Beazer Homes (NYSE:BZH) shares dropped $2.71, or 19.37%, to $11.28 after rumors surfaced that the Atlanta homebuilder was preparing to file for bankruptcy. The speculation comes amid worries about homebuilders being able to pay their bills as subprime and variable rate mortgage worries weigh done on the entire housing sector.

Beazer Homes also announced last week that it was under federal investigation in North Carolina for certain company practices. The homebuilder also swung to a loss in the third quarter after cutting prices to help sales and took on major charges to write down the value of unsold inventory. While the situation looks bleak, the company called the bankruptcy rumors "scurrilous and unfounded", telling investors to refer to its third-quarter financial statements for "an accurate representation of the company's financial condition.

Clearly there are some major problems facing the mortgage and homebuilding markets as delinquencies continue to rise while housing prices fall. However, such speculation can also pave the way for cheap stocks for companies able to weather the storm. After all, who can forget how Equity Office Properties was formed back in the 1980s? On the crash of the commercial real estate market after the S&L bust.

Savvy investors able to see through the smoke and mirrors will surely be able to profit from these similar situations. Whether or not BZH turns out to be one of these situations remains to be seen, but it is definitely a stock worth watching!

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Trico Marine Services (NDAQ:TRMA) shares rose $0.82, or 2.31%, to $36.27 today after the company announced a $100 million share buyback program in which it will repurchase around 20% of its outstanding shares during the next 12 to 18 months in privately negotiated and open market transactions. Shareholders have been pushing for the overcapitalized company to return some of its $16/share in cash to its owners and this buyback is a great step forward.

Share buyback programs are one of the most popular ways for companies to return extra cash to shareholders. Repurchasing shares off of the open market both increases the stock price and improves financial ratios. Stock prices tend to increase since demand presumably remains the same while supply is shortened which causes price to rise. Meanwhile, the company's EPS is typically increased since there are less shares in the equation which improves ratios like P/E, ROE and ROA.

Shareholders also recently voiced concerns over the company's future direction. Sources in Norway told one investor that the company received an offer to sell their North Sea fleet at very attractive prices but the company failed to explore the opportunity. The same shareholder also said they had reason to believe that the company failed to exercise an option associated with a newbuilding contract despite the fact that the option itself could have been resold for a profit of $5-6 million. Clearly, the company has missed opportunities to invest and missed opportunities to divest - where is the company headed?

In the end, Trico is a healthy company with a large amount of cash on its books that failed to take advantage of some great opportunities at the expense of shareholders. Now the company appears to be turning itself around, however, with the introduction of a substantial share buyback program. TRMA is definitely a stock to watch going forward given their strong industry and new actions to unlock shareholder value!

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Wendy's International (NYSE:WEN) shares jumped more than 7 percent yesterday after Nelson Peltz disclosed that Triarc would be willing to pay between $37 and $41 per share for the third largest fast food chain in the U.S. and the bid could go even higher if he was allowed to see confidential information. Shareholders have been waiting for such a buyout since April 24th, when the company first began exploring strategic alternatives.

The problem Peltz has been facing deals with the way financing on the deal is structured. Certain conditions in staple financing created a disadvantage for Triarc and other strategic buyers. Peltz wants to explore other means of financing, but is facing problems with the way the terms are structured. Meanwhile, he is also concerned about the confidentiality agreement that Wendy's is seeking to have signed as part of the sale process. The activist investor threatened to take more hostile actions against the company if they do not revamp the agreement to more reasonable terms.

Peltz's Triarc Cos (NYSE:TRY) is the parent company of competing chain Arby's and has long been considered a strategic buyer for the Wendy's chain. The activist investor also runs Trian Fund Management, which owns a 9.8 percent stake in the company and has been pushing the company to maximize shareholder value, including the spin-off of Tim Horton and the sale of Baja Fresh. The company is also considering the sale of Cafe Express.

In the end, the idea of a $41 per share or possibly higher buyout is great news for shareholders. And luckily, with Nelson Peltz behind the company, it will not likely give up in pursuing an acquisition despite difficult financing terms and an unreasonable confidentiality agreement. Combined, these factors make WEN a stock worth watching!

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American Home Mortgage Investment Corporation (NYSE:AHM) shares fell $9.32, or 89.02%, to $1.15 after its shares resumed trading after a day and a half of being halted. The company announced that it was facing serious liquidity issues amid a flood of margin calls from lenders and has hired advisors to evaluate its options, which could include a liquidation of its assets.

The mortgage lender confirmed that it had already received and paid "very significant" margin calls during the past three weeks and has "substantial" unpaid margin calls pending. To compound the problems, AHM also said it was unable to borrow on its credit facilities at present and is unable to fund its lending obligations. Investors pushed the stock down today on concerns that the company will be unable to meet its obligations and be forced to liquidate. In fact, the company revealed just today that it has hired Milestone Advisors and Lazard to help it in evaluating its strategic options and to obtain additional funds.

The news comes after widespread troubles in the mortgage sector lasting upwards of six months. Subprime lenders that lend to people with poor credit were the first to suffer a rise in delinquencies and defaults with more than a dozen brokers declaring bankruptcy. Many are hoping that this three year problem will be resolved eventually as lending requirements are tightened and subprime lenders undergo some consolidation and recapitalization.

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Stamps.com Inc. (NDAQ:STMP) shares hit a two year low recently prompting at least one investor to speak out against the company. LaGrange Capital disclosed a 6 percent stake in the company and demanded that the company immediately institute a share buyback program and work on improving its financial condition or put the company in the hands of someone who can!

La Grange said that it feels Stamps.com offers a highly competitive product and below market prices while maintaining key barriers to entry. The company also has a subscriber-based model capable of generating substantial recurring cash flows. In fact, management has stated that the lifetime value of each customer is 2x the subscriber acquisition cost - a great ROI for any industry! However, the hedge fund is disappointed with the disconnect between potential and actual performance.

Stamps.com needs to revive its earnings and subscriber growth rates in order to regain the confidence of shareholders. Backing out interest income and fully taxing earnings, the company generated a mere $0.07 in non-GAAP EPS - a decline from last year. Moreover, the new direct marketing campaign generated only 2,000 net paying subscriber adds with the total number of subscribers below the prior year's quarter and only marginally higher than the last quarter.

One of the key suggestions made by LaGrange was a share buyback program that would repurchase 1/3 of the company's outstanding shares. The hedge fund insists that such a program would involve minimal financial risk given the fact that the company has no debt and a substantial pile of cash. LaGrange also recommended that the company pursue strategic partnerships and alliances to drive subscriber growth, which is key to profitability. If the company isn't capable of delivering on results, it should consider a sale of the company to a more capable group.

In the end, Stamps.com is an extremely undervalued business with poor management that is unable to deliver results. And with the company trading at a two year low, many shareholders are ready for change. Obviously, any share buyback or sale of the company should dramatically help unlock shareholder value, which makes STMP a stock worth watching!

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Cache Inc. (NDAQ:CACH) shares rose $1.94, or 12.62%, to $17.31 today after the company announced a 6 percent rise in same-store sales along with a one million share buyback. The news comes just one day after Vardon Capital Management noted that the company was trading at 2/3 its private market value with $4 per share in cash and therefore should implement a share buyback program. Shareholders are extremely satisfied with the jump in same-store sales and clearly applauded the buyback announcement.

Cache is a specialty retailer of social occasion sportswear and dresses targeting style-conscious women. This month, the company acquired Adrienne Victoria Designs in a move that many applauded. There is some speculation that it was this acquisition that has provided the boost to sales and may help boost the company's operating margins and net profit going forward.

Meanwhile, Vardon Capital, which owns 9.1 percent of the company, said that the share buyback should help close the gap between the current market pries and its intrinsic value. The move will also help boost the company's earnings per share and ROA/ROE ratios. Finally, the company's mid-single digit operating margin has the potential to reach double digit levels through such initiatives as well.

So, why are shares up today? Well, the company's acquisition of Adrienne Victoria turned out to be a great decision while the company's share buyback announcement helps ensure that the company has confidence in itself going forward and is dedicated to closing the discount gap in its valuation. Combined, these factors make CACH a stock worth watching!

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Packeteer Inc. (NDAQ:PKTR) shares moved up marginally today after Chapman Capital disclosed a 9.9 percent stake in the company and demanded that the company immediately hire an investment bank to maximize shareholder value. The wireless application provider has been facing widespread criticism since posting a wide loss during the second quarter of this year. Shareholders are hoping that Chapman can help unlock value through a sale of the company.

Activist investor Robert Chapman is well known for actively seeking to turn around or force the sale of the companies in which he is involved. He is also known for not being especially patient - and Packeteer's board may have pushed the envelope. In his letter to the company, Chapman noted that both the CEO and CFO failed to return his calls or respond to his inquiries and demanded that both be immediately fired. After all, Chapman is one of the largest owners of the company with a 9.9% stake!

Any investment bank will likely recommend one of several actions. The most anticipated action is a sale of the company to a strategic or financial buyer. Another possibility would be a leveraged recapitalization of the company that would enable shareholders to seek immediate returns in the form of one-time dividends or share buybacks. Either way, these actions would result in a windfall for shareholders. And given Chapman's reputation and large stake in this company, we think there is a decent chance that the company will eventually take action and hire and investment banker to explore its options. This makes PKTR a stock worth watching!

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Activist investor Robert Chapman is betting big on Nabi Biopharmaceuticals (NDAQ:NABI) while pressuring the company to implement a three step plan aimed at maximizing shareholder value. Chapman's hedge fund revealed a 9.4 percent stake in the company with several large purchases made throughout the month of July. Investors are carefully watching this situation as any successful initiative to maximize shareholder value could pay some large dividends!

Chapman's proposed plan would involve three steps: (1) Pursuing an FDA approval of Nabi's BLA for Nabi-HB Intravenous, (2) distributing the proceeds from a sale of Nabi Biologistics to shareholders, and (3) partnering/licensing Nabi's vaccine pipeline. Recently, the company announced that it the second of two planned strategic business units while eliminating 5 percent of its workforce (resulting in a $3.3 million annual savings). Widespread shareholder support and pressure ensure that the restructuring will continue on schedule.

"These and other actions recently taken by the company are designed to facilitate our strategic alternatives and partnership process that maximize the value of Nabi and our pipeline," said CEO Leslie Hudson.

Robert Chapman was also satisfied, commenting, "Unlike many of our activist targets, Nabi is not yet worthy of our disdain or disgust. The company has taken the necessary steps to prepare for its restructuring and recapitalization. Nabi has bifurcated itself into two strategic business units that facilitate the successful completion of its strategic alternatives process being overseen by Bank of America Securities, and has committed to reduce further its cost structure and cash burn. These developments give Chapman Capital confidence that Nabi CEO Leslie Hudson is a man of his word, with that word being "execution" and not the formerly insuperable one of "vision" (talk)."

In the end, shareholders will have to wait to see whether or not this turnaround is successful. However, given the involvement of such large and successful activist investors along with support of the company itself, NABI is certainly a stock to watch during the next few months!

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Ampex Corporation (NDAQ:AMPX) rejected a partial buyout offer from its largest shareholder late last week. The move comes after the company expressed interest in utilizing a special purpose acquisition company (SPAC) to better utilize its intellectual property. Shareholder are obviously looking for this proposal to materialize as it would mean a decent buyout premium.

ValueVest, who owns a 13 percent stake in the company, proposed the creation of a new company that would purchase all existing intellectual property rights, including the franchise, non-competing product manufacturing, and private-label rights to use the name Athena and all of the company's patents, copyrights, trade secrets and other intangible assets.

The new company would also enter into an agreement that would effectively transfer all management and economic rights of all existing licenses of the intellectual property to which no payments are currently being made. ValueVest agreed to provide $14 million in cash to fund the new company, with $7 million being used to acquire intellectual property. In return, the hedge fund required the right to 50 percent of the new company's net income.

While ValueVest's original proposal was rejected, they did leave the door open for suggestions to the company. Meanwhile, the company said it has to hear back about MCAM's valuation of its intellectual property in order to get an idea of just how much everything is worth. In the end, we could still see a deal materialize but it may take a little longer than expected. However, AMPX is still a stock worth watching!

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Many hedge funds are experiencing problems in today's environment with over-leveraged capital and overly zealous managers. Sowood Capital Management became yet another example today after a stunning 50% loss in one month led to it's announcement that it would begin winding down its firm. The Boston hedge fund is one of the largest to fall as its assets were cut in half from $3 billion to $1.5 billion in record time.

Sowood said in a letter to its investors that it "made a painful and difficult decision" to sell nearly all of the fund's portfolio to Citadel following "severe declines in the value of [their] credit positions and non-performance of offsetting hedges". That statement caused some to recall the LTCM fiasco that led to a similar downfall of one of the largest hedge funds at the time. And why? Because they were over-leveraged and over-exposed to certain markets.

Meanwhile, the deal could be sweet for Citadel who is known for making purchases in downward markets at bargain prices. Last year, the hedge fund assumed a number of energy positions held be Amaranth after that hedge fund experienced substantial losses - eventually they profited on the deal. Whether or not this particular deal turns out to be a good buy, however, remains to be seen. Regardless, this is definitely a situation to keep a close eye on in the near future!