SunTrust Bank (NYSE:STI) shares moved up marginally after rumors surfaced that the company may become a takeover target for Citigroup (NYSE:C) who may be looking to increase its presence in Florida while increasing its profitability through cost savings. One banker noted that the company was in talks with a large bank while another said he would be surprised if the bank wasn't in talks with two to three other banks.

SunTrust has long been the target of takeover speculation, but never has Citigroup been mentioned as a potential candidate. Instead, many believed that Wells Fargo, JP Morgan, and PNC would be the most likely suitors. Citigroup is different from these players in that its assets are large but it has a relatively small branch presence and profitability. This would suggest that a SunTrust takeover would be make sense for the company to expand its footprint.

SunTrust CEO Jim Wells was quoted as saying that his company was exploring all options to help turn the company around. More, many analysts have suggested that Citigroup's organic growth has been slowing and it may be forced to pursue acquisitions in the U.S. markets. As for a price, many prior reports have thrown around $105 to $115 per share as likely buyout prices. And this makes STI a stock worth watching!

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CBRE Realty Finance (NYSE:CBF) shares dropped $1.21, or 19.48%, to $5.00 after the company announced disappointing second quarter results. The commercial real estate specialty finance company has been suffering amid the mortgage crisis, but appears to be substantially undervalued even given the risks that it faces.

CBRE announced that it was forced to write-down $7.8 million on one of two foreclosed assets but insists that the company is still trading more than 50% below its book value. The company's current assets include $211 million in CDOs, $75.8 million in Joint Venture Equity, $54.6 million in foreclosed assets, $72.9 million in warehouse lines, and $42.4 million in cash. If we subtract out $61.5 million in Trust Preferred Securities, we come up with a total net value of $395.7 million.

Based on the current market price, these assets are being priced a more than $205 million below their estimated book value. Even discounting the foreclosed assets division and some of the potentially-risky CDO's the company would still be undervalued! But in reality, the strong fundamentals in the commercial real estate market have many believing that the company is substantially undervalued. This makes CBF a stock worth watching!

NuCo2 Inc. (NDAQ:NUCO) shares rose $0.40, or 1.59%, to $25.63 after Shamrock Activist Value Fund disclosed a 5.66% stake in the company and recommended that it consider issuing a $7/share special dividend and institute a regular dividend of $0.25/share. The move caused a late-day rally that continued into after-hours pushing the stock price past $25.90.

Shamrock said that it believes the company's capital structure is sub-optimal and could support a substantial increase in long-term debt without compromising the company's ability to execute its business plan. Specifically, after considering a range of alternatives including, but not limited to, a further share repurchase, special dividend, and regular dividend, we recommend that the company utilize the strength of its balance sheet and strong cash flows to pay a dividend of $7.00 per share and institute an ongoing regular annual dividend of $0.25 per share. Achieving a debt financing package at attractive rates and terms should be achievable over the next 60 days."

In the end, the activist hedge fund feels that if the company believes it can achieve its business plan, they believe shareholders would be best off with a recapitalization of the company as proposed. Finally, Shamrock also requested a meeting with the board to discuss this proposal along with other measures that can be taken to unlock shareholder value. Combined, these factors make NUCO a stock worth watching!

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Temple-Inland (NYSE:TIN) shares moved up $0.86, or 1.6%, to $54.76 today after the company announced that it would sell its timberland holdings for $2.4 billion and distribute the money to shareholders via a special dividend. The move comes amid an Icahn-led restructuring of the company that many shareholders are hoping can help it unlock value.

The 1.6 million acres of timberland will be sold to Campbell as part of the company's restructuring move that will also include spin-off of its financial services and real estate operations. The moves should help the highly diversified company with branches in financial services, real estate, corrugated packaging and forest products consolidate its operations and focus on its core competencies.

Famous activist, Carl Icahn, holds a 6.7% stake and has been pushing for a sale of the company since the beginning of this year. Shares in the company are up over 18% since he first indicated he was involved and continued to rise before their recent drop. Since then, some other activist investors have taken stakes in the company as many are banking on a restructuring to unlock value for all involved.

The special dividend from this timberland sale will amount to $10.25 per share while the remaining $700 million from the sale will be used to pay down debt. The move will help Icahn and other large shareholders cash out a portion of their stake while they wait on the company to complete their spin-offs of the other organizations. Combined, these factors make TIN a stock worth watching!

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Intel Corporation (NDAQ:INTC) shares moved up marginally after the Financial Times reported that the company plans on entering the high-end cell phone market currently dominated by Blackberry and iPhone. Many are carefully watching this move as yet another large player enters an already crowded cellular chip maker marketplace.

Intel's CEO said that the company plans to create more products to push "internet access, compute capability, small form factors, or high performance, or low power for cost savings, are all necessary ingredients, to build these new classes of machines, whether it's in computer. It is where the handset world is going, or where the world of consumer electronics is going."

Essentially, Intel believes that it can create smaller chips with an extended battery life. The company also said it plans to integrate its WiFi and WiMax technologies as part of the product. Given the company's affiliation with Sprint and Clearwire, the firm will likely challenge large US cellular providers like AT&T and Verizon Wireless. This makes INTC a stock worth watching!

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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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Ceridian Corporation (NYSE:CEN) urged shareholders on Thursday to vote in favor of a $36 per share takeover offer from buyout firm Thomas Lee and Fidelity National Financial. Meanwhile, Pershing Square's Bill Ackman is speaking out against the merger saying on Tuesday that it would vote its 15% stake against the merger and propose to firing the board.

The September 12th board meeting promises to be an interesting one with a plethora of proposals on the table and a hostile hedge fund. Pershing Square has been pushing for the company to spin-off its Comdata division in order to unlock significant value in the company. The hedge fund also proposed a recapitalization of the company that would enable it to either offer a cash dividend or buyback its stock.

Interestingly, shareholders recent won a lawsuit against the company that will enable the buyer to back out of the transaction if the incumbent board loses the next election on September 12th. And with nearly 15% of the company's shares in Bill Ackman's hands, there is a good chance that the company's merger could be at risk. This is further confirmed by the differential between the share price and the buyout price. In the end, CEN is definitely a stock to keep an eye on while this situation unfolds!

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Metromedia International Group (OTC:MTRM) shares jumped $0.10, or 5.88%, to $1.80 today after Fursa Alternative Strategies' Mickey Harley expressed concerns over the company's proposed $1.80/share buyout offer and made his own $2.05/share proposal on the same terms. Shareholders applauded the move today but shares are currently at the original buyout price, leaving 14% on the table.

The planned merger is between Metromedia and an investor consortium called CaucusCom Mergerco, funded by Capital Management & Investment and others. Unfortunately for Fursa, these investors also have a $7.5 million breakup fee along with 20% of the net fees if the merger deal falls through and a third party acquires the company. This may cause some problems; however, it is likely that the board will at least consider the alternative proposal.

Metromedia is a diversified holding company that focuses on the Georgian telecom market. The interest in the companies lies predominantly in its 50.1% stake in MagtiCom - a mobile phone operator in the Republic of Georgia.
However, the company also has a large stake in PeterCom - a mobile phone operator in Russia. It also owns interests in Telecom Georgia and Telenet - two other Georgian companies.

In the end, this is good news for shareholders as it cannot hurt them. The current buyout offer stands at $1.80/share, so risky investors may find it worthwhile to purchase shares that are currently trading at that price in hopes for a chance at $2.05/share - a 14% premium. And this makes MTRM a stock worth watching!

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