Sharper Image Corporation (NDAQ:SHRP) shares dropped after the company posted wider losses for the third quarter, hurt by a 35 percent drop in sales. The specialty retailer reported a net loss of $1.50 per share compared to analyst estimates of a $1.31 per share loss on sales that actually beat Wall Street expectations of $67.4 million. Shareholders are hoping that one new development, however, will change the trend.

The Clinton Group caught shareholder attention when they disclosed an increased stake, from 157,000 shares to 1.09 million shares, and now controls approximately 7.2% of Sharper Image. The activist hedge fund did not make any specific comments regarding their intentions, but many shareholders are anticipating some kind of action in the near future given the hedge fund's reputation on Wall Street.

Sharper Image still faces an uphill battle, however, with the stock being down 64% so far this year and 82% during the last five years. Moreover, with 31% of its shares shorted, there is a lot of interest in keeping the stock down. However, any significant changes could also force a short squeeze and jump shares of the company in the short-term. Combined, these factors make SHRP a stock worth watching!

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Cadbury Schweppes (NYSE:CSG) shares moved up this week after activist investor Nelson Peltz reported raised his stake in the company from 3.47% to 4.5%, according to a report put out by the company. No official confirmation could be made because Peltz owns less than 5% of the company and is not required to report to the SEC. The move comes amid a split-up that is just now showing signs of success with the company raising its full-year guidance.

Cadbury announced that it would be beating its growth goal of four to six percent; however, analysts were quick to point out that the gains come against a relatively weak quarter last year. Moreover, there are concerns that the company's revenues will be hurt by the currency exchange rate. Remember, the dollar continues to extremely low compared to the euro, which is hurting exports in many European firms.

Cadbury's Americas Beverages unit, which is being spun off, also reported modest year-over-year progress in underlying operating proft. The future of this unit was recently sealed after the firm came under pressure from billionaire investor Nelson Peltz to separate the candy and beverages arms. This split up should unlock substantial value for investors who have dealt with a stagnant share price for some time now.

In the end, this will likely be a great move for the troubled Cadbury, but many feel that it is already reflected in the share price. Investors were encouraged with Peltz increased his holdings, but the stock has since returned to previous levels. Regardless, this is definitely a stock worth watching!

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Royal Philips Electronics (NYSE:PHG) shares jumped today after two activist hedge funds teamed up to confront the company over its results and capital structure. Jana Partners and D.E. Shaw Group announced today that they plan to act together to jointly communicate their views regarding the electronic-maker’s operating performance and capital structure. Shareholders applauded the move as shares rose over four percent on the day.

The move comes after CEO Gerard Kleisterlee sold most of the company’s semiconductor assets and reduced the company’s stake in a flat-panel display venture to focus on medical scanners, appliances and lighting. These actions have provided Philips with around $30 billion in spare cash for purchases, buybacks and dividends over the next three years. Obviously, this has led to speculation that the activists are intent on unlocking this value and distributing the cash to shareholders. However, they may face some problems as Philips has been rather intent on what it plans to do with its cash pile.

The two hedge funds do have a strong track record of success, however, with successes in breaking up or selling ABN Amro – which became the largest bank sale in history after 183 years of independence. In the end, the hedge funds are targeting the cash position while the company likely wants more time to build out its plan. However, given the stagnant shares recently, a success on the part of the hedge funds may be in the cards. Combined, these factors make PHG a stock worth watching!

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