Transmeta Corporation (NDAQ:TMTA) shares rallied today after Riley Investments disclosed a 5.9% stake in the company and demanded that the company review its strategic alternatives. The activist hedge fund also indicated its belief that the stock is undervalued relative to its intrinsic value and peers. Shareholders are hoping that the company will heed the advice and work to unlock shareholder value.

Riley Investments said it believes that the public market valuation reflects a negative enterprise valuation despite strong prospects for positive free cash flow in 2008 and the five years for which it will be paid license fees under its recent agreement with Intel. Moreover, the hedge fund indicated that after Intel's first $150 million payment, Transmeta will have close to $180 million in cash on its balance sheets. This equals out to $13 per share in cash compared to the market value of $12 per share!

Riley Investments demanded that the company review its strategic options to enhance shareholder value. Specifically, the hedge fund recommended that the company sell the intellectual property to a company who can better leverage the costs associated with pursuing the strategy, delist from the NASDAQ, go "dark" to significantly reduce public company costs, or finally, engage in a significant dutch tender offer to unlock value.

In the end, this is all good news for shareholders as it means the company's intrinsic value could be realized. Whether or not the company takes action remains to be seen, but this is definitely a stock worth watching closely!

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Wynn Resorts Ltd. (NDAQ:WYNN) announced today that it would be issuing a $6.00 per share cash dividend for all shareholders of its common stock. The distribution will be payable December 10th for shareholders on record November 30th and will begin to trade ex-dividend on November 28th. Shares moved up over 6 percent on the news after a substantial drop yesterday.

The news comes amid a mass exodus from the casino stocks. Barrons came out yesterday saying that early profits from Macau were strong, but forecasts for this to continue fail to consider the impact of over-building and maturation. Since entering Macau, Wynn has surged more than 140 percent and it is going to slow down. They believe that investors are in for a surprise when they see margins being pressured.

Some analysts disagree, however, saying that forecasts are on-track for a total market size of over $15 billion by the end of 2010. However, one wildcard acknowledged by both parties is the risk of the Chinese government intervening with new rules and regulations that could curb growth. Combined, these factors make WYNN a stock worth watching!

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Target Corporation (NYSE:TGT) shares are down marginally after the retailer announced disappointing third quarter earnings but managed to mask it with a giant share buyback. Shareholders are hoping that the company will be able to turn itself around in a tough sales environment, while many are encouraged by the giant share buyback announced.

"Our third quarter earnings were disappointing due to soft sales in our higher margin categories, leading to lower-than-expected gross margin in our core retail operations," said Chairman and CEO Bob Ulrich. "However, we have not observed any meaningful change in the intensity of the competitive environment and continue to believe that we are well-positioned to operate in a variety of sales environments going forward."

Target also announced a giant $10 billion share buyback program along with an update to credit card receivables unit that is still pending. In September, the company said it was considering selling $7 billion in credit card assets in order to unlock further value for shareholders. The buyback alone would result in nearly a quarter of its shares being repurchased while the $7 billion cash infusion from a sale would also be a windfall.

In the end, Sears is facing a variety of problems. The company is facing a credit downgrade and a tough competitive environment. However, a share buyback combined with the prospects of a $7 billion sale of its credit card division. Combined, these factors make TGT a stock worth watching!

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Sears Holding Corporation (SHLD)

Sears Holding Corporation (NDAQ:SHLD) disclosed a 13.7% stake in Restoration Hardware Inc. (NDAQ:RSTO) and indicated that it may be interested in a takeover of the hardware company. The news comes after Restoration Hardware entered a definitive merger agreement at $6.70/share with an affiliate of Catterton Partners. Shareholders are hoping that Sears will make a higher bid and unlock additional value for shareholders.

Currently, Sears Holdings is seeking to obtain certain non-public information from Restoration Hardware and has indicated that it would enter into a confidentiality agreement to do so. The two companies have reportedly discussed the terms of such an agreement, but there is no guarantee that anything will come of it. Presumably, this agreement will enable Restoration Hardware to open its books and perhaps lead to a higher bid.

This speculation led to an 11.85% jump in the stock price today - far in excess of the $6.40 per share buyout offer that is currently on the table. Notably, this number is still well below the company's 52-week high of $9.17. But it is unclear whether Sears would raise the bid that significantly in order to beat out a $6.40 bid that is unlikely to be raised in response.

In the end, Sears' previous offer of $4.00/share was too low and an additional bid may be possible once they have more information about the company. This is great news for RSTO shareholders, as it could mean more money for the buyout. Combined, these factors make RSTO and SHLD two stocks worth watching closely!

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O'Charley's, Inc. (NDAQ:CHUX) may find itself under pressure from shareholders after activist investor Crescendo Partners disclosed an 8.9 percent stake in the company. The news came shortly after shares plummeted early Friday without reason. The restaurant chain is trading near its 52-week lows off of its high of $23.45 earlier this year.

O'Charley's is a casual dining restaurant company that owns and operates three restaurant concepts under the trade names O'Charley's, Ninety Nine Restaurants, and Stoney River Legendary Steaks. The company owns and operates 227 restaurants in 16 states along with six franchise operations. Restaurants have been a popular activist target recently with many activists demanding spin-offs or share buybacks to unlock value.

Crescendo Partners is most well known for its recent involvement with Topps, where it is attempting to force a buyout of the company. In this case, the hedge fund noted that it was not currently considering taking any typical activist action, but it may amend the filing in the future to include those possibilities. For now, the activist seems content in acquiring shares of the company at near a 52-week low.

In the end, this is a situation definitely worth watching as an activist investor is acquiring a sizable stake at near 52-week lows. Whether or not they will take future actions to actively unlock value remains to be seen, but the possibility is strong given the hedge fund's past actions. Combined, these factors make CHUX a stock worth following!

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E*Trade Financial (NYSE:ETFC) shares dropped marginally today after reports surfaced that the company may be looking to accept a cash infusion or sell itself to a competitor after a 60% cut in its market capitalization. The drop was fueled by analyst reports that there could be a run on deposits at E*Trade's bank, which reported a drop in the value of its mortgage holdings last week.

So, is E*Trade a value play at this point? Well, a cash infusion would likely increase investor confidence after the company's market cap fell to just $2.28 billion from $10.9 billion just a few weeks earlier. However, diluting the equity base might cause some issues with shareholders who have already seen a steep decline in the value of their holdings.

Meanwhile, a buyout may be the better option. The most likely suitor would be TD Ameritrade (NYSE:AMTD) and there would be plenty of benefits for the two firms as customer accounts could be transferred at almost no cost. Additionally, the long-term savings of such a combination would be over $600 million annually. In effect, this would make the deal pay for itself after five years or so.

In the end, this deal is great news for shareholders who stand to benefit from any such transaction. The brokerage also noted yesterday that it was not in any danger of default and would not face a cash crunch. Combined, these factors could mean a potential value play in the future.

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Cisco Systems (NDAQ:CSCO) shares rallied today after the company announced that its board authorized up to $10 billion in additional share repurchases of its common stock with an indefinite time period. This brings the total authorized amount under the program to $62 billion if it is fully completed.

Cisco's current market cap stands at just $178 billion, meaning that if all the shares are repurchased the company will nearly be taken private. The news comes after the company's stock slumped nearly 10 percent when chief executive John Chambers said that declining orders from automobile and financial companies are curbing growth.

Results ended up being in line with expectations but failed to impress investors  who had been expecting faster growth. After all, Cisco has exceeded sales predictions for the last seven out of eight quarters! To help increase growth, the company has looked to invest in emerging markets, making acquisitions and pushing into new products such as television set-top boxes.

Int the end, this share repurchase is good news for investors. While the unlimited timeframe is of some concern, it is good to know that the company is interested in unlocking shareholder value during tough times. Cisco remains a solid stock with solid growth numbers, and should recover along with the general economy. Combined, these factors make CSCO a stock worth watching!

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Warren Buffet's Berkshire Hathaway (NYSE:BRK) revealed its portfolio today in a mandatory Schedule 13F filing with the SEC. The regulatory filing showed the billionaire investor increasing his holdings in banks, including Bancorp, which he was rumored to be considering for acquisition. Investors are carefully watching the investors actions as it could mean an opportunity for them to piggyback on his famous market knowledge.

Buffet added to his stakes in three large U.S. banks, including Wells Fargo, U.S. Bancorp, and Bank of America. He also disclosed a new stake CarMax Inc. (NYSE:KMX), which surprised many investors since the auto industry is not expected to turn for some time now. The timing is also questionable as the company appears to be headed towards a recession and car loans are becoming more scarce.

Wells Fargo made the news in another way today after its CEO said that its exposure to CDO's and asset-backed commercial paper is minimal. He also noted that the U.S. housing market is now the worst since the Great Depression and is far from over. This dropped many bank stocks while Wells Fargo traded higher on news that its own exposure was limited.

The banking market is still being hit hard from subprime and credit market concerns that have caused deep losses in many investment banks like Merrill Lynch and even brokerages like E*Trade. Whether or not we have hit a bottom remains to be seen, but it appears that Warren Buffet may be predicting a bottom coming relatively soon given his large move.

In the end, this is good news for the banking industry and very interesting news for investors who are sitting on the sidelines. Buffet has been involved with the banking world through several crisises like this one (read: LTCM) and has experience in the industry. Combined, these factors make the banking industry worth watching closely!

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Billionaire investor Carl Icahn acquired stakes in Genzyme Corporation(NDAQ:GENZ) and Harrah's Entertainment Inc. (NYSE:HET) after selling his stakes in Kraft Foods Inc. (NYSE:KFT) and Clear Channel Communications Inc. (NYSE:CCU), according to a Schedule 13F filing released Wednesday. Shareholders are hoping that the activist investor will work to unlock value in some of these new investments.

Icahn also reported new stakes in several video game providers (TTWO, PLCE), medical companies (MOGN, CYBX, ACOR, CRA, ABI, LSR), and gas and oil companies (CMT, TLM). Interestingly, he sold off his stake in aluminum producers (AA, AL). Meanwhile, he significantly increased his stake in larger companies like BEAS, MOT, REGN, and APC.

Carl Icahn is well known in the investment community as an activist investor willing to do what it takes to unlock value in his investments. The investor has ousted several CEOs and enforced "strategic alternatives" like share buybacks and outright sales. It is likely that at least his stake in BEAS will result in an activist situation. Combined these factors make Carl Icahn worth watching!

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Delta Airlines (NYSE:DAL) announced that it has formed a special board committee to evaluate strategic options after being pressured by an activist hedge fund. Pardus Capital Management, which holds stakes in Delta and United, sent a letter to Delta Management Tuesday renewing its call for airline consolidation and advocating a Delta-United merger. Shareholders pushed up the stock of both companies in response.

Pardus noted in their letter that they believe it is, "imperative that Delta enter into a merger transaction with another carrier given the rapid rise in fuel prices and increased risk to the business as a stand alone entity." The letter came in response to word that Delta had consulted industry experts, including a former Continental Airlines chief executive. Some believe that this may have caused concern that Delta was looking elsewhere for merger possibilities.

Pardus insisted that a merger between Delta and United could result in $585 million in synergies along with other benefits that would result in a combined company stock worth $53 per share - a 75% improvement over today. The hedge fund even offered to support the Delta management team leading the strategic direction of the combined entity.

"We have been consistent in our public statements that Delta believes that the right consolidation transaction could generate significant value for our shareholders and employees and that strategic options should be evaluated," said Delta in a statement. "With oil at over $90 a barrel, this analysis takes on a heightened importance as we factor those prices into our long-term planning process."

In the end, this is all good news for Delta shareholders and may finally mark an end to the problems that have plagued the company before it was forced to declare bankruptcy and emerge in debt. These factors make DAL a stock worth watching closely!

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