Though unconfirmed, the New York Times is reporting that famous investor Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK.A) is considering buying as much as 20% of the troubled financial firm Bear Sterns Companies Inc. (NYSE: BSC).

Bear Sterns recently reported a 60% drop in third-quarter profit due to terrible loses from its mortgage trading department. The collapse of two of Bear Sterns hedge funds also cost the firm more than $200 million as well as seriously tarnished its reputation.

Bear Sterns has been attracting a good deal of outside interest recently as its shares were trading near book value. The article reported that:

"Mr. Buffett, in particular, reached out to [Bear Sterns CEO] Mr. Cayne about a month ago...when the stock was approaching its one-year low of $100. While he is not known to be close friends with Mr. Cayne, Mr. Buffett might find more in common with the Bear Stearns boss than other Wall Street chief executives. Both in their mid-70s, they hail from the Midwest and are passionate bridge players."

Bank of America (NYSE: BAC) and Wachovia (NYSE: WB) are also supposedly interested in pursuing a possible deal with Bear Sterns, though CEO James Cayne has been known to demand a premium of as much as 40% from outside investors.

Regardless of what happens, with Warren Buffett's name in the mix, BSC is definitely as stock worth watching!

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3Com Corporation (NASDAQ: COMS), a network hardware and software provider for corporations, announced today that it has agreed to be sold to Bain Capital Partners LLC with Huawei Technologies Corporation, China's largest networking company, taking a minority stake of 3Com in the deal.

The all-cash deal values 3Com at $2.2 billion or about $5.30 per share, a premium of more than 40% over yesterday's closing price of $3.68.

In a statement, Edgar Masri, President and CEO of 3Com, said "We believe that this agreement better positions 3Com to establish itself as a global networking leader, which will benefit our employees, our customers and our partners."

3Com has a pre-existing relationship with Huawei, as they had operated a joint venture together in China since 2003. The jointly held company, called Huawei-3Com Ltd., performed exceptionally well, helping boost revenue for 3Com some 60% last year.

Even with a foothold in the Chinese market, 3Com has struggled to compete against bigger players like Cisco Systems Inc. (NASDAQ: CSCO) and Nortel Networks (NYSE: NT). In the face of such tough competition, Masri said that the board and management "have thoroughly reviewed our strategic alternatives and have determined that the agreement with Bain Capital provides the best value for 3Com shareholders."

Shares of 3Com are up more than 30%, to nearly $5 a share, on news of the deal.

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Private equity firm J.C. Flowers & Co. has said that it doesn't plan to finish its purchase of SLM Corporation (NYSE: SLM), more commonly called Sallie Mae.

Sallie Mae was created with government support in 1972, though it has been completely privatized since 2004. It manages more than $150 billion in student loans.

The deal to buyout Sallie Mae at $60 per share was announced this April and slated to be complete by next month. In a statement, however, the J.C. Flowers firm, which heads a consortium of buyer including Bank of American and JPMorgan Chase, said "that the conditions to closing under the merger agreement, if the closing were to occur today, would not be satisfied as a result of changes in the legislative and economic environment."

The change in the legislative environment is a reference to new student-loan legislation, which Bush just signed into law, that cuts $20 billion in subsidies to Sallie Mae and other student-loan companies while balancing this measure by drastically decreasing the interest rate on government-backed student loans.

Sallie Mae still thinks the deal should be completed and has released a statement warning it "firmly believes that the buyer group has no contractual basis to repudiate its obligations under the merger agreement and intends to pursue all remedies available to it to the fullest extent permitted by law."

The upcoming battle to decide future ownership definitely makes SLM a stock worth watching!

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Spectrum Brands Inc. (NYSE:SPC) is set to receive its first round of bids for its pet supply business which is expected to fetch in excess of $1 billion. The segment is said to have had $543 million in net sales in 2006 with an EBITDA around $100 million, according to sources close to the situation.

The diversified retailer said it would divest the business after several shareholders complained that the company had overleveraged itself to make a series of acquisitions. The divesture also follows the company's move to sell its lawn, garden and insect control businesses last year when it hired Goldman Sachs to explore alternatives.

Currently, Spectrum has yet to sell any of its business segments but shareholders are hoping that this first deal - which accounts for 21% of the company's overall sales - will help spark interest in others and improve the company's suffering financial condition.

In the end, this is great news for shareholders as it means more cash on the balance sheet, less debt, and much greater flexibility. Spectrum's plan to divest all of its mis-guided acquisitions is a move that could finally help shareholders unlock value that has been hidden in this company for years. Combined, these factors make SPC a stock worth watching!

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China Direct Inc. (AMEX: CDS) is a management and consulting company that both provides consulting services to public Chinese companies as well as acquires controlling stakes in Chinese firms with the intent of using the position to better direct and manage the business.

Though China Direct focuses specifically on mid-size Chinese companies, it still represents a play on the Chinese economy as a whole - which is almost universally seen as a very attractive investment.

Though China's GDP has been notoriously difficult to pin down precisely due to government manipulation of the numbers and other statistical factors, it is generally accepted that China has been growing at an astonishing annual rate of approximately 9% since the late 1970's, with GDP growth in the last three years averaging an even higher 10%.

China Direct is particularly poised for growth as it was just listed on the American Stock Exchange on September 24th. This was an important symbolic step representing the company's permanence and market cap, now exceeding $130 million - but it also plays a practical role in the company's future.

New merger and acquisition regulations in China would have prohibited China Direct from using its OTC shares for purchasing stakes in Chinese companies; however, China Direct can now use equity for future investments due to its listing on AMEX.

The listing of China Direct on AMEX combined with the recent performance of Jinwei, a subsidiary of China Direct that produces magnesium, has sent China Direct's stock price up almost 50% this week.

Twin Disc (NDAQ:TWIN) executives and board members may have to fight for their jobs after a large investor again criticized the power company's misleading statements and urged it to pursue a sale, according to a Schedule 13D/A filing with the SEC.

Clarus Capital, which owns 5.1 percent of the company, issued a letter to Twin Disc's board of directors criticizing the company's own initiatives to unlock value and pushing for it to hire an investment banker to explore a possible sale. In particular, the hedge fund is concerned with the fact that the company refuses to improve its balance sheet or privatize to reduce costs while board members and executives continue to sell shares.

"We are asking the Board to seek the advice of an investment bank regarding how to maximize shareholder value because of the continuing undervaluation of Twin's stock and because we believe there are parties who are interested in acquiring Twin at a significant premium to its current stock price," said fund manager Ephraim Fields in a letter to the board.

Some shareholders are questioning whether the company is really trying to maximize value. They suspect that the chief executive, who has already amassed significant personal wealth, may be more interested in keeping Twin as a family run business so that his son, who is currently an employee of the company and a board member, can one day run the company. Moreover, they question why the company remains public despite the lack of equity need and significant costs. Where do executive and board loyalties lie?

"With some of these Board directors continuing to reduce their already limited ownership of Twin stock, one might wonder whether these directors are truly motivated to make decisions that are in the best interests of all shareholders," said Fields. "As our 13D clearly indicated, over the past three months (which covers the period during which Twin has initiated its buybacks) Clarus has been buying, not selling, shares of Twin."

In the end, this appears to be another case of a family-run company that can't seem to accept the fact that they are legally bound to be accountable to shareholders. If Clarus Capital can successfully institute change and force a sale, significant value could be unlocked for shareholders. This makes TWIN a stock worth watching!

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Affinion Group Holdings (NYSE:AFI) revealed its intentions to go public next month in an amended S-1 filing with the SEC today. The marketing firm, owned by Apollo Management, is expected to raise $520 million at the $16 midpoint of its expected price range and would reward the private equity firm with a handsome 336% realized gain on its investment.

What does the company do? According to the prospectus, "We are a leading global provider of comprehensive marketing services and loyalty programs to many of the largest and most respected companies in the world. We partner with these leading companies to develop customized marketing programs that provide valuable products and services to their end customers using our creative design and product development capabilities."

The IPO is expected to price on October 9th and begin trading on the next day on the NYSE with the symbol AFI. The IPO will place its market cap at around $1.5 billion with 92.2 million shares outstanding. The company also plans to pay a dividend of 64 cents per share for 12 months following the IPO.

In the end, this IPO may be one worth watching given the success that many have seen in the sector and given the fact that it is backed by a successful private equity firm that has helped build it into a formidable company during the past two years. The IPO also underscores the continued success experienced by private equity groups incubating private companies.

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EchoStar Communications (NDAQ:DISH) shares jumped $2.77, or 6.7%, to $44.09 in afternoon trading after the television provider announced that it would be acquiring Sling Media and may spinoff its technology and infrastructure assets, according to a press release.

EchoStar issued a statement Monday night indicating that it had agreed to purchase Sling Media - which it already owns a stake in - for $380 million in cash and stock options. This will enable the company to offer the Slingbox system to its consumers, which enables users to watch and control home TV with a portable device such as a PDA or laptop.

The company also indicated that it is considering spinning off its technology and infrastructure assets. The spin-off assets would include, among other things, EchoStar's award-winning set top box design and manufacturing business, its international operations, and assets used to provide fixed satellite services to third parties, together with satellites, uplink centers and spectrum licenses not considered core to DISH Network's subscriber business.

"We believe separation of our consumer-based and wholesale businesses could unlock additional value. Each company would be able to separately pursue the strategies that best suit its respective long-term interests. The spin-off transaction would also allow employee incentives to be tied to their respective company's performance, and improve opportunities to effectively develop and finance expansion plans," said Charlie Ergen, Chairman and Chief Executive Officer of EchoStar.

Investors should carefully watch for a 10-12B filing with the SEC that would detail any potential spinoff as it often represents a great opportunity to profit. Meanwhile, the acquisition of Sling Media should provide the company with an innovative new product that can help it differentiate itself in an increasingly competitive market. Combined, these events are great news for shareholders and investors.

In the end, this is great news for shareholders who have been waiting for an event to unlock value in shares that have dropped over 10 percent from their 2007 highs. Combined, these factors make DISH a stock worth watching!

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Rural Metro Corporation (NDAQ:RURL) executives and board members may finally face their day of reckoning after a large shareholder expressed dissatisfaction with the medical transportation company's late SEC filings, inadequate investor relations and the unreasonable delay of the annual meeting, according to a Schedule 13D filing with the SEC.

Stadium Capital, which owns 11.4 percent of the company, changed their filing status from passive to active yesterday and urged members of the board to restore shareholder confidence by addressing its concerns, replacing management or pursuing a sale of the company.

"Our primary research continues to suggest that RURL has strong relationships in the communities in which it operates and highly regarded field personnel," said the hedge fund in its letter to the board. "We believe that there is value well in excess of the current share price, but repeated financial reporting, operational and communication blunders have both masked and potentially eroded this value."

The hedge funds primary concerns are with the confusion and frustration caused by RURL's repeated delays and restatements (see 10-KNT filing) along with weak financial performance arising from mismanagement of uncompensated care. The company also shocked shareholders when it announced in a Schedule 14A filing that it would delay its 2007 annual meeting until February 2008!

Stadium Capital wants to address these issues sooner, "We see no reason to wait until February 28, 2008 to have the 2007 Annual Meeting of Stockholders. You and we know that there are significant issues that need to be discussed and we would prefer to get that done as soon as possible."

In the end, there are clearly problems with RURL that need to be addressed and it will be interesting to see how the company responds to these requests. Stadium's large stake in the company should at least warrant a response, which makes RURL a stock worth watching!

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Elixir Pharmaceuticals Inc. announced its intentions to raise $86.3 million in an initial public offering, according to a S-1 filing with the SEC. The company did not indicate a specific IPO date but did note that it would use the proceeds to fund pre-commercial activities for its lead drug candidates Glinsuna and Metgluna which are set to seek approval in 2009.

""We are a pharmaceutical company focused on the discovery, development and commercialization of novel pharmaceuticals for the treatment of metabolic diseases such as diabetes and obesity," said the Elixir Pharmaceuticals in its filing with the SEC. "We mine the pathways involved in the regulation of aging discovered by our founders to identify novel mechanisms leading to the development of compounds to treat a range of metabolic diseases and disorders."

Elixir Pharmaceuticals recently reported closing a $28 million Series D round of venture capital earlier this month, with $10 million coming from Novartis AG. The company also raised $100 million in the past from backers like MPM Capital and Arch Partners. There is clearly a lot of interest in the company's drugs and many are hoping that Wall Street will share the same enthusiasm despite IPO'ing before a drug launch.

"Our product pipeline includes a number of programs which we believe will have significant advantages over existing products and will address unmet medical needs of the large metabolic disease markets," added the company in its statement with the SEC. "These include our phase III programs, Glinsuna (mitiglinide) and Metgluna (mitiglinide plus metformin) for the treatment of type 2 diabetes, and our novel ghrelin antagonist which represents a potential next-generation treatment for a range of metabolic diseases."

In the end, there is a tough IPO market at the moment that may cause some troubles, especially given the fact that the company has yet to produce a drug that it can sell in the United States. However, the drugs in its pipeline are in Phase III and are very promising. This makes Elixir a stock worth watching!

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