LMP Real Estate Income Fund Inc. (NYSE:RIT) is a non-diversified, closed-end management investment company that invests in securities related to the real estate industry. The company has recently come under fire from investors concerned with the share price's discount to the company's net asset value (NAV). Spearheading the shareholder revolt is Stevenson Capital Management, who first expressed concern back in May 2006. The 9.6% holder renewed its threats in a Schedule 13D/A filing today, where it said that if the company did not take immediate action to correct the discount they would seek to replace members of the Board of Directors with a proxy fight.

What steps does Stevenson want the company to take to unlock this value? Well, the fund outlined three key solutions in their filing:

1. Within the next sixty days, the company urged the fund to sell sufficient assets to eliminate the company's leverage, which, in turn, will generate realizable net capital gains of approximately $5.00 per share to the shareholders.
2. Secondly, they demanded that the company commence a tender offer or a series of tender offers (or a reasonably structured open-market share repurchase program) to repurchase at least 400,000 shares of the company's common stock. Moreover, they noted that the transaction may need to be financed by selling assets, as mentioned above.
   
3. Finally, they demanded that the company commit to file with the SEC within a reasonable period of time, not to exceed 90 days, an application for an exemptive order that would allow the implementation of a managed distribution plan under Section 19(b) of the Investment Company Act of 1940 which will pay a dividend to the shareholders at an annual rate of 8% of NAV.

Stevenson then continued by outlining what would happen if the company did not comply with shareholder demands:

We realize that our approach presents a direct course of action. Our underlying proposition is that not enough of the value locked within the Fund is benefiting the shareholders. The value of the Fund belongs to the shareholders and we want management of the Fund to affirmatively take action to return a portion of that value to the shareholders. While your lack of response to our prior overtures have prevented us from having a meaningful dialog, I would again extend a sincere offer to you and your board to discuss the Fund’s future with us. If necessary, we are fully prepared to move forward to propose a slate of directors for election at the upcoming annual meeting of shareholders with individuals committed to realizing shareholder value and responding to shareholders concerns and to further propose for the consideration of the Fund’s shareholders that the Fund be converted from a closed-end to an open-end fund.

As the time to submit nominations and proposals under the Fund’s advance notice bylaws rapidly approaches, we hope that you realize that it would better serve the Fund and its shareholders if we could discuss our options rather than resort to a proxy fight. It is our hope that this letter serves as a catalyst to a meaningful dialogue.

Given the threat of a proxy fight at the upcoming annual meeting, it is likely that the company will at least respond to these demands. And clearly there is opportunity here if the company decides to positively respond to shareholder concerns. A return to NAV would mean significant share appreciation while a Section 19(b) distribution plan would unlock this value by distributing more to shareholders in the form of dividends. Combined, these factors make RIT a stock worth watching!

Synta Pharmaceuticals Corp. (NDAQ:SNTA) shares continued their decline today despite strong insider buying since its initial public offering earlier this month. Synta is an early-stage drug development company with a rich portfolio of chemical compounds, small molecules and plant extracts that it mines for drugs that the company hopes will be able to battle skin cancer or inflammation ailments like rheumatoid arthritis. Interestingly, the company's shares are down over 15% from their highs while several members of management and the Board of Directors have disclosed large purchases in a series of Form 4 filings with the SEC. Moreover, Luxor Capital Group also disclosed a 6% stake in the company in a Schedule 13G - indicating institutional interest in the company. Typically when a company IPOs, management uses the opportunity to divest their shares in order to diversify their portfolio. Therefore, this combination of events is certainly worth a second look...

Who is buying up these shares and could they have any information that normal investors do not? Well, there are several company officers that reported purchases, including:

• Eric Jacobson - Sr. VP, Research, and CMO - disclosed a 300 share purchase at $10/share on February 9th.
• Martin Williams - Sr. VP, Business Dev., and CBO - disclosed a 200 share purchase at $10/share on February 9th.
• Keith Gollust - Director - disclosed a 180,000 share purchase at $10/share on February 9th.
• Robert Wilson - Director - disclosed a 100,000 share purchase at $10/share on February 9th.
• Bruce Kovner - Director - disclosed a 720,000 share purchase at $10/share on February 9th.

Now, these numbers are not employee stock options, restricted stock grants, or stock awards - these are open market purchases of common stock using their own cash! One of the more interesting members of this group is Bruce Kovner, who readers of this blog may recognize as the manager of Caxton Associates - one of the more successful hedge funds on Wall Street. Currently, he alone holds around a million shares that he purchased for close to $10 million. Combined, this open market purchasing by company officers, directors, and a successful hedge fund manager make this stock one definitely worth watching!

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Shuffle Master, Inc. (NDAQ:SHFL) shares dropped more than 15% on yesterday after the company said it expects fiscal first quarter earnings to fall "significantly" below last years results due to lower revenues and higher costs associated with their February 1st Stargames acquisition. Other factors contributing to the windfall included the short-term impact from ending its Asia representative deal with Elixir Group Ltd. on February 4th, a $1.7 million revenue deferral related to a shipment to a Macau customer, and slower-than-expected rollout of multiplayer electronic table games.

Why are we concerned with a company that is under performing? Well, according to the company: "As a result of the near-term uncertainty associated with the factors discussed above, including, but not limited to, operational improvements in the company’s multi-player electronic table game business, including the evaluation of broader distribution relationships and the evaluation of various strategic alternatives for certain business segments, management has decided to temporarily suspend guidance for fiscal 2007." Shuffle Master CEO Mark Yoseloff said that the company would be evaluating all of their business segments in an effort to maximize long-term revenue growth, improve gross margins, and reduce operating costs. Restructurings can often provide opportunities to investors - particularly if they end up spinning off one of these segments. With shares near their 52-week low on what could be "short-term" windfalls, this is certainly a stock to keep an eye on!

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Ryerson Inc. (NYSE:RYI) shares dropped $1.99, or 5.71%, to $32.89 today after Owl Creek disclosed a 5.3% stake and expressed their dissatisfaction with the company's  management in a Schedule 13D filing with the SEC. The activist hedge fund said that they have reviewed Harbinger Capital's recommendations made on January 2, 2007 and concluded that they are not confident in current management's ability to improve the operating results of the company given the company's history of underperformance. Consequently, they said they would support Harbinger's slate of seven independent directors, whom they believe would add more specific industry experience and be more proactive managers of the company.

Why is change needed? Well, under the leadership of the current management team and Board of Directors, the company has underperformed its peer group in several key operating metrics such as inventory turns, margins, return-on-invested-capital, and share price returns. Indeed, the majority of the stock's rise over the past year was a result of Harbinger's proposal to replace the Board of Directors. Owl Creek is concerned that the current management team and Board of Directors are not sufficiently proactive in managing the company in an industry with a constantly changing business and operating environment.

The hedge fund also noted that it was strange that the current management team specified a number of new initiatives only after Harbinger filed its Schedule 13D in January. Meanwhile, the hedge fund siad it does not see evidence of a credible plan to support management's goals of improving underperforming service centers, achieving an inventory turn rate of 5x by the end of 2007, and operating more efficiently. And indeed, if there are actionable ways for the company to achieve these goals, it begs to question why these actions have only been implemented in response to shareholder pressure and have not been implemented sooner since the management team has been in place since 1999.

Overall, with the additional support of Owl Creek, it is increasingly likely that Harbinger's proposals will gain traction. Whether or not the Board of Directors is actually replaced depends on many factors; however, we do know that there is now increased pressure on management to perform. This makes RYI a stock worth watching!

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Eagle Hospitality Properties Trust, Inc. (NYSE:EHP) shares moved up $0.01, or 0.1%, to $10.35 after Corporex disclosed a 17% stake and made an offer to acquire the company for between $10.75 and $11.25 per share. The Schedule 13D/A filing noted that a draft merger agreement with a definitive price per share within the range described above would be delivered to your counsel immediately following successful conclusion of confirmatory due diligence. We first mentioned EHP back in January when the company's Board of Directors decided to explore a possible sale of the company. Since then, the company's shares have risen 10% with the buyout premium bringing that to as high as 19.6%.

But will the company accept the offer? Well, the offer is contingent upon a five day due diligence period, during which Corporex has the ability to withdraw its offer without penalty. Despite this, the offer is more likely than not to go through, given Corporex's existing 17% stake in the company, existing Board support, and their long-term interest in the company. The buyout premium comes in a bit lower than many were expecting, with some investors looking for $11.50 or higher; however, if the offer is accepted, Corporex would give the company a thirty day "go-shop" period to find other possible suitors. Overall, while this buyout was not as high as expected, it did net shareholders 10% to 20% in a month's time - that's nothing to complain about!

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Chrysler Group (NYSE:DCX) will offer allnearly 50,000 hourly workers in the U.S. up to $100,000 to leave the company as part of a recovery plan announced earlier this month. The company, which lost $1.475 billion in 2006, said it expects losses to continue through 2007. Chrysler plans to shed 13,000 jobs, including 11,000 hourly positions and 2,000 salaried, as it tries to further shrink itself to match reduced demand for its products.

Oil prices finished slightly higher Tuesday, after a volatile day that saw prices fall by more than $1 per barrel and then rebound to a 2007 high. Light, sweet crude for April delivery added $0.07 to settle at $61.46 a barrel on the New York Mercantile Exchange.
Movie-rental company Blockbuster Inc. said Tuesday its fourth-quarter earnings fell 28%, largely due to costs to launch and promote its growing online rental business. Quarterly net income dropped to $10 million, or $0.05  per share, versus $18 million, or $0.09 per share, a year ago.

For TXU Corp. (NYSE:TXU), higher fourth-quarter profits were eclipsed Tuesday by political wrangling over the pending sale of the company in what would be the largest private buyout ever. Compared to that drama, TXU's fourth-quarter results contained few surprises for Wall Street. The company churned out a 33 percent increase in profits despite weak revenue caused by mild winter weather.  The Dallas-based electric utility said it earned $475 million, or $1.03 per share in the last quarter, up 33% from its profit of $356 million, or $0.74 per share, a year earlier.

Target (NYSE:TGT) reported higher quarterly profit, beating estimates on strong holiday season sales and growth in its credit card business, but the stock fell amid a broad market sell-off. The No. 2 U.S. discount retailer, behind Wal-Mart Stores, said profit increased to $1.119 billion, or $1.29 a share, in the fourth quarter that ended on Feb. 3, from $939 million, or $1.06 a share, in the same period a year earlier.

Consumer electronics retailer RadioShack (NYSE:RSH) reported higher quarterly profit after a restructuring drive improved inventory management and cut costs, sending its shares sharply higher. The company also forecast stronger-than-expected earnings for 2007 on improved profitability. Q4 earnings rose to $84.5 million, or $0.62 a share, from $51.2 million, or $0.38 a share, a year earlier.

Great Atlantic & Pacific Tea Company (NYSE:GAP) said it was in talks to acquire rival supermarket chain Pathmark Stores for about $653 million in cash and stock. A&P said no final agreement has been reached. A deal would mark the latest merger in the quickly consolidating grocery-store industry. Last week Whole Foods Market said it would buy Wild Oats Markets for $565 million.

General Motors (NYSE:GM) expects its February U.S. sales to be down 6% to 7%, mainly due to the automaker's decision to reduce sales to daily rental fleets. Ford Motor forecast an even bigger sales decline, also mostly due to slower fleet sales. GM spokesman John McDonald told Reuters the company expects retail sales to be flat for the month.

Threshold Pharmaceuticals (NDAQ:THLD) said its experimental drug for pancreatic cancer failed to meet the goal of improving overall survival in a late-stage clinical trial, slamming the company's shares. Threshold shares plummeted 76% , from $14 to $3.35. 

Shares of Apple (NDAQ:AAPL) fell after the company said it would have to delay until March the launch of it gadget for streaming video and other content from computers to TV’s.

The Food and Drug Administration informed Novartis AG (NVS) that it needs an additional clinical data before it can approve the company's diabetes drug Galvus, a move that analysts say could delay the drug's approval by up to a year.

TXU Corp. (TXU), the biggest power utility in Texas, said Monday that its board agreed to a deal to be taken private by an investor group led by Kohlberg Kravis Roberts (KKR), Texas Pacific Group and Goldman Sachs.

Marvell Technology Group Ltd. (MRVL) said late Monday that fourth-quarter revenue rose 27% from a year ago as it sold more chips used in data storage devices and consumer electronics. Shares moved up on the news.

Apple Inc. (AAPL) shares slipped Monday evening after the company said that it has pushed back the release of its Apple TV product. "Wrapping up Apple TV is taking a few weeks longer than we projected," according to Lynn Fox, an Apple spokeswoman. No reasons were cited why.

Brocade (BRCD) shares rose 6.2% to $9.23 after the company reported fiscal first-quarter earnings of $33.3 million, or 12 cents a share, up from $9.7 million or 4 cents a share a year ago.

Threshold Pharmaceuticals (THLD) shares dropped 60% to $1.40 after the biotech firm said that a Phase III clinical trial for its drug candidate glufosfamide failed to show the drug could extend lives in patients stricken with pancreatic cancer.

NetEase (NTES) shares rose 3.7% to $22.63. The company said that its fourth-quarter net profit grew 19% to $41 million, or 30 cents per ADR, from a year-earlier profit of $34.4 million or 25 cents a share. Revenue grew nearly 15% to $69.2 million. Excluding certain items, fourth-quarter profit was $44 million compared with $34.2 million a year earlier. Analysts expected earnings of 24 cents a share on revenue of $64.8 million.

Focus Media (FMCN) shares traded up 3.2% at $85.68 after the company's fourth-quarter net income more than tripled to $30.1 million, or 55 cents per ADR, from $9.43 million or 23 cents an ADS a year earlier. Total revenue increased to $68.3 million from $24.6 million. Analysts were looking for earnings of 62 cents a share on revenue of $68.6 million.

Xilinx Inc. (XLNX) shares rose 1.1% to $26.63 after the company boosted its quarterly dividend to 12 cents a share from 9 cents a share. It also approvated a share buyback plan of up to $1.5 billion, which is in addition to the $175 million remaining from its previous program. The company is funding this through a proposed $900 million convertible notes offering.

Dow Chemical Co. (DOW) management said that it would oppose any attempt by buyout firms to break up the chemical giant. Shares, however, closed 3.5% higher on rumors that the company could be valued as high as $60 per share in a buyout.

Infocus Corporation (NDAQ:INFS) shares rose $0.08, or 2.91%, to $2.83 today after Caxton Associates disclosed an 11.2% stake and said it had reached an agreement with the company in a Schedule 13D/A filing with the SEC. We've been following Caxton's battle with the company for a few months now, as they pressed for a sale or restructuring of the company. A few weeks ago Caxton said that it would actively seek representation on the company's Board of Directors via a proxy contest at the next annual shareholder's meeting. The company quickly responded to these threats and today agreed to let the activist hedge fund occupy two seats on the Board after signing a confidentiality agreement. This is good news for shareholders, who should benefit from Caxton's guidance of the company. The hedge fund outlined its plans in a previous Schedule 13D/A filing with the SEC:

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.

Caxton has an excellent track record of unlocking shareholder value through strategic alternatives. With management's willingness to listen, INFS shares could see significant upside during the next few months as the company pursues a sale or restructuring. Unfortunately, with a confidentiality agreement in place, it is unlikely that we'll see any updates until a definitive plan is announced. Regardless, this is definitely a company worth watching!

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Ceridian Corporation (NYSE:CEN) announced last week that it had hired Greenhill & Co. to explore a "broad range" of strategic alternatives in a move that upset Bill Ackman, who had been pushing for a Comdata spin-off. Sources close to the situation now say that investment bankers are already reaching out to potential private equity and corporate buyers who may be interested in acquiring the entire company - not just Comdata. Bill Ackman's Pershing Square believes that shareholders could realize more benefit by unlocking the value of Comdata than selling the entire company outright. Moreover, he argues that if Comdata were spun-off before a sale of Ceridian, shareholders could benefit from a better price and greater value in the end.

The situation is a win-win for existing shareholders, however. A sale of the company would come at a significant premium to the current market price, with many investors looking for around $40/share (18%). Alternatively, Bill Ackman already filed preliminary proxy materials so if the company isn't sold we know a spin-off is likely in the cards. And with Ralph Whitworth's Relational Investors joining Ackman a few weeks ago, the odds of success are greatly enhanced. Either way, shareholders stand to gain from a sale of spin-off. Combined, these factors make CEN a stock worth watching!

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Temple-Inland Inc. (NYSE:TIN) shares moved up $7.98, or 14.52%, to $63.06 today after the company announced that it would take Carl Icahn's recommendations and spin-off or sell three of its divisions. We have been following TIN with great interest since January, when Carl Icahn first proposed a breakup of the company to unlock shareholder value. Since then, shares of the company have risen nearly 30%! Congratulations to all SECInvestor readers who took advantage of this opportunity - we still believe there is a lot of upside after this transaction is completed as the true value of the company's operating segments are individually realized.

According to the company's 8-K filing with the SEC, the company's Board of Directors has approved a transformation plan to unlock shareholder value through the separation of Temple-Inland into three focused, stand-alone, public companies and the sale of its strategic timberland. Upon completion of the transformation plan, Temple-Inland will be a low-cost, highly efficient manufacturing company focused on corrugated packaging and building products. The plan includes:

1. Retaining its manufacturing operations – corrugated packaging and building products,
2. Spinning off its financial services operation,
3. Spinning off its real estate operation, and
4. Selling its strategic timberland

The sales process for the company’s strategic timberland is expected to begin immediately, with the majority of proceeds being returned to shareholders. The proposed separations of Financial Services and Real Estate are intended to be tax-free distributions to shareholders. The final terms of these proposed separations and sale have not yet been determined and will be announced at a later date. Completion of the proposed separations is subject to approval of the final terms by Temple-Inland’s Board of Directors; favorable rulings from the Internal Revenue Service, and/or favorable opinions of tax counsel; and the filing and effectiveness of registration statements with the Securities and Exchange Commission with respect to the common stock of each of the spun-off entities, and other approvals. However, the transformation plan is anticipated to be completed by calendar year-end.

Temple-Inland is yet another example of Carl Icahn successfully unlocking value in his investments for the benefit of all shareholders. Clearly there was hidden value in this company that could be unlocked through a strategic separation of its operating segments. Now that the Board of Directors has agreed to unlock this value, shareholders should benefit from not only the 30% rise leading up to today's news, but also the unlocking of value through the Timberland sale and two spin-offs! This makes TIN a stock that is still worth keeping an eye on!

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