TXCO Resources Inc. (NDAQ:TXCO) shares rallied recently after an activist hedge fund notified that it would be nominating its own slate of directors for the company's board in order to unlock shareholder value. Shareholders and investors are hoping that this move will help the company capitalize on assets to bring the company's shares to its intrinsic valuation.

Daniel Loeb's Third Point LLC, which owns an 8% stake in the company, indicated in the regulatory filing that they believe the company's stock represents an attractive investment opportunity. Moreover, they contend that the potential value in the company's existing development projects has not been adequately recognized in the market price of the common stock. This could be due to the fact that management lacks the development experience and technical expertise to manage the opportunities presented by those projects.

As a result, the activist hedge fund indicated that it would be nominating its own directors to the company's board during the company's next annual meeting in 2008. Third Points three candidates would constitute half of the company's board and would provide the technical expertise to hire and manage executives capable of capitalizing on the company's existing development projects.

In the end, this is great news for shareholders as it could mean significant share appreciation over the short-term. The stock is also trading at a fundamental discount, which means that it has a little downside protection built-in. Combined, these factors make TXCO a stock worth watching!

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Bank of America (NYSE:BAC) is treading in rough waters these days ever since it sunk $2 billion into the struggling mortgage company Countrywide. That stake has since halved in value as Countrywide shares continued to decline during the past few months. This has led to speculation that BAC will be pressured into throwing more money onto the fire or perhaps even purchasing the mortgage company outright.

A recent Wall Street Journal article pointed out that "people familiar with the thinking in its executrive suite say the company is in a wait-and-see mode". This unearthed speculation that the company could acquire the troubled mortgage banking firm once it hits a bottom to create the world's largest mortgage bank. Bank of America already has the right of first refusal if another company makes an offer for Countrywide, but many believe that it may not wait.

So, what does this mean for shareholders? Well, the mortgage banking firm probably will not sell for much more than its current $5 billion market cap given all of the troubles that it is facing. Moreover, any potential deal might be questioned by antitrust officials concerned that the company will have a monopoly on the vulnerable market. The real value of such an announcement would be the idea of a bottom in the subprime mortgage crisis. Combined, these factors make BAC a stock worth watching!

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Marsh & McLennan Companies, Inc. (NYSE:MMC) shares rallied over two points today after a Toronto investment firm controlling around 1.1 million shares urged the company to spin off two of its business units. K.J. Harrison & Partners said the insurance broker's performance had "deteriorated financially and operationally" and that its strategy was flawed.

"In our view, holding companies are effective only when they demonstrated that they can add value through excellence in capital allocation and management selection and retention," said K.J. Harris CEO Jim Harrison. "Marsh & McLennan is currently doing neither. Consequently, the share price trades 40% below our estimate of the underlying enterprises and these enterprises are each at a disadvantage to competitors."

K.J. Harrison demanded that the company put a proposal for such a split off in the proxy for the company's next annual meeting. It is likely, given this analysis, that other shareholders will jump on board. Similar actions taken on other holding companies have resulted in significant value being unlocked for shareholders. Combined, these factors make MMC a stock worth watching!

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