Target Corporation (NYSE:TGT) shares soared more than 5 percent yesterday after reports surfaced that Bill Ackman's Pershing Square has been accumulating shares in the company. The Bloomberg report cited "a person with direct knowledge of his plans" but the hedge fund refused to comment on the situation. Investors are hoping that the activist hedge fund will be able to unlock value and help the retailer improve its long-term outlook.

Bill Ackman is a well known activist investor who has managed above average returns for several years for his limited partners. While most of his investments are passive, he is well known for his activist approaches to unlocking value in large companies like McDonalds and Wendy's. Many are speculating that his involvement with Target will involve similar strategies aimed at unlocking value through the exploration of strategic alternatives. These could include a recapitalization, special dividend, spin-off of particular brands, restructuring or even an outright sale of the company.

Investors will have to wait until Mr. Ackman files a Schedule 13D with the Securities and Exchange Commission in order to figure out his plans. If the rumors of him acquiring a 5 percent stake in the company is true, then he will be forced to file with the SEC within the next 10 days. This filing should outline whether or not he is considering strategic alternatives for the retailer. Alternatively, if he ends up filing a Schedule 13G, we will know if he is in it passively for the time being. Regardless, Target is definitely a stock to watch as this situation unfolds.

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Ceridian Corp. (NYSE:CEN) shares rose marginally this morning after Bill Ackman's Pershing Square disclosed a 14.9% stake in the company and updated shareholders on its plans in a Schedule 13D/A filing with the SEC. The Minneapolis, MN-based company announced a $36/share management-led buyout earlier this year that Ackman finds grossly inadequate. The activist investor proposed a range of alternatives that it believes would likely result in greater value for shareholders. Investors are watching the situation closely, but the hedge fund still faces an uphill battle against the board and management.

Bill Ackman's heated battle with Ceridian has been taking place for several months now and he shows no signs of letting up. The activist investor initially proposed that the company spin-off its Comdata division as it is undervalued and shares few synergies with the rest of the company's business segments. Ackman also proposed a recapitalization of the company that would enable it to issue a special dividend or institute a share buyback. Finally, he also believes that the company could attract a greater premium if it continued to shop itself. In fact, his firm reportedly knows of several interested parties!

Many investors share Ackman's belief that these transactions could provide substantial returns; however, the Ceridian board has remained resistant. As a result, Ackman was forced to nominate a slate of directors to replace the incumbents and enforce change. A recent shareholder lawsuit also led to a lower threshold for a "superior proposal" and the elimination of a buyer's walkaway rights in the event that the incumbent board loses in the next proxy season. In the end, if Ackman is successful in nominating his own candidates to the board or directors there is a good possibility that we could see a higher share price.

So, what are the changes that these proposals will be adopted? Well, a lot rides on Ackman's ability to win the upcoming proxy contest. With nearly 15 percent of the company's shares in his hands along with call options that he disclosed in the past, there is a distinct possibility if he can garner other institutional support. The activist investor asked the company yesterday for additional information to make its case, even if it would require a confidentiality agreement. Consequently, the next thing investors should watch for is an 8-K filing by the company disclosing that they have entered into such an agreement. Combined, these factors make CEN a stock worth watching!

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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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