Authentidate Holding Corporation (NDAQ:ADAT) shares rose $0.04, or 2.68%, to $1.46 today after Coghill Capital disclosed a 9.9% stake and made several recommendations to the company's board of directors. The Chicago-based investment firm is seeking to restructure the board of directors while also working to improve the company's capital structure.

Authentidate, which provides secure enterprise workflow management solutions, is trading well off its 52-week high of $2.61 but appears to be working to turn itself around. The company recently sold off its Document Management and Systems Integration businesses in order to focus more on their core competencies. Meanwhile, the company reported broad success with its new initiatives in domestic healthcare and foreign partnerships.

Coghill Capital Management is an activist investment company that employs a bottom-up fundamental analysis approach to identify companies in the highly inefficient small cap universe. They target small cap companies with specific, time-bound catalysts for stock price movement. The firm has a strong track record in this area and is a great fund to follow - especially in strong positions like these.

Authentidate's new business initiatives combined with a potential change in capital structure makes it a stock with great potential. The involvement of Coghill only solidifies the potential as they will likely provide the company with the advice and financing that they need to succeed. Combined, these factors make ADAT a stock worth watching!

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Brinks Co. (NYSE:BCO) shares rose $0.68, or 1.09%, to $63.34 today after MMI Investments disclosed an 8.3% stake and suggested that the company explore a spin-off certain business segments. The news comes shortly after Pirate Capital's bout with the company in which they recommended similar spin-offs or a breakup of the company as a whole. Investors are hoping that the involvement of two activist hedge funds may help boost the company's stock price.

MMI Investments suggested in their Schedule 13D filing with the SEC today that BCO shares could be worth as much as $88/share in the event of a spin-off. They based this price off of multiples attained by competitors Tyco and Securitas. Tyco, BCO's largest competitor, recently completed its long-awaited spin-off and transformed itself into a security monitoring pure-play. The new Tyco trades at 10.2x 2007 EBITDA versus BCOs 6.6x. Similarly, Securitas' spin-off is trading at 9.7x - also higher than BCO's 6.6x.



Clearly, the valuations presented here would be a windfall for shareholders as even the lowest valuation represents more than a 25% premium to today's closing price. More, with two activist shareholders standing behind these proposals, there is a strong likelihood that management will at least review the idea. Combined, these factors make BCO a stock worth watching!

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Liz Claiborne (NYSE:LIZ) updated shareholders on its restructuring efforts and gave an upbeat long-term outlook. The American sportswear maker announced that it would shed 16 of its apparel brands and cut nearly 800 jobs in an effort to reduce its reliance on department stores and push their own in-house brands. CEO William McComb said the company is targeting operating margins in the mid-teens percentage with ROIC growth in the high-teen percentage.

Liz Claiborne has traditionally been known in the investment community as an acquisition-driven company. The company's previous strategy had been building a big brand portfolio to hedge against unpredictable fashion cycles. However, this strategy led to some unforeseen consequences that drew concern from investors. While the company's revenues grew, the company saw a substantial increase in both management complexity and overhead costs.

Liz Claiborne plans to cut these expenses and reduce complexity by selling off 16 of its brands while doubling its spending on advertising for its remaining brands. The company also wants to open 300 of its own stores by 2010 to further reduce its dependence on department stores. At the same time, the company plans to cut $190 million in annual expenses through workforce reductions and other cost-cutting measures.

Analysts expect improvements in the company's financials to be visible in 2008. Many analysts and investors are also hoping that CEO McComb will be able to turn around Liz Claiborne's brands like he did J&J's Tylenol brand in his prior position at that company. Combined, these cost-cutting and restructuring efforts could lead to a turnaround in a company that has seen somewhat dismal performance amid a struggling apparel market. This makes LIZ a stock worth watching!

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Advanced Medical Optics (NYSE:EYE) may face some opposition to its proposed acquisition of Bausch & Lomb (NYSE:BOL) from its largest shareholder. ValueAct Capital, who owns 14.7% of the company's outstanding shares, said the $4.75 billion bid would reduce their returns and expose the company to "unacceptable risk"

ValueAct Capital insisted that the proposed acquisition increases business risk by further concentrating cash flows in a consumer contact lens and lens care business that is clearly prone to product recalls and that has a long-term demand profile that is much more questionable than EYE's surgical business. The debt financing reduces the margin for error operationally and, together with the proposed issuance of collarless equity, subjects current shareholders to significant capital market risk.

Many investors purchased stock in Advanced Medical Optics due to its diverse revenues and the strength of its surgical assets. Favorable demographics support solid secular growth rates, which the hedge fund and others believe will be augmented by less emphasis on reimbursement-based demand and more emphasis on consumer-based demand.

Unfortunately, this transaction will destroy these strengths and consolidate its cash flows in the consumer contact lens market. If ValueAct Capital is able to breakup this proposed transaction, it could save shareholders a significant amount of money in the future. This makes EYE a stock worth watching!

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Angelica Corporation (NYSE:AGL) may face more heat from Pirate Capital's Thomas Hudson after the activist hedge fund disclosed a 9.8% stake and expressed strong disappointment with the company's operating results. The Chesterfield, MO-based company recently posted a first quarter loss of $1.14 million on revenues of $107.8 million compared to a loss of $1.5 million on $107 million during the same period last year.

The largest concern that many shareholders have is the disconnect between the intrinsic value of the company and the current market valuation of its shares. Specifically, many are concerned that the aggregate price of Angelica's 11 bolt-on acquisitions between 2003 and 2006 is substantially higher than the value that the market currently assigns to these assets. The company ended up paying 1x sales while the company remains valued at just 0.5x sales. Clearly this is a problem with either the market's mis-valuation or management's recklessness.

Pirate Capital is a well-known activist hedge fund but had some troubles in the past when lackluster returns led to multiple limited partners pulling their money out of the fund. The hedge fund is now trying to turn itself around, however, amid a healthy M&A market that has seen more deals than ever before. While Pirate Capital never indicated that they were specifically seeking a sale, the hedge fund did say that they would actively pursue strategic alternatives. Combined, these factors make AGL a stock worth watching!

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Borders Group (NYSE:BGP) may soon become an activist target after Spencer Capital disclosed a 6.8% stake in the company along with communications it had with management. The investment management firm disclosed in a Schedule 13D filing with the SEC conversations that it had with the company's Chief Financial Officer while announcing its intent to have further discussions with the company's management and board of directors.

The books, music and movies superstore chain was also targeted not long ago by Bill Ackman's Pershing Square - an activist hedge fund that also owns a large stake in Barnes and Noble (NYSE:BKS). There was speculation that the famous investor may be interested in merging the two competitors in an effort to strengthen their position against key competitors like Amazon.com (NDAQ:AMZN).

The involvement of another activist shareholder reignited hopes that the company may be exploring a merger or other strategic transaction aimed at unlocking shareholder value. But just how far fetched is this idea? Well, the company has already seen interest from Pacific Equity Partners - a private equity firm that expressed interest in the Australian unit of the company. If there are other interested buyers, BGP could see itself split-up and sold at a substantial premium to the current market price. Combined, these factors make BGP a stock worth watching!

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Google Inc. (NDAQ:GOOG) shares received a boost today after the company announced the acquisition of Postini Inc. - a privately held email security money - for $625 million in cash. The move gives Google access to the lucrative market with 35,000 businesses and over 10 million users.

Postini provides security, archiving and encryption products used to protect email, instant messages and other web-based communications. These products have becoming increasingly popular during the past few years as more and more critical business data gets transferred through these channels. Postini is one of the largest companies operating in the sector.

Google made the acquisition in hopes to expand its hosted businesses which are included in its Google Apps lineup. The company claims that over 1,000 businesses are signing up for its Apps products daily, but larger businesses have been reluctant so far to lean away from MS Office. The acquisition of Postini should enable the company to move into these new markets.

The acquisition follows Google's recent strategy to diversify its revenues away from its existing Adsense and Adwords programs as investors remained concerned about its long-term growth prospects. The company's most publicized purchase was a multi-billion dollar deal for DoubleClick Inc. which it hopes will help it to move into the CPM-based banner advertising market. The purchase of Postini should help the company expand its revenues even further into the lucrative business applications market. Combined, these factors make GOOG a stock worth watching!

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Lear Corp. (NYSE:LEA) shares rose $0.87, or 2.43%, to $36.73 after Carl Icahn increased his buyout offer for the company to $37.25/share from a previous $36/share offer. The revised offer comes after Penza Investments voiced strong opposition along with two shareholder advisory firms.

The shareholders criticized the $36/share offer saying it undervalued the company; however, Icahn argued that the company still faced substantial risks as a North American supplier. Shareholders countered saying that the company has improved its footing in the difficult auto-supplier segment.

Shareholders are expected to vote on the new proposal at the company's next annual meeting scheduled for July 16th. There is no word on whether the new proposal has widespread support from shareholders, but many analysts believe that the offer remains undervalued. The prospects for a higher buyout offer in the future makes LEA a stock worth watching!

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Dana Corporation (OTC:DCNAQ) said Friday that it has reached an agreement with its unions and secured $750 million to help it exit Chapter 11 bankruptcy. The bankrupt auto parts maker announced that its unions have agreed to back a reorganization plan that includes labor settlements and funding commitments.

The union agreement would replace the company's healthcare and long-term disability obligations for retirees and union employees with trusts to which the company would contribute $700 million in cash and $80 million in stock. This change is expected to save the company more than $100 million per year.

Now that agreements have been reached with its unions, investors are beginning to see the light at the end of the tunnel. Centerbridge Capital Partners and its affiliates have agreed to purchase $500 million in convertible stock and facilitate an additional $250 million in funding from others. Many now believe that the company is on track to have a reorganization plan in place by September and be able to emerge from bankruptcy by the end of the year.

So, what does this mean for shareholders? Well, the fate of existing shareholders remains uncertain. While the company's assets outnumbered its liabilities as it entered bankruptcy (suggesting that common stock still had value), there are costs associated with the reorganization itself that may push down value further. Until these costs are fully detailed, it's hard to say whether or not the current common stock is worth anything.

Investors looking for bankruptcy investing opportunities may find this stock interesting. New stock in a company that has just emerged from bankruptcy is often undervalued. This is simply because the holders of this stock are often debtors that want nothing more to do with the company. Obviously, people are also skeptical as to whether or not the company can turn itself around after having already burned shareholders once. This deep value can translate to healthy profits in the event that the company is successful in turning itself around.

The healthy M&A market for automakers and auto parts makers is also something that is worth noting. Many private equity firms have already taken advantage of companies fresh out of bankruptcy court as their stock is often traded at a substantial discount while most of their large debts have been satisfied. The best examples of these transactions occurred in the airlines industry a few years ago.

Combined, Dana Corporation is definitely a company worth watching as it emerges from bankruptcy. While investment in its bankrupt shares may be a risky bet, investors may find an appetite for newly issued post-bankruptcy shares as they will likely be undervalued.

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NovaStar Financial (NYSE:NFI) shares rose as high as 13 percent yesterday amid rumors that the troubled subprime lender may have found a buyer. The Kansas-based company, which provides loans to borrowers with poor credit, has been searching for a buyer since April without success. Investors are hoping that the troubled company can avoid bankruptcy by finding a buyer willing to take on its debt and reward shareholders with a premium buyout price.

NovaStar is one of many subprime lenders that fell victim to an overzealous public. Subprime lenders were able to make a substantial amount of money by lending money to borrowers with poor credit and charging higher interest rates to make up. However, problems began occurring when many of these borrowers began to default on their loans as their variable rate mortgage payments began to balloon. Unfortunately, many subprime lenders were highly leveraged, which led to a substantial windfall.

So, what are the chances that NovaStar will find a buyer? Well, Accredited Home Lenders (NYSE:LEND) was able to find a private equity fund willing to pay $400 million for the company, but this appears to be the exception amid many bankruptcies including that of New Century. Investors must also not forget the "imminent sale" rumor that surfaced last month leading to a 16 percent run-up that was quickly erased. Of course, the company would also not comment on any rumors.

Overall, investors should remain skeptical and prudent when trying to read this stock. The company may be open to a buyout - which helps - but selling a subprime lending firm in this environment could prove to be difficult without a substantial discount. This is definitely a stock to watch, but maybe not one to buy until more solid information surfaces.

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