Lear Corp. (NYSE:LEA) shareholders have been on a roller coaster recently after successfully rebuffing Carl Icahn's bid just last month but things finally seem to be stabilizing. The auto-parts company posted strong second-quarter results today on cost-cutting and customer diversification moves. Some shareholders are confident that the company will be a strong independent performer while others are hoping for a raised bid for the company in the near future.

Lear has been following the lead of many auto suppliers by cutting down on its workforce by closing plants and moving more work to countries with lower labor costs to combat higher raw material costs and less demand from U.S. manufacturers. These efforts have led to operating margins improving to 7.7%  from 5.7% just one year earlier. The company also said it plans to intensify such moves and report improved operating results in 2008 despite even or lower sales.

Lear has also been focusing on gaining new business with Asian and other foreign automakers. Stronger production overseas combined with favorable exchange rates have helped the company's competitors, like TRW Automotive, post stronger results. Lear hopes to replicate this success for their own business by moving their operations offshore and focusing on international business development. Combined, these factors make LEA a stock worth watching!

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Dillard's Inc. (NYSE:DDS) shares fell $1.49, or 5.28%, to $26.75 today after the company rebuffed Barington Capital's attempt to meet with the company's chief executive to discuss ways in which the company can maximize shareholder value. Shareholders clearly disapproved as shares tumbled off of their 52-week highs and many are hoping that the hedge fund will continue working to make meaningful changes to the company.

Barington Capital is a well known activist hedge fund that has been pushing the company to maximize shareholder value. The hedge fund points out that Dillard has lagged in almost every retailing measure of success, including (1) sub-par operating margins and same-store growth, (2) lowered valuation multiples compared to its peers, (3) and it has a ROIC that is two percentage points below its WACC.

Barington Capital said it believes the company's shares are materially undervalued and asked to meet with company executives to discuss ways in which shareholder value can be maximized. Measures to accomplish this would include changes to the company's inventory management, merchandising and also involve measures to contain costs.

The hedge fund also sees ample opportunities with the company's extensive real estate portfolio. These opportunities would include converting certain properties to more profitable uses, closing unprofitable stores and offering sales/leaseback options to owned properties. Combined, these operational and property changes should could result in substantial value being unlocked for shareholders. This makes DDS a stock worth watching!

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NCR Corporation (NYSE:NCR) announced earlier this week that its proposed spin-off of Teradata Corporation is on track for the end of the third quarter. The trading itself is scheduled to begin on October 1st when NCR shareholders will receive one share of Teradata for each share they own.

The data-warehousing solutions division (to be Teradata) continues to grow as well, reporting a revenue increase of 9% to $433 million. There have also been rumors circulating that the company could become an immediate buyout target for IBM (NYSE:IBM) or Oracle (NDAQ:ORCL). The spin-off is also expected to result in significant cost savings for both companies as well as allow each to focus on their core competencies.

Investors should also note that spin-offs in general tend to outperform the overall market by a substantial margin. This is for two reasons: (1) shareholders of the parent company may receive shares they do not want and sell for no reason, which can push down the share price without warrant, and (2) most companies that undergo spin-offs do so for very good reasons - the two companies share few synergies and can reduce costs and increase focus apart.

Clearly this situation is one worth watching for shareholders and investors alike. For existing shareholders, it is a sign that the company is committed to unlocking shareholder value and also gives a "free" stake in a great new company. For potential investors, spin-offs represent great opportunities to invest in the time after the spin-off occurs as their is undue selling. Combined, these factors make NCR a stock worth watching!

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