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.

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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!

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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!

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