E*Trade (NDAQ:ETFC) and Ameritrade (NDAQ:AMTD) are reportedly mulling a potential merger, according to several industry sources. The Wall Street Journal recently reported that the number 3 and 4 brokerages were discussing a potential union but were not close to a final offer. Many analysts and shareholders are betting that tremendous value could be unlocked through a merger.

The two companies have also found themselves under the fire of activist hedge funds looking to unlock value. Jana Partners and SAC Capital have both been pressuring the companies to pursue strategic alternatives and unlock shareholder value. These cheerleaders could eventually push the two companies towards a merger if they both remain convinced that it is a good idea.

Together the two companies would becoming the largest brokerage in the world with a combined value of $16.5 billion. Interestingly, shares in both companies rose substantially on the news and held their gains through today's trading. Whether or not these rumors turn out to be true remains to be seen, but AMTD and ETFC are definitely stocks to watch!

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Bank of America (NYSE:BAC) shares rose marginally after the company revealed that it had the troubled Countrywide with a $2 billion purchase of convertible non-voting preferred stock. The move helped the largest mortgage company in the United States to clean up its balance sheet while presenting the bank with a great opportunity to profit.

Shares in Countrywide jumped over 20 percent afterhours widening the 17 percent discount at which the preferred stock was issued. The move also underscores the severity of the subprime problem as such a large discount was required for investment. Skies are not yet clear either for Bank of America, which now holds a substantial stake in a company that has had its value roughly cut in half so far this year.

In the end, the move will help the mortgage banker stay alive for another day while presenting a great opportunity for BAC. There is also some speculation that BAC may actually be interested in acquiring the mortgage banker outright; however, that situation may face some heavy regulatory hurdles given BAC's pending $21 billion purchase of ABN Amro. Regardless, BAC is definitely a stock to watch!

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Kintera Inc. (NYSE:KNTA) shares moved down marginally after Coghill Capital Management disclosed a ten percent stake in the company and expressed its support for a change in the role of chief executive officer.

The activist hedge fund said in a letter, "In our view, Harry's track record with respect to managing Kintera has demonstrated an ongoing inability to achieve business goals and objectives resulting in destruction of shareholder value, as well as the squandering of a considerable market opportunity for which Kintera's solution is well suited to take advantage of. Kintera's lack of acquisition integration and cost rationalization have led to massive and ongoing losses necessitating several equity financings that have been significantly dilutive to existing shareholders. Unrealized performance projections and consistent cash burn have caused the investment community to become disenchanted; as evidenced by Kintera's current $1.30 stock price (as of close on February 5, 2007), which is a fraction of the Company?s $7.00 per share IPO price in 2003.

As Harry is both the Chairman and Chief Executive of the Company, we
 are concerned that he has the ability to exert undue influence over strategic and operational decisions without meaningful checks and balances.  Further, as we view a certain level of dialogue between boards of directors and investors to be important and constructive, we are especially concerned with Kintera?s policy of prohibiting independent board member communication with the investment community. In this particular case, we view such communication to be key to catalyzing change and we support Harry's replacement with a professional manager as a necessary step to drive Kintera to sustained profitability."

Clearly, a new chief executive could help turn around the company and prevent any further deterioration in value. A turnaround CEO could even help the company further its objectives and improve its condition. Combined, these factors make KNTA a stock worth watching!

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