Steven Madden Inc. (NDAQ:SHOO) caught the attention of at least one activist investor today after the company announced that it was setting up a strategic review committee and hinted that a sale to a strategic or financial buyer may be in the best interest of the company. The Clinton Group disclosed an increased stake and reiterated that a leveraged stock repurchase would help improve the efficiency of the company's capital structure and create immediate value for shareholders while it explored the possibilities of a sale.

"We would support a sale of the company if the acquisition price reflected Steve Madden’s promising, long-term business prospects," wrote the Clinton Group in a letter to the board. "We think there are potentially multiple buyers who would be interested in the company. Steve Madden may be a logical target for a strategic buyer interested in diversifying its footwear portfolio, or a financial buyer who could steward growth in a flexible, private context."

The Clinton Group was also quick to note that they look forward to working constructively with the board and strategic review committee in order to facilitate this process. The activist hedge fund did not want to make this appear as if it were a hostile campaign at all. Clearly, this is also good news for other shareholders who stand to gain if the company announces a transaction. This makes SHOO a stock worth watching!

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Merrill Lynch & Co. (NYSE:MER) may face heavy fines and prosecution from regulatory authorities after reports surfaced that the firm may have been hiding its losses from investors through a series of transactions resembling the network of lies at Enron. Sources say that Merrill may have hidden its exposure to risky mortgage-backed securities by selling commercial papers through related entities that it agreed to repurchase in a year at a premium.

One of the deals being discussed was a $1 billion commerical paper sale by a Merrill-related entity containing mortgages. The hedge fund who purchased the papers had the right to sell back the paper to Merrill after one year for a guaranteed minimum return. Since the liabilities were never transferred, this transaction should have been reported to shareholders who could then account for them on Merrill's books. But instead, they were hidden for a year.

The issues never came to light until now after Merrill was forced to take a $7.9 billion write-down fueled by mortgage-related issues. Some are projecting that next quarter the firm will be forced to write-down $4 billion more in the fourth quarter after a combined $8.4 billion loss this quarter. Merrill still appears to be making its rounds with hedge funds, however, in an effort to reduce their exposure. But presumably, they will be a little more careful now as regulators begin to take a look into their activities.

In the end, Merrill is in a world of hurt that could get worse if regulators find that the firm took illegal actions to hide its risky mortgage exposure from shareholders and investors. The firm is not likely to close as a result of these allegations, but shares could see even more downside pressure. Combined, these factors make MER a stock worth watching!

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Sprint Nextel (NYSE:S) is reportedly considering a spin-off of its WiMax business amid declining profits and subscribers in its core business. There is speculation that Sprint may be looking to acquire WiMax-partner Clearwire (NDAQ:CLWR) and spin-off the two companies to satisfy investors who are skeptical of WiMax and looking for a separation.

Many technologists love WiMax but the project continues to be seen as a massive cash bonfire on Wall Street. Sprint previously announced that it is committed to spend nearly $5 billion over the next three years to complete the wireless network that is expected to have the same coverage area as standard cell phones. Clearwire is also expected to contribute roughly the same amount to finish its national footprint.

However, there are those that are betting on WiMax becoming the new global standard for wireless. Clearwire has an impressive list of large investors, including Intel and Motorola, who have a great deal to lose if the project gets slowed down. A combination of Sprint and Clearwire would not only result in substantial capital savings from synergies but also likely enable financial support from the companies that have a stake in WiMax's success.

In the end, the WiMax spin-off would satisfy Sprint investors who are skeptical but allow investors who are bullish on the new technology to make a pure-play bet on it. Meanwhile, a combination with Clearwire would provide the spin-off with much greater stability and make additional funding from strategic players much easier. Combined, these factors make S a stock worth watching!

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