Bristol-Myers Squibb Co. (NYSE:BMY) shares continued their climb today amid speculation that the company could be a takeover target for a larger un-named pharmaceutical company. Implied volatility jumped over 5% during the past week indicating an increased bet on bullish price action.

The pharmaceutical company has been the target of takeover rumors for some time now, specifically with France's Sanofi-Aventis who was previously rumored to be interested in the company. Options activity looked similar to yesterday's before it died down along with the rumors.

Bristol-Myers does not comment on market speculation, but with 26,700 call options trading hands yesterday compared to only 2,800 puts, this is definitely a stock to keep an eye on. It seems that many traders are betting on the November $30 call options, meaning they expect the price of the stock to exceed $30 in about a month.

Related Companies
Pfizer Inc. (PFE)
Barr Pharmaceuticals (BRL)
Genentech Inc. (DNA)

SunAmerica Focused Alpha Growth Fund Inc. (NYSE:FGF) is a successful non-diversified, closed-end managment investment company that is starting to catch the attention of hedge funds given its somewhat cheap valuation and growth prospects. The fund has moved up over 23% since mid-2006 and recently declared a dividend in August. 

Karpus Management, which owns 4.34% of the company, disclosed a Schedule 13D filing yesterday indicating that it acquired shares in the company for investment purposes but reserve the right to contact management with regard to concerns they have with the fund - presumably the growing valuation gap. This is especially interesting given Karpus' specialty focus in closed-end funds.

Many activist shareholders have targeted undervalued closed-end funds seeking to convert them to open-ended funds or forcing them to liquidate their undervalued positions and return the proceeds to shareholders via a special dividend or share buyback. Real estate closed-end funds in particular have been pressured to convert to REIT structures in order to unlock value.

In the end, we still do not know whether Karpus intends to do anything with its investment in SunAmerica. However, activist hedge funds have been increasingly looking into this sector, making this a situation that is definitely worth watching!

Related Companies
None

PDL BioPharma, Inc. (NDAQ:PDLI) finally bowed to the demands of activist shareholders by announcing that it will seek offers for the sale of the company as a whole or of its key assets, according to a press release put out by the company yesterday.

The pharmaceutical company announced that it has completed its review of strategic alternatives and decided to pursue a sale of some or all of the company's assets. To this end, PDL has retained Merrill Lynch to help it shop itself and maximize shareholder value.

"Following a comprehensive review of available options, the PDL board has concluded that seeking offers for the sale of the company as a whole or of its key assets is our primary strategic focus," said Ms. Dawes, chairperson of the board. "We look forward to working with our advisors and interested parties to maximize stockholder value."

The company also announced that Mark McDade has stepped down from his position as chief executive and director effective immediately. Shareholders have been pushing for such a move for some time arguing that it was McDade who mismanaged the company and destroyed shareholder value. Patrick Gage has stepped in as interrim CEO until a suitable candidate can be found.

 "I look forward to leading the talented and dedicated employees of PDL during this time of transition to build stockholder value through increasing our operational efficiency and driving our business forward," said Dr. Gage, interim CEO.

In the end, this is great news for shareholders who have been struggling with lackluster performance for years. It also marks another success for Daniel Loeb's Third Point LLC and Steven Cohen's SAC Capital who have both pushed (albeit passive for SAC) for McDade to step down and the company to act to unlock shareholder value. Combined, these factors make PDLI a stock worth watching!

Related Companies
Genentech Inc. (DNA)
Medarex Inc. (MEDX)
DOR BioPharma Inc. (DORB)

AMR Corporation (NYSE:AMR) announced a plan today to reduce its interest expense amid pressure from activist shareholders to improve its financial results. The plan calls for the American Airlines parent company to prepay $545 million in aircraft debt in the forth quarter and should cut annual interest expenses by $25 million, according to their press release.

"With our improving financial performance, we have bolstered our liquidity position and we have opportunistically strengthened our balance sheet by reducing debt," said Thomas W. Horton, Executive Vice President of Finance and Planning and Chief Financial Officer of AMR. "While we have more work to do, our recent decisions not only improve our balance sheet, but also reduce our interest burden going forward and give us more financial flexibility for the future."

This new plan supplements existing actions taken by the company in the first half of 2007, including debt prepayments, bond refinancings and the lowering of interest rates on a credit facility. Combined, these actions eliminated an incremental $27 million of annual net interest expense, in additional to the net interest expense savings from AMR's scheduled debt amortizations. In the end, the company expects its net interest expenses to be $130 million lower than its expenses for the same period in 2006.

Clearly, AMR is doing what it can to reduce its expenses and improve its balance sheet to help unlock value for shareholders. Shareholders also applauded the move as AMR stock rose over 10% during the past two days. In the end, this is great news that makes AMR a stock worth watching over the next few months!

Related Companies
Continental Airlines, Inc. (CAL)
Delta Air Lines, Inc. (DAL)
Northwest Airlines Corporation (NWA)

Furniture Brands International, Inc. (NYSE:FBN) shares rallied for a second day after Samson Holding revealed a business combination proposal that the company declined to pursue in a Schedule 13D filing with the SEC. Shareholders are clearly excited about the interest as shares jumped almost 30% yesterday and another 7% in early trading today.

"[We] presented a proposal to the Issuer in July this year with respect to a possible business combination transaction, which the Issuer declined to pursue," said Samson in a statement. "The Issuer is a major customer of Samson Holding and in a business that is complementary to the Reporting Persons’ businesses and/or investments."

The Samson group said that it "may consider various alternative courses of action and take any action deemed appropriate" including seeking to acquire control of the company or pursuing board representation. This hardliner stance is the main reason shares in the company have risen to greatly.

In the end, any business combination is great news for shareholders as it would mean a significant premium to the company's current market price. Obviously, shareholders are very interested in such a deal as the share price has spiked on the news while the company seems like it may be resistant. Overall, this is a great stock to watch as this situation unfolds!

Related Companies
La-Z-Boy Incorporated (LZB)
Ethan Allen Interiors Inc. (ETH)
Stanley Furniture Co. (STLY)

A large shareholder of Duckwall ALCO Stores Inc. (NDAQ:DUCK) recommended several strategic changes for the company in a recent telephone conversation with Chairman Warren Gfeller, according to a Schedule 13D/A filing with the SEC. Shareholders and analysts are hoping that this could be a turning point for the company.

Strongbow Capital, which owns 14.2 percent of the company, suggested that the company expand the size of the board by one member and create an executive committee of the board that would be authorized to exercise all powers and authority of the board in the management of the business.

The hedge fund suggested that this executive committee work to reduce average inventory levels, reduce SG&A expenses and reduce losses from shrinkage. Strongbow also recommended that its own representatives occupy the additional board seat and be appointed to the executive committee.

Shareholders are hoping that this move can help bring accountability back to management and help the retailer improve its balance sheet and cash positions. It will be interesting to see if the company agrees with Strongbow and implements these changes. If so, this is definitely a stock worth watching!

Related Companies
Family Dollar Stores, Inc. (FDO)
Dollar Tree Stores, Inc. (DLTR)
Big Lots, Inc. (BIG)

Bioenvision Inc. (NDAQ:BIVN) may have trouble pushing through its proposed merger with Genzyme after a major shareholder reiterated its intentions to vote against it in the company's upcoming annual meeting. Shareholders are divided on the issue that promises to be a close call on October 14th.

SCO, which owns 13.1% of Biovision, called the $5.60 offer extremely inadequate and the result of a poorly managed and ill-timed sale process. The activist hedge fund believes that the company should instead work on behalf of shareholders to maximize value over the near term through alternative strategies.

"We remain highly confident that clofarabine will be approved in the European Union for the treatment of adult AML in 2008," said SCO in a letter to the board. "We believe that Bioenvision will be well positioned, within a 3 to 6 month timeframe, to engage an independent investment bank to do a well-run process to market the company to possible acquirors, and that there will be considerable interest in clorfarabine. We believe that this type of processs could lead to an offer price well in excess of the current offer price, leading to a success for all common shareholders including Genzyme."

SCO also announced that it intends to propose a new slate of directors for the next annual shareholders meeting that would work to this end and unlock value for common shareholders. Combined, these factors make BIVN a stock worth watching!

Related Companies
BioCryst Pharma (BCRX)
Peregrine Pharma (PPHM)
Coley Pharma (COLY)

Microsoft Corporation (NDAQ:MSFT) and Google Inc. (NDAQ:GOOG) have reportedly offered to invest anywhere between $300 million and $500 million for a 5% stake in the social networking giant Facebook. Many investors are carefully watching this deal as it could open the door to many opportunities.

First, there is speculation that the social networking website will use some of the money to build out its own advertising platform that could help boost its somewhat lackluster $150 million per year in revenues. Specifically, the company may use the cash infusion to buy a behavioral advertising company.

Many also insist that Facebook may have an interest in going public. After all, with its own stock it would be able to quickly make acquisitions and ramp up its operations. Obviously, any initial offering in this sector would be a hot IPO that is definitely worth watching closely.

In the end, Facebook will no longer have the time to invent new addons and services for its company. It will likely be forced to hire new engineers or acquire companies with products to fill their void to maintain strong growth. However, it is still uncertain as to whether the company will remain private, pursue a buyout or go public. Combined, these factors make Facebook and other players like MSFT and GOOG stocks worth watching!

Related Companies
International Business Machines (IBM)
Sun Microsystems (JAVA)
Cisco Systems (CSCO)

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!

Related Companies
Morgan Stanley (MS)
Goldman Sachs Group, Inc. (GS)

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.

Related Companies
NetGear, Inc. (NTGR)
Juniper Networks, Inc. (JNPR)