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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