A large Silicon Storage Technology (NDAQ:SSTI) shareholder believes the company's shares are "significantly undervalued" and threatened to take a more "proactive approach" if the company didn't take action to close the valuation gap, according to a Schedule 13D filing with the SEC.

Riley Investment Management, which owns a 4.9% stake in the company, said in a letter to the board that it believes the the company's $168 million in cash, $100 million in equity investments, $35 million per year licensing revenues and the company's NOR flash business and robust pipeline of non-commodity products are worth well in excess of the market's currently assigned $321 million market cap.

"[Our] desire, at this point in time, is to work assiduously and aggressively with the current management team on behalf of all shareholders," said the hedge fund in a statement. "[Our] sincere hope is that management and the Board of Directors share its sense of urgency. If they do not, it will force RIM to take a more proactive approach, one which will include, among other things, the nomination of new directors."

Interestingly, Riley noted that if cash and investments were subtracted from the company's market capitalization, the resulting $60 million is all the value the market is currently assigning to SST's NOR flash business, product pipeline and licensing revenue streams. This is low by anyone's measure but the company has done very little to correct the problem.

In the end, Riley Investment Management is a well-capitalized hedge fund with a great track record in activist situations. Shares today moved up over 2% in support of the suggestions. If the group can successfully force the company to make changes, it could mean significant value being unlocked for shareholders. Combined, these factors make SSTI a stock worth watching!

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Target Corporation (NYSE:TGT) shares rose $1.47, or 2.34%, to $64.19 after the retailer announced that it had retained Goldman Sachs to explore options related to its credit card business and re-evaluate its use of debt in its capital structure, according to an 8-K filing with the SEC.

"Given our objective to create substantial shareholder value over time, we plan to approach the capital markets to determine whether Target or a financial institution is better suited to own our receivables," said CFO Doug Scovanner. "Unlike other retail credit card portfolios, Target’s receivables portfolio possesses a unique combination of attributes which include strong double-digit growth, a consistently high yield and unprecedented integration with our retail operations."

The move comes as the result of pressure from Bill Ackman's Pershing Square, which owns a 9.6 percent stake in the retailer. The activist hedge fund said in a previous letter that the company's shares were "undervalued" and hinted towards a sale of Target's credit card business. The company had resisted previous requests to sell the division, but many are saying the bad credit markets may have played a role in the reverse decision.

In the end, this is great news for Target shareholders as its credit card business could fetch a substantial amount of money. The fact that the company is also considering a change to its capital structure and increase its share buyback program is an added bonus. Combined, these factors make TGT a stock worth watching!

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