Griffon Corporation (NYSE:GFF) shares moved up $1.54, or 6.97%, to $23.65 today after Clinton Group disclosed an 8.5% stake in the company and suggested that the company undergo a recapitalization. The proposal would tender 50% of Griffon's outstanding shares at a price of $25 per share, but has yet to receive a meaningful response from the company.

Clinton Groups proposal is contingent on financing from two lien bank loans and financing from the hedge fund and its affiliates. The proposal would also require the hedge fund to institute several of its own board members and implement a restructuring plan aimed at improving the profitability of Griffon's businesses.

In the end, Clinton Group believes that a recapitalization of the company combined with measures designed to reduce expenditures and improve the bottom line would drastically increase the stock's valuation. Using a multiple of 15x price to earnings on a tax affected $20 million of savings divided by a share count 43% less than the current number yields in excess of $9 per share in incremental value. Clearly, this would be great news for shareholders and makes GFF a stock worth watching closely!

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Motorola Inc. (NYSE: MOT), the wireless handset and cell phone maker, announced yesterday that it would be laying-off another 4,000 workers, in addition to the 3,500 job cuts it announced in January, as part of its continuing efforts to manage costs.

These new lay-offs, in conjunction with other cost-cutting measures, are predicted to save the company $600 million in 2008, and the previously announced workforce reduction will ultimately eliminate another $400 million in costs.

The continuing efforts at Motorola to tighten the corporate belt are described by company CFO Tom Meredith as an "update to the commitment...to drive out additional costs," an initiative announced at the company's first-quarter conference call.

Motorola is in need of cost controls as it posted a net loss in the first-quarter of this year in the face of declining handset sales and lackluster new cell phone models. The poor performance of the company's stock, only a dollar off its 52-week low, led activist billionaire investor Carl Icahn, who has a 2.9% stake in the company, to seek a seat on its board in elections this month.

Icahn lost the election to the company-backed candidate, John A. White, by a margin of about 13% but still received more than 700 million votes in the process. The election followed a series of exchanges, primarily in letters to shareholders, between Icahn and company management in which Icahn attacked what he saw as mismanagement of the company, especially in comparison to rival Nokia (NYSE: NOK).

Motorola stock is basically unmoved, down .27%, on the news today.

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Dendreon (NDAQ:DNDN) shares rocketed $2.72, or 40.36%, to $9.46 in early trading today after the company received confirmation that the FDA will accept either a positive interim or final analysis of survival from its ongoing IMPACT study to supplement the Biologics License Application for Provenge. We began covering this story on May 21st when we noted the widespread support for the drug from doctors and patients alike. The problem was that the FDA said it would delay the approval of the drug for some time - which could signal trouble for investors. Perhaps the FDA felt the heat from supporters or simply changed its mind, but regardless this latest press release is very bullish for the company.

Today's news that the FDA will accept a final analyiss of survival to supplement the BLA for Provenge indicates that they may significantly reduce this delay. Obviously, if the delay is reduced or eliminated and Provenge is approved for use, it would mean significant share appreciation for investors in DNDN. The drug targets a large underserved market that could generate substantial revenues over the long-term and perhaps even make the company a takeover target for a larger pharma player. Combined, these factors make DNDN a stock that is certainly worth watching!

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Jo-Ann Stores (NYSE:JAS) moved up $0.99, or 3.29%, to $31.05 today after the company announced positive earnings for the quarter. The specialty retailer announced a net loss of $0.07 per diluted share compared to $0.28 per diluted share a year ago. Same-store sales - or comps - increased 1.8% this quarter compared to a loss of 3.9% a year ago.

Investors are also carefully watching the bidding process for the company, which may end up topping $1 billion. The group of bidders reportedly consists of middle-market private equity firms including Leonard Green & Partners and Freeman Spologi & Co. There are also reports that larger firms like Blackstone may be looking at the company. Final bids, however, are expected to be in by June when Lehman Brothers will then evaluate them along with the board of directors.

But just how much could the company fetch? Well, the company's improving margins and growth prospects may certainly increase the final bidding price. The company's main competitor, Michael's Stores, was also recently acquired for 12.8x EBITDA and a 30% premium to the stock's closing price on the day it announced that it was exploring strategic alternatives. These metrics seem to confirm the fact that the Jo-Ann could fetch a nice premium. This makes JAS a stock worth watching!

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ESS Technology (NDAQ:ESST) shares rose over 8% this week after Riley Investment Management disclosed a 1.3m share stake in the company and expressed their concerns over the company's management and valuation. The company operates in the semiconductor industry and services the consumer electronics and digital media marketplace. These have been the subject of many recent takeover attempts and could be an industry for further consolidation.

Riley believes that the shares are undervalued and that the current restructuring should be expedited with the ultimate conclusion being a liquidation of the company. Ultimately, the activist hedge fund believes that a liquidation of the company could result in a 100% appreciation of ESST shares; however, that value deteriorates every day the company functions in its current structure. The fund is also concerned that the company may make an acquisition that will further deteriorate the remaining equity value. Consequently, Riley will issue one more letter to the company's board describing their position in greater detail while threatening to replace members of the board if no action is taken. Combined, this is great news for shareholders as it could mean a significant increase in value over the short term. This makes ESST a stock worth watching!

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Interactive Brokers Group (NYSE:IBKR) shares plummeted $1.98, or 7.19%, to $25.57 in early trading today after the company released lower first quarter earnings on higher revenues. The newly IPO'd options firm posted net income of 31 cents per share compared to 34 cents per share one year ago.

Why is this so troubling for investors? Well, the brokerage market appears to be extremely hot right now with almost all competitors posting record gains while IBKR was the first to be stalling. The brokerage clearly experienced some of this upside in the market by increasing their trading volume by 40% quarter over quarter but somehow managed to report declining earnings.

Interactive Brokers reported declining revenues from trading gains and other income while interest income and revenues from commissions and fees rose. These numbers suggest that the brokerage raised its fees in order to compensate for lack of bottom-line net income growth - a negative sign to many investors. Whether this is a one-time occurrence or a larger slowdown in the brokerage industry remains to be seen; however, this stock is definitely one to watch.

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Avaya (NYSE:AV) share jumped $1.94, or 14.19%, to $15.61 after reports surfaced that the company is in buyout talks with private equity firm Silver Lake Partners. The Wall Street Journal report also said that Nortel could step up as a bidder, citing people familiar with the situation.

These days private equity buyout rumors tend to dominate the market headlines and separating fact from rumor is imperative to success. So, what facts support an Avaya buyout? Well, the company was already in buyout talks with Nortel just last month, but the deal fell through after the two parties could not agree on the cash/equity deal structure. The company also has strong cash flows and relatively little debt, making it an ideal acquisition in the fast-growing VOIP market. And finally, Avaya also postponed its May 31st analyst conference, which many see as an indication that the company may very well be in buyout talks.

Combined, these series of events along with a WSJ report citing an exact hedge fund as suitor gives some credibility to this rumor. Given the interest by Nortel, this potential acquisition by a financial buyer could be an attempt to take over the company simply to resell it at a higher multiple to larger strategic buyers in the near future. This is likely why Nortel or other strategic buyers could place their own bids to attempt to get the company for cheaper. Regardless, this is definitely a stock to keep an eye on as the situation unfolds!

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Building Materials Holding Company (NYSE:BLG) shares moved up $1.92, or 13.38%, to $16.27 today after Chapman Capital disclosed a 7.4% stake and expressed their concerns over the company's performance. Specificially, the activist hedge fund suggested that the stock's value could best be unlocked through a sale of part or all of the company.

Chapman first noted that while management cannot be blamed for the steep correction in the U.S. homebuilding market, the board's generous reward distribution to management during this downturn should not be overlooked. Equally troubling is the fact that management and the board have very little stake in the company while much of what they do own was granted to them free of charge. This lack of a stake in the future of the company is certainly a cause for concern.

Chapman then argued that the company is undervalued. To unlock this value the hedge fund recommended that the company immediately hire financial advisors to explore selling all or part of the company. After all, the building materials sector is clearly amid a consolidation wave. Chapman has also recently made personal contact with BLG’s peers and leveraged consolidators of the building supply industry, and they can convey an extremely high level of interest from both private equity and strategic building supply players in the acquisition of the company.

Chapman Capital recognizes the unique value of BMHC’s assets, the years and efforts required to assemble and integrate them. As a result, they are not encouraging an inopportune, undervalued sale, but instead a methodical auction timed to consummate into the inevitable cyclical recovery. And this would be great news for the company's shareholders who have suffered since the downturn in 2006!

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Circuit City (NYSE:CC) shares jumped $0.16, or 1.03%, to $15.69 today after an Associated Press story suggested that the company may need a buyout or major management shakeup to recover from recent profit warnings and increasingly intense competition.

Circuit City rejected a $17 per share buyout offer in 2005, instead opting for a turnaround effort that was quenched by a price war on flat screen televisions last year. The price war caused the company to replace 3,400 workers with cheaper labor that ended up hurting sales. Overall, the situation for Circuit City isn't looking all to good with one of its competitors even considering bankruptcy.

So, what are the chances of a buyout? Well, the fact that the company has received a bid in the past for an amount greater than the current market price suggests that it is could be a possibility. Moreover, while some other companies may be cheaper, nobody can match Circuit City's status as the second largest electronics retailer in the United States. Combined with the financial troubles that the company is in, it would not be too hard to fathom a buyout scenario. This makes CC a stock worth watching!

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Wendy's International (NYSE:WEN) shares continued their rise today after its new ad campaign debuted on American Idol earlier this week. The fast food company has been struggling to regain its advertising foothold ever since Dave Thomas passed away in 2002. Now the company is back with a fresh new campaign centered around their new slogan: That's right. Wendy's shares rose the day after the campaign as many investors hoped that it would help boost the ailing chain.

Wendy's also announced last week that the special committee of the board that had been exploring strategic options had retained J.P. Morgan as lead advisor and Lehman Brothers as co-advisor. These moves suggest that the company is beginning to seriously explore some potential extraordinary transactions such as a sale of the company, recapitalization or special dividend. It is also worth noting that activist investors Bill Ackman and Nelson Peltz have been involved in pushing the company towards unlocking value for its shareholders.

Many rumors have surfaced regarding potential bids for the company in the past; however, nothing has been confirmed. Investors do know, however, that the company is actively exploring ways to unlock value while working to increase its brand awareness through a unique new advertising campaign. The results on both of these fronts remains to be seen, but WEN is definitely a stock to watch in the meantime!

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