CSK Auto Corporation (NYSE:CAO) shares moved up $0.28, or 1.62%, to $17.54 today after Karsch Capital Management disclosed a 9.4% stake along with a letter in the company in a Schedule 13D/A filing with the SEC. The activist hedge fund said in a letter that it believes that the company's shares are undervalued at their current market level and believes that the company should actively pursue a sale once it has completed its pending restatement of certain of its past financial statements and becomes current with its SEC reporting obligations. Karsch had first insisted on hiring an investment banker back in October of last year and later attempted to add its own candidates to the company's upcoming proxy. However, CSK has since informed the SEC that it does not intend to voluntarily include Karsch Capital's stockholder proposal in its proxy materials for the next annual meeting of stockholders and has asked the SEC to confirm that it would take no action against the company if it does so.

Yesterday, the hedge fund sent another letter to the company asking when they would finish restating earnings to satisfy the SEC and asked that the company immediately put itself up for sale after the process was completed. According to their latest letter attached to their most recent Schedule 13D/A filing with the SEC:

Since our last letter to the Board dated October 23, 2006, we have received numerous inquiries about CSK Auto that lead us to believe that there is genuine interest from private equity firms in acquiring the Company and from investment banks in financing a transaction for a prospective buyer.  Now that the company has stated that it expects that it can file its financial statements no later than one month beyond the February 28, 2007 date set by the SEC, we have received numerous indications that potential acquirers would prefer to conduct their due diligence investigation of the Company now and thereby be in a position to make an acquisition proposal at or shortly after the date the Company files its financials.

Further, while we understand that the Board, for business reasons, may not wish to allow competitors and other potential strategic buyers access to sensitive business information, hiring a nationally-recognized investment bank to run an auction process appropriately mitigates such considerations and such considerations are not applicable to financial buyers.

The debt capital markets are very strong right now.  By putting the Company up for sale immediately, we believe the Board would increase the probability of a
transaction given these current robust capital markets.  We strongly feel that this would be the best course of action to maximize shareholder value.

Given the continued strength of the M&A market - particularly by private equity - along with the substantial discount that this company is trading at due to their restatements, a sale of CAO could come at a substantial premium to the current market price. If Karsch is not successful in convincing management to take this step on their own, they may be forced to attempt to take control via a proxy fight. While this process is somewhat uncertain and time consuming, CAO is definitely a stock that is worth watching over the next few months!

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JetBlue Airways Corporation (NDAQ:JBLU) shares moved up $0.43, or 3.33%, to $13.33 today after falling sharply at Tuesday's open. The company remains positive that it will be able to rebound from weather-related troubles that it had earlier this week that caused around 1,000 flights to be delayed. Founder and CEO Dave Neeleman has already estimated the damage at more than $30m in lost revenue and free flights, and unveiled a "passenger bill of rights" plan in an effort to lessen the brand damage. The $30m charge will affect the quarterly earnings - swinging them to a loss - but will have little impact on the full-year earnings forecast. Moreover, Neeleman said that the new compensation scheme – which promises a sliding scale of refunds and free flights depending on the severity of delays – would act as a marketing tool and "pay for itself". The way JetBlue handled this situation and got itself back on track today says a lot about their management ability. Moreover, the impressive growth that the company has experienced along with the recent upgrade make JBLU a stock that is definitely worth watching.

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Natural Health Trends Corp. (NDAQ:BHIP) shares moved down another 5% today after several shareholders expressed their dissatisfaction with the company's current management. The ~4% shareholders filed a Schedule 13D/A with the SEC, and outlined their complaints in the Purpose of Transaction section:

The Reporting Persons no longer have trust or confidence in the Issuer's President, Chief Executive Officer and board member, Ms. Stephanie Hayano, and intend to work towards securing her dismissal or resignation from those positions at the earliest possible moment. The Reporting Persons believe that the Issuer's current difficulties can be attributed, for the most part, to Ms. Hayano's lack of industry experience. The Reporting Persons are of the view that Ms. Hayano does not understand the Japanese and Mexican markets in which the Issuer does business and, therefore, is unable timely to resolve direct selling issues in those markets. These two factors, the Reporting Persons believe, have significantly contributed to the declining revenues in the Japanese and Mexican markets. The Reporting Persons are also of the opinion that Ms. Hayano's failure to provide adequate leadership and management during this critical juncture may lead to a substantial decrease in the number of the Issuer's active distributors. Finally, the Reporting Persons are concerned that Ms. Hayano intends to either pull money out of the Issuer's Chinese subsidiary, which may cause a deficiency in that entity's capitalization and ultimately force it to de-register in China, or sell the Issuer's Greater China business at a fraction of its value. Either move may, in the view of the Reporting Persons, destabilize the Issuer's entire global seamless network of independent distributors. The Reporting Persons fear that, because Ms. Hayano lacks industry experience, she does not understand the possible implications of either action.

Clearly the company is facing problems as it continues to move down and most of these problems can be traced back to the company's Chief Executive Officer. With a stock that is down roughly 80% since 2006 - after the company was subjected to a formal SEC investigation as well as related class action lawsuits - there may be support for their proposal to remove members of management. This makes BHIP a stock worth watching over the next few months.

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