Axcan Pharma Inc. (NDAQ:AXCA) shares rose marginally today after 9.95% holder Pennant Capital Management said they were disappointed with the $23.35 per share buyout price by TPG Capital. Shareholders remain divided on the issue, however, given the fact that the M&A market has suffered a dramatic setback since the credit crunch, which has lowered valuations across the board.

"While we support selling the Company, we believe the valuation indicated is inadequate considering the strong cash flows of the business coupled with significant net cash on the balance sheet," said Alan Fournier, managing partner of Pennant. "We believe the company is worth at least $25 per share using a relatively conservative 8x EBITDA multiple which still results in a high single digit FCF yield."

Pennant also questioned the timing of the deal, pointing out that it was announced concurrently with very strong revenue and earnings report that, couple with guidance, likely would have driven a recovery in the stock price. The speculation is that the deal was announced so that the premium looked much more substantial than it would have reacted had they waited until after the earnings report.

In the end, Axcan is a great company that recently reported strong results. The buyout offer may be ill-timed and inadequate, but it does represent something that the company should carefully evaluate. The board should also work to disclose the details of the process and evaluation to allow shareholders to assess the fairness of the transaction. Combined, these factors make AXCA a stock worth watching!

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Axcan Pharma Inc. (AXP)
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In a report today, the Mortgage Bankers Association said that delinquencies rose to over 5.5%, making them the highest they have been since 1986. Delinquencies, defined as being more than 30 days behind on mortgage payments, are seen as spelling future trouble for the housing market as many delinquencies turn into foreclosures, and an increase in foreclosures would further depress an already tough market for sellers.

Despite this news, the most prominent mortgage lender is up over 10% on the day. Countrywide Financial Corp. (NYSE: CFC), with a market capitalization of over $6 billion despite losing more than 80% of its value this year, is seen as being a major beneficiary of the recently announced federal plan to freeze the interest rates on some subprime mortgages as well as allow local governments to fund refinancing through tax-exempt bonds.

Both of these announcements are good news for Countrywide because it not only has significant mortgage portfolio holdings, which desperately need strengthening in the wake of rising foreclosures, but is also the major player in the mortgage origination industry and will greatly benefit from an increase in perceived housing market strength.

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United Rentals Inc. (NYSE:URI) shareholders may be in for a ride after SuttonBrook Capital Management disclosed a 5.83 percent stake in the company and announced that they may hold discussions with management, other shareholders or possible acquirers regarding a potential sale of the company. Many shareholders are still looking for an exit after the company's failed merger attempt with RAM Holdings (NDAQ:RAMR).

RAM Holdings and RAM Acquisition, subsidiaries of private equity giant Cerberus Capital Management, backed out of their planned $4 billion acquisition of United Rentals in November. United Rentals subsequently filed a lawsuit to force Cerberus to follow through with the buyout, since the firm gave no justifiable cause for terminating the deal. Cerberus contends, however, that they are only required to pay the $100 million breakup fee without reason.

SuttonBrook announced today that it would be in talks with interested parties regarding a possible merger, reorganization or liquidation of the company, sale of assets, material changes to the company's business structure, or changes in the board of directors, among other considerations. Many shareholders are hoping that other interested parties would be willing to make a bid or the company at or above the price that Cerberus was prepared to pay.

In the end, it is uncertain as to whether or not anything will become of this, but there are certainly many wildcards in play. Combined, these factors make URI a stock that is definitely worth watching over the next few months!

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It should come at no surprise that Fannie Mae (NYSE:FNM) has been loosing money, but just how much remains uncertain. The company's shares plummeted yesterday after it announced that it was cutting its quarterly dividend by 30 percent and raising $7 billion in new preferred securities after a strong reception to its previous offerings. Many investors are hunting for a bottom in this stock that has dropped nearly 50% during the past year.

Fannie Mae also announced today that it was expected to take credit losses of 8 to 10 basis points in 2008, compared to 4 to 6 basis points in 2007. The company said that 60% of its "seriously delinquent" loans have credit enhancement, based on the unpaid principal balance of the loans. The company also took the time to explain that the $7 billion offer yesterday will provide the company with a "capital cushion" over regulatory requirements in a "difficult market" and take advantage of select business growth opportunities.

The mortgage markets themselves remain in serious trouble as a significant number of subprime loans are expected to reset over the next 18 months. Many more near-prime loans are expected to do the same through 2010. It is important to note that all of these resets could cause further defaults, which could increase the number of homes on the market and lower prices. These lower prices then decrease the home equity the people rely on so much in the United States.

In the end, this problem is far from over and Fannie Mae may face further downside before it sees any significant upside. Regardless, this is definitely a stock to watch as once a bottom does it, there will be a great opportunity for profit!

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Websense Inc. (NDAQ:WBSN) shares moved up marginally after the Shamrock Activist Value Fund disclosed a 6.09 percent stake in the company - up from its previous stake of 5.03 percent. The activist hedge fund has made no indications that it would be seeking to unlock value, so many investors are assuming that this may simply be a value play worth watching.

Websense shares are more than 30 percent off of their highs as the company struggles in the tough environment. The web-security software company recently cut its third quarter revenue estimate amid concerns that it would see lower billings for the quarter. The company now expects third quarter revenues to be around $50.4 million compared with its prior view of $51.5 million.

Websense provides web filtering and web security software products that enable organizations to protect employees and confidential information from external web-based attacks, such as spyware and phishing, as well as analyze, report and manage how employees use computing resources and the Internet.

In the end, this continues to be a difficult business environment for Websense, which has been struggling with losses for several years. It will be interesting to see whether Shamrock takes action in its investment, or is simply confident that the company will eventually turn itself around organically. Combined, these factors make WBSN a stock worth watching!

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Atmel Corporation (NDAQ:ATML) shares rose marginally yesterday after Daniel Loeb’s Third Point LLC disclosed a reduced stake in the company. The activist investor disclosed in a regulatory filing that it had sold large blocks of shares between 10/11/07 and 11/30/07 at prices ranging from $5.80 and $4.39. The move will likely mean a loss for Loeb, who had been purchasing shares at around $5.45 a piece.

The integrated circuit manufacturer recently announced in-line earnings of $16.6 million or 4 cents per share, compared to a gain of 3 cents per share a year earlier (excluding a one-time gain of $120 million). This drop, combined with other news, has led to a drop in the company’s stock of around 30% since the beginning of the year. This may have been one issue that led to the activist liquidating its stake in the company – to cover the losses from the position or others in its portfolio.

So, how does the Atmel’s future look? Well, the company’s top and bottom line growth in recent years seems to be slowing considerably. The company currently trades at a negative PE ratio (since it has experienced losses during the past four quarters) but should stand at around 15x earnings based on its historical EPS growth rate. Meanwhile, the company’s market cap of over $2 billion is over 40x its latest quarterly net income, meaning it is extremely overvalued.

In the end, this stock is a poor investment that Daniel Loeb’s Third Point appears to have given up on. In the past, Loeb has taken action to repair his investments and return them to profitability in order to reap healthy profits for his hedge fund. However, in this case it appears that even he is losing faith. Combined, these factors make ATML a stock worth watching!

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Ford Motor Company (NYSE:F) shares moved up marginally after a fall Monday after the company announced the first positive sales trend after 12 straight months of decline. The automaker saw the greatest success from its redesigned Ford Escape, Ford Taurus X, and Mercury Mariner vehicles, which saw sales increase 199% compared with a year ago. Meanwhile, the new hybrid vehicles hit November sales records.

Ford also issued guidance in that was unchanged. In the first quarter of 2008, the company said it plans to produce 685,000 vehicles in North America compared to 740,000 during the first quarter of 2007. Sales for the fourth quarter of 2007, however, are expected to be unchanged from previous plans. This news surprised many industry analysts who had expected the company to announce results in line with other automakers who have been struggling with sales.

Ford also announced yesterday that a judge accepted the company’s deal to settle class action lawsuits on behalf of about 800,000 Ford Explorer owners whose vehicles low value because of their perceived rollover dangers. The settlement involves a payment of a $500 voucher to buy new Explorers or $300 vouchers to buy other Ford vehicles. This lawsuit has been in the works for several years and a settlement of the suit may remove a cloud that has been hovering over the company’s head for some time.

In the end, Ford appears to be on a turnaround track with sales starting to increase and a significant lawsuit under control. Combined, these factors make F a stock worth watching closely!

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Research in Motion (NDAQ:RIMM) may finally be feeling the effects of gravity after the company’s stock dropped another 8% yesterday on profit taking from many investors who are growing uncomfortable over the company’s earnings prospects. The stock made a huge run-up last year that took the stock up over 200%; however, shareholders are now taking some profits off the table as speculation circulates that the momentum may not be sustainable.

The mobile devices network has been in a state of flux since Apple launched its new iPhone and Verizon decided to open up its network to new devices and software. Such open systems may not help the Blackberry given the many new, competing products that have recently come to market. Verizon already markets the Motorola Q and Palm Treo – two of Blackberry’s largest competitors, and there is no way to predict how this may affect RIM.

Meanwhile, Google’s recent decision to provide open wireless device software through its service – codenamed Android – will likely allow competing device manufacturers to insert Blackberry-like features onto their own devices. Clearly, this is a reason for concern for the Blackberry as competition then becomes simply a matter of design instead of software. And finally, we already know that AT&T has been pushing the new Samsung Blackjack, which may end up taking a slice of the pie.

In the end, this new competition may prove to put a strain on Blackberry’s market dominance. Whether or not it will materially affect the company’s stock remains to be seen, but it is certainly a great reason to take some money off the table, which is what many people think is happening right now. Combined, these factors make RIMM a stock worth watching!

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Activist hedge funds have had a rough couple of months recently after several key deals have begun to fall through as the markets have plummeted. The hedge funds, which buy up cheap stock when they believe a catalyst could boost the share price, have seen double digit months for some time now. However, one of the key elements of their success is the ability to unlock value in their investments, often through exploring strategic alternatives. Unfortunately, these alternatives are becoming increasingly rare following the tough credit markets and stark drops in share prices.

The event-driven sector – as it’s known in the hedge fund world – has seen a drop of 4.3% so far this month with many prominent names seeing double digital declines. In fact, JP Morgan’s Highbridge Fund is down 12.7% in just the first two weeks of this month! However, others such as Atticus remain strong so far this year as they diversify their bets away from ailing industries. The prevailing favorite stocks amongst these players are value stocks – the same sector that is often hurt in markets like these.

Interestingly, many investment professionals are bullish on these same players as they begin to unwind their positions. The next big move will be towards the many distressed investment opportunities out there, and once the focus is placed on these sectors the portfolios will look very different than they do now. The current positions that are hurting are predominantly searches for private equity buyout targets – a strategy that has paid off handsomely during the past few months.

In the end, we are likely to see a different kind of return for these event-driven activist hedge funds. Rather than predicting and pushing for buyouts, these funds are more likely to begin seeking distressed investments that they can unlock value within and bring back to fair market price. These are still opportunities worth watching; however, they may now be more geared towards the long-term.

Newmont Mining Corporation (NYSE:NEM), the world’s second biggest gold producer, announced this weekend that it would be selling its royalty interests to Franco-Nevada Corp – one of its subsidiaries that it plans to spin off. The sale of the interests and other “non-core” investments is expected to net $950 million that it plans to use to fund the development of its mining business.

“We remain focused on our core gold operations and intend to reinvest the proceeds to increase gold price leverage for our shareholders,” said CEO Richard O’Brien. “We are extremely pleased with the outcome.” The proceeds should allow the company to expand its existing mines and make acquisitions to replace depleted reserves and boost production.

Newmont already has active mines in Nevada, Indonesia, Australia/New Zealand, Ghana and Peru. The company reported net income of $397 million, or 88 cents per share, during the last fiscal quarter. Meanwhile, the company’s consolidated gold sales slipped to 1.614 thousand ounces from 1.698 thousand ounces during the prior year’s quarter. Equity gold sales were also down as the average gold price quarter over quarter rose from $611 per ounce to $681 per ounce.

Many shareholders are looking at the new spin off, however, as the key investment opportunity. Spin offs tend to outperform the overall market during the first two years as a public entity. This is due to several reasons and is very well documented by researchers that have studied the phenomena. In fact, the research behind this is so solid that an ETF has been created to take advantage of this deal (CSD). In the end, both of these developments make NEM a stock worth watching!

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