Amgen Inc. (NDAQ:AMGN) received a boost from George Putnam's The Turnaround Letter, which called this a great opportunity to buy Amgen stock. The famed turnaround artist explained that a who's who list of value investors, including David Dreman and Bill Miller, have been accumulating the stock and he'd recommend joining them.

Here's an excerpt from the letter:

"Not only are the short-term regulatory issues abating, but more importantly, Amgen has the drug pipeline, the manufacturing capability and the financial resources to remain a leader in providing biotech solutions to the many health problems faced by the graying population across the developed world.

"While there is still a risk that Medicare and private insurers might impose restrictions that would hurt sales of the drugs, those risks are pretty well priced into the stock. Moreover, the physician community appears to favor continued widespread use of these drugs. The company is also reducing costs, which should help offset any loss of revenues from these two drugs.

"Longer term, Amgen's pipeline of products in development – targeting conditions from osteoporosis to diabetes to prostate cancer to Alzheimer's disease – is widely considered to be the strongest in the biotechnology industry.

"Over the last few years, the pipeline has more than doubled in size and become much more diverse. In 2006 the company spent $3.4 billion on research and development, and it is also willing to make acquisitions that boost the drug pipeline.

"For example, in 2006 Amgen spent $2.1 billion to purchase Abgenix, thereby greatly expanding the company's expertise with human monoclonal antibodies. Now Amgen is poised to launch Denosumab, a monoclonal antibody that helps prevent the loss of bone-mineral density, and it is viewed as having the potential to be a revenue blockbuster.

"Another strength of Amgen is its manufacturing capability. Producing biologic drugs is more complex than many other kinds of pharmaceuticals. With nearly $6 billion invested in plants and a highly trained workforce, the company is well positioned to prosper as the industry grows.

"In addition, Amgen has the financial resources, including more than $5 billion in cash, to support all aspects of its business. Today, as in 2000, Wall Street is wondering how fast Amgen will be able to grow in the years ahead. There's a big difference today, though: in 2000, the P/E ratio was as high as 77; now, it's a much more attractive 16."

Overall, this is solid research and a great recommendation to purchase Amgen stock at these low prices. Whether or not the market chooses to follow this advice remains to be seen, but AMGN is definitely a stock worth watching in the meantime!

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Dell Inc. (NDAQ:DELL) shares fell over 13 percent today amid concerns that rising costs from a turnaround would destroy profitability for the computer-maker in future quarters. The company reported better-than-expected earnings growth of 8.5 percent in its third quarter, but said gross profit margins narrowed by 1.4 percent while operating expenses rose 24 percent.

Many analysts are now questioning if Dell's turnaround can succeed at all. It may take more than a year to build a worldwide retail network similar to HPs while it is likely to continue losing market share in the meantime. The company's direct-to-consumer business model has far too little share of the global market to succeed against larger competitors. The server market is also hurting with increased competition from Sun and others.

Dell may now be finding itself in a situation that it cannot fix. The company does not have a broader array of businesses than its competitors. The company no longer has cost advantages when it comes to ordering online or scalability. And it no longer the only computer manufacturer to offer computers online. There is clearly a plethora of issues facing the company that mere cost-cutting and restructuring cannot solve.

Dell's old business model was one that was built atop of a platform with a notoriously low barrier to entry while they focused on competiting on price. That's a battle that very few companies can win. These factors make DELL and interesting stock to watch as investors have very little hope for the company now...

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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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Citigroup Inc. (NYSE:C) reportedly received a call from an invetment banker suggesting that it explore the possibility of merging with Bank of America (NYSE:BAC) as the bank deals with billions of dollars in writedowns stemming from losses in the subprime and credit markets. The rumor caused a spike in the stock, but the two banks immediately dismissed it as nothing more than rumor.

Citigroup's board responded by calling the approach "totally out of hand" saying that no discussions have taken place. Meanwhile, Bank of America said it never authorized a formal proposal to Citigroup. And finally, a person familiar with the matter reportedly said that Citigroup would be unlikely to consider such a merger as the bank would be very difficult to manage.

The rumor gained traction due to Citigroup's recent $7.5 billion cash infusion from the Gulf Arab emirate of Abu Dhabi, which gave it fresh capital to repair the subprime mess and explore other opportunities.The new Arab emirate will be the bank's largest shareholder following the transaction. Many speculated that the company may use this cash to acquire other bank stocks that are cheap as a result of the crisis.

In the end, this is news that is worth following. After all, there is likely to be continued speculation on the use of the funds Citigroup acquired. Bank stocks are also up today on hopes that the Fed will cut interest rates once again. Combined, these factors make C a stock worth watching!

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Transocean Inc. (NYSE:RIG) shares are up over four percent in today's trading as the stock continues its run despite a credit downgrade from Fitch. The stock is up recently on an announcement of its inclusion in the S&P 500, which will force many mutual funds to begin acquiring the shares during their next rebalance. It also marks the company as an industry giant.

So, is this downgrade worth worrying about? Well, Fitch downgraded the company's debt to BBB-, two notches above "junk" status, because of Transocean's intent to devote free cash flow during the next two years towards debt repayment. Luckily, the company has a very strong backlog and recently increased the diversification of its fleet, meaning that this may not be such a bad idea. In the end, the company will probably not have a problem with cash.

However, the company did establish a 364-day $15 billion bridge loan to fund its cash dividend to shareholders (as a result of the SantaFe merger), which will be reduced through a combination of debt and equity. This is what has caused some concern by the credit agency and several institutional investors because it means the company will be leveraging itself substantially in order to unlock value in its future cash flows in today's dollars.

In the end, Transocean is banking on the fact that it is underleveraged given its future cash prospects. This may be true, but we now know how quickly markets can turn when excess leverage is used. It was probably prudent for Fitch to cut ratings, but it doesn't mean their is a problem quite yet. Combined, these factors make RIG a stock worth watching!

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Steak n Shake (NYSE:SNS) may be in for a shake-up of its own after Sardar Biglari's Lion Fund increased its stake in the company from 7.3% to 8.6%, according to a Schedule 13D/A filing with the SEC. The activist hedge fund has been targeting the company lately, voicing their concern about mismanagement of the company by the present board of directors.

The move is welcomed by many investors frustrated with the company's recent performance. Shares in Stake n Shake have plummeted in recent weeks after it reported that net earnings dropped by more than 50 percent on same-store sales down 3.8% for fiscal 2007. According to one analyst, "I think the best way to describe it at this point is basically it's a big mess, and it's going to take some time to turn it around."

In fact, things have gotten so bad that disgruntled shareholders have formed a website (EnhanceStakenShake.com) and are placing billboard ads in the Indianapolis area lobbying for board seats. The campaign is spearheaded by The Lion Fund and is very similar to what happened when it lobbied for a sale of Friendly Ice Cream - which turned out to be a great success.

In the end, it is uncertain as to whether or not these efforts will pay off. The company has suffered horrible losses and shares are trading at a low. Many investors are hoping, however, that The Lion Fund can work to unlock shareholder value using the same successful tactics that it has in the past. Combined, these factors make SNS a stock worth watching!

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Lahde Capital, a California-based hedge fund, has made more than 1,000 percent return this year by betting against subprime home loans, making it one of the world's best performing funds of all time. Andrew Lahde, the man behind the fund, noted that his returns had exceeded every estimate that he has ever offered any investor.

“We believe that all of these positions have further downside. However, the risk/return characteristics are far less attractive than they have been in the past. We do not plan on adding any positions at current levels. If the ABX indices were to bounce, we may short them again,” wrote Lahde in a letter to investors.

Lahde's portfolio consists primarily of short positions in AA down to BBB- holdings on the ABX index. The hedge fund plans to close out its positions in BBB- holdings within the next 90 days, only holding onto As and AAs, which will - according to the fund - take awhile to disintegrate but still may be worth nothing at all. Meanwhile, Lahde's new focus will be in a new fund that will short credit, as there is still plenty of bad credit to short!

In the end, this hedge fund's great performance can give us some insight into how much damage is left. Clearly, the scaling back of his position indicates that some of the mortgage problems may be coming to an end; however, there is still a lot of bad credit on the credit markets that may be worth shorting.

Borders Group (NYSE:BGP) shares rose over four percent today after Bill Ackman's Pershing Square Capital Management disclosed an increased 17.1% stake in the company, according to a Schedule 13D/A filing with the SEC. The activist investor has reportedly been soliciting the board for its views on the firm's management, but gave no further details into his interest in the company.

Borders Group is well off of its 52-week highs of $24.15, trading at just $12.29 today. However, the company said last week that it expects its holiday sales be benefit from a toy backlash and strong best-seller lineup and customer rewards program. Management did not give an exact estimate, but did say that its fourth quarter earnings - excluding restructuring charges - will exceed last year's earnings from continuing operations of around $1.48 per share.

"If you mention the toy business, they have had a lot of issues there because of safety issues, recalls, etc.," said Borders CEO George Jones in a conference call with analysts. "We are going to have signing in our stores ... talking about what a nice, safe alternative books can be and what a great gift they are for kids."

Borders Group is also in the middle of a turnaround launched in March. The move includes the sale of some international stores, efforts to improve operates at U.S. bookstores, and the development of its own website to replace its existing agreement with Amazon.com. To this end, the company announced its decision to sell its 42 superstores and 28  Book etc. stores in the UK and Ireland for up to $40 million.

In the end, Ackman may be interested in the turnaround process combined with the potential boost obtained from the toy recalls in China. Others speculate that he may be interested in switching up management and implementing a new strategy. Regardless, these factors make BGP a stock worth watching!

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