's new consumer group. This all comes a few weeks after founder Michael Dell resumed his role as chief executive officer, replacing Kevin Rollins. Dell has been making many executive changes lately amid mounting problems that include disappointing earnings, eroding market share, an ongoing federal accounting investigation and several shareholder class-action lawsuits. Dell also has recently lured executives from General Motors Corp., Hewlett-Packard Co., Amazon.com Inc. and Wells Fargo & Co. Dell shares rose $0.10 to close at $23.61.  

Broadband service provider Covad Communications Group Inc. (AMEX:DVW) said it expects to report a wider loss in 2007. The company expects a net loss between $15 million and $39.5 million on sales between $490 million and $525 million. In 2006, Covad posted a loss of $13.9 million, or $0.05 a share, on revenue of $474.3 million.

Merrill Lynch upgraded its recommendation on shares of General Motors Corp. (NYSE:GM) to "buy" from "sell," on the belief that the auto maker will use its liquidity and assets to continue to cut costs. At the same time, Merrill cut Ford Motor Co. to "sell" from "neutral" because the stock may be overvalued. News of the GM upgrade helped the stock hit its highest level since August 2005 in early trading on the NYSE. The shares closed up $0.88, or 2.5%, at $36.59. The stock traded as high as $37.24. Ford's shares fell $0.20, or 2.31%, to close at $8.45.  

First Solar Inc. (NDAQ:FSLR) rose in aftermarket trading Tuesday after the Phoenix-based maker of solar power modules reported a Q4 profit, topping Wall Street's expectation for a quarterly loss. Revenue also beat analyst projections. The stock was up $5.42, or 15.8%, to $39.70 in aftermarket electronic trading, after gaining $1.18, or 3.6%, to finish at $34.28 on the Nasdaq.

Titanium Metals Corporation (NYSE:TIE) reported operating income of $109.5 million for the quarter ended December 31, 2006 compared to $63.0 million for the quarter ended December 31, 2005, an increase of 74%. The company also reported net income attributable to common stockholders of $110.6 million, or $0.61 per diluted share, for the quarter ended December 31, 2006, compared to $38.6 million, or $0.23 per diluted share, for the same quarter the previous year.  

Nvidia Corp. (NDAQ:NVDA) posted a 68% rise in quarterly profit as the graphics chipmaker had strong sales of its chips for desktop and notebook personal computers. Nvidia said Q4 net income rose to $163.5 million, or $0.41 a share, from $97.4 million, or $0.26 a share, a year ago. Revenue jumped to $878.9 million from $633.6 million.

Nasdaq Stock Market Inc. (NDAQ:NDAQ) shares fell $2.54, or 6.83%, before settling at $34.66 after only 0.6% of London Stock Exchange shareholders voted in favor of the Nasdaq's buyout offer. The number fell far short of the required 51% needed and puts the Nasdaq in a difficult position with it's 29% stake in the exchange, costing roughly $1.68 billion. Many investors are now skeptical as to whether or not the exchange can unload its shares without deflating the LSE's price significantly, which would cause large losses. Moreover, the Nasdaq also suffered a hit when its debt rating was cut to "junk" status since most of the LSE purchase was funded through bond issues.

Perhaps more troubling is the fact that the Nasdaq is now far behind the NYSE in terms of expanding their global reach. While the NYSE's $12 billion deal with Euronext has not officially closed, the two exchanges are already working together to buy stakes in Japanese and Indian exchanges overseas. The Nasdaq must now attempt to unload its LSE stake while talking with other exchanges to work out a possible deal. Many are now speculating that these exchanges could include those in Hong Kong, Madrid and Italy. Another possibility being discussed is Deutsche Boerse, who is most well-known for its attempted breakup of the NYSE-Euronext deal. Regardless, these developments leave a lot for investors to watch!

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Home Depot Inc. (NYSE:HD) shares moved up $0.45, or 1.1%, to $41.45 after the company said that it was evaluating alternatives for its HD Supply business. These strategic alternatives include a possible spin off of the division or initial public offering in a move to focus on its core retail business. According to the company, HD Supply is the wholesale distribution business of Home Depot, has nearly 1,000 locations nationwide and in Canada, and employs more than 26,000 people. "We are undertaking this action today because of our desire to increase our focus on our retail business," said the new Chairman and Chief Executive Frank Blake in a statement. "With annual revenues of approximately $12 billion, HD Supply is a healthy, growing and vibrant business, and we are undertaking this evaluation to determine whether there are strategic alternatives with respect to HD Supply that would optimize shareholder value."

Spin offs present excellent opportunities for investors to profit as they typically outperform 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. Any actions like this would also greatly benefit Home Depot, who would be able to receive a cash influx while unloading some of its debt onto the new entity. Combined, this makes HD a stock worth watching closely!

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WCI Communities, Inc. (NYSE:WCI) shares rose $1.17, or 5.66%, to $21.85 today after the company announced that it has hired Goldman Sachs to assist in a review of the company's operations and potential sale of the company. Jerry Starkey, President and CEO said in a press release, "During 2007, we expect our company to generate about $1 billion of free cash flow, in large part from the collection of our tower receivables, which will enable us to dramatically reduce our debt. We also are exploring the disposition of certain assets, which would further increase liquidity and reduce leverage. Once our receivables are collected and our debt is reduced, we believe our ability to enhance shareholder value through a variety of strategic alternatives, including additional stock repurchases and potentially the sale of our company, will be greatly improved."

In late January, billionaire investor Carl Icahn said he had acquired a 14.6% stake in WCI and said he wanted to engage the company in discussions on "how to unlock the inherent value of the shares." Shortly after, the company adopted a shareholder rights plan that would prevent any hostile takeovers of the company, until after February 9th, by diluting their shares. The company's excessive cash after the towers are sold, Icahn's participation in the process, and the company's willingness to explore strategic alternatives make this stock one that is definitely worth keeping an eye on! WCI is a leader in their market and should receive substantial offers in the event of a sale.

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