Sonesta International Hotels Corporation (NDAQ:SNSTA) shares rose $3.51, to 8.67%, to $44.00 today after Mercury Real Estate Partners disclosed a 9.8 percent stake in the company and expressed its belief that the company's shares are worth $110 to $125 per share. Shareholders are hoping that the company's willingness to explore strategic alternatives combined with the involvement of this activist hedge fund will lead to a substantial buyout in the near future.

Mercury Real Estate Partners supported their $110 to $125 per share valuation with an in-depth analysis presented in their Schedule 13D/A filing with the SEC. The company's largest asset is its partnership in Key Biscayne which is worth approximately $73.35 to $80.45 per share based on expected cash flows priced out at industry multiples. This value alone surpasses the current market price substantially.

The company also owns Royal Sonesta Boston, which is worth $23.24 to $28.65 per share based on the same type of analysis. Finally, the company also has other hotel interests amounting to $4 to $7 per share along with cash amounting to $5.77 per share. Subtract the combined value of these entities with the companies few liabilities and you can see how a value of $110 to $125 per share is realized.

Clearly, there is substantial value present in Sonesta that well surpasses the price the market has put on its shares. Now that the company has decided to explore its strategic alternatives, it it quite possible that it will be able to unlock this value in the near term. This makes SNSTA a stock worth watching!

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PDL BioPharma (NDAQ:PDLI) shares rose $0.49, or 1.92%, to $26.06 today after Daniel Loeb's Third Point disclosed a letter to the company's board once again calling for Mark McDade's termination and its support for a recent directive given to an investment bank to explore strategic alternatives. Many shareholders are hoping that the activist hedge fund will be able to clean up management and force the company to put itself up for sale to unlock value.

Third Point has been pushing for the termination of Chairman and CEO Mark McDade for several months now. The hedge fund contends that Mr. McDade (1) sabotaged a previous buyout offer, (2) moved the company's headquarters against the advice of his advisors at a cost of $100 million, (3) oversaw the loss of countless senior employees due to his incompetence, (4) consistently disappointed investors with poor earnings and delayed product launches, (5) failed to communicate with the analyst community to garner interest in the stock, and (6) committed several ethical violations according to former employees. All the evidence to back these claims are clearly laid out in their letter to the board.

Third Point made three recommendations to the company after meeting with them in June to discuss both Mr. McDade and the future of the company. First, the hedge fund demanded three of their own nominees be placed on the company's board. Secondly, they suggested that the company slow the progression of Ularitide and Nuvion Partnerships until all alternatives are considered. And finally, replace CEO McDade with a more competent executive that can help unlock shareholder value.

In the end, if the company heeds the hedge funds advice and decides to take action it could mean significant share appreciation for shareholders. Not only would McDade's removal pave the way towards a much more efficient company, but the strategic alternatives being explored could lead to a significant sale in the near term. This makes PDLI a stock worth watching!

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Ford Motors Company (NYSE:F) announced today that it is willing to consider offers for its Volvo car unit as it looks to raise more cash to fund its restructuring. The news comes shortly after the automaker completed the sale of its other luxury international brands that included Aston Martin, Jaguar and Land Rover. Shareholders are hoping that this additional cash will be enough to fund the automakers broad restructuring efforts aimed at returning it to profitability.

Management is banking on the proceeds from these sales to fund a broad restructuring effort aimed at reversing a $12 billion annual loss in 2006 by revitalizing its North American operations. The automaker already received a $26 billion financing package in 2006 which brought its total available liquidity up to $46 billion; however, many analysts have suggested that the company may need more to complete its restructuring efforts - hence the sale of its luxury brands.

Notably, the Volvo unit was pledged as part of the $26 billion financing package, so any offer would have to come at a substantial premium in order to justify surrendering such a large portion of its line of credit. This, however, did not stop the company from selling its previous luxury brands - so anything is a possibility.

In the end, Ford still faces many obstacles before it will be able to return to profitability. Clearly, any premium prices paid for its brands will help fund its restructuring and offers a great opportunity to consolidate its offerings. Combined, these factors make Ford a stock worth watching!

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Target Corporation (NYSE:TGT) appears to be a big hit with Bill Ackman after his Pershing Square Capital Management disclosed a 9.6 percent stake in the company, confirming rumors that surfaced late last week. Investors are hoping that the famed activist investor can help unlock value in the retail giant that has been experiencing a lower valuation than many feel deserved the company.

Bill Ackman noted in his filing with the SEC that he believes the leading domestic retailer has significant growth opportunities and strong operational management but remains significantly undervalued. While not going into any specific details, he noted that his fund intends to hold discussions with management aimed at correcting this undervaluation. Interestingly, he also noted that he would donate a third of his net aftertax profits from his Target investment to his charitable foundation - a bit of Karma for the activist!

So, what is Ackman planning for the company? Well, many analysts are speculating that the activist investor will try and push the company to sell its lucrative credit card portfolio, which has around $6.5 billion in receivables. While the company wasn't interested in selling the division earlier, many are speculating that it may be open to a sale once the credit cycle has peaked. Any move to sell this division would, however, provide a windfall of cash for shareholders that could be distributed through a special dividend or massive share buyback program.

In the end, the rumors that Ackman built up a stake in the retailer are true but we still have no idea what his plans are for the company. We just know that he believes the company's shares are undervalued and he intends to take some actions to unlock that value. This makes TGT a stock worth watching!

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Pomeroy IT Solutions (NDAQ:PMRY) is quickly turning into an interesting restructuring play for opportunistic investors. The national IT solutions provider has faced several issues over the last few years stemming from poor governance practices by key executives and management personnel. Many investors are hoping that several recent changes to the company's governance will help unlock value for shareholders and jump the company's share price.

Flagg Street Capital, who owns approximately 9.8 percent of the company's outstanding shares, took notice of these inefficiencies and has been pressuring the company towards several governance reforms. The activist hedge fund believes that such reforms could help the company increase its focus and cut down on its expenses. Earlier this year, Flagg Street Capital announced a proxy contest aimed at installing its own nominees to the company's board and enforcing change.

This move quickly caught the Pomeroy's attention. Earlier this month, the company fired its President and CEO Stephen Pomeroy after an independent committee found that certain, non-illegal conduct and actions were adversely affecting shareholder value. Even better, the company agreed on July 12th to give two Flagg Street Capital representatives seats on the company's board of directors. Combined, these events are great news for shareholders as they could lead to a much more efficient company. This makes PMRY a stock to watch!

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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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