PDL BioPharma (NDAQ:PDLI) just can't seem to distance itself from the activist crowd. The pharmaceutical company already bent to shareholder pressures earlier this year when it forced its chief executive out of office and agreed to pursue a sale of the company. Now, activists are complaining that the company's financial advisor isn't suited for the job.

Highland Capital Management disclosed a 7 percent stake in the company today and disclosed a letter to the board recommending that the company engage a new financial advisor with substantial experience and competence to maximize the value of the company's pharmaceutical royalties.

"The recent sell down by your most vocal shareholder should not invite the Board of Directors to ignore its fiduciary duty to the company's owners," said Highland, referring to Daniel Loeb's Third Point, which recently sold its entire stake in the company.

Highland believes that Merrill Lynch - the company's current advisor - is not well qualified for the job. The firm said the investment banking firm appears incapable or unwilling to market the royalty stream to all appropriate buyers, which they believe will impair the value of the asset. Highland also provided a list of other firms that should be contacted - including themselves, of course.

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MBIA Inc. (NYSE:MBI) is one of the most popular short sales during the current mortgage crisis, but that may be changing after the company received a $1 billion capital injection from buyout firm Warburg Pincus. The bond insurer is expected to take losses of between $1.97 billion and $3.2 billion from its exposure to home equity lines of credit and second lien loans, while losses from all mortgage-related securities could approach $2.3 billion to $4.2 billion.

Bullish investors were encouraged that an outside party had the chance to comb through the company's books and was willing to make a large common equity investment. However, bearish investors argue that the deal was sweetened with warrants and may not be all that it seems. Moreover, the current numbers may make sense in today's market, but further losses could easily develop as an increasing number of ARM resets hit the market.

The late January reporting period is expected to be an especially rough time period for the company as the sheer size of likely write-downs may surprise the market yet again. This will likely result in spreads widening again a little before any progress is made reining in losses. The company is also likely to pursue additional capital in order to ensure liquidity, which may end up diluting shares at some point.

In the end, the capital injection that took place this week definitely helped MBIA, it is not an end-all solution. The company still faces an uphill battle as an increasing number of ARM resets take place and the credit spreads continue to widen ahead of these steeper losses. Regardless, MBI is definitely a stock worth watching!

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Wachovia Corporation (NYSE:WB) announced today that it would be doubling its expected loan loss provision for the fourth quarter to $1 billion in additional write downs, up from previous estimates of $500 million to $600 million. Difficulties in the California and Florida mortgage markets have caused widespread devaluation in mortgage-backed securities over the past two months.

Bank of America Corporation (NYSE:BAC) also announced an increase in their loan loss provisions, which are now expected to exceed the $3 billion it previously projected. The bank stated that one third of the increase is due to growth and seasoning in their consumer lending portfolios with the remaining two thirds due to deterioration principally in consumer real estate and in some small business.

The mortgage market itself continues to face sharp losses ahead of million of ARM mortgage resets. A fraction of these resets were eliminated due to new government regulations that enable consumers to keep the same introductory interest rates. However, near-prime and prime loans facing similar resets are also likely to have borrowers that will have trouble repaying their loans.

Both banks refused to forecast quarterly earnings, but it is easy to assume that results will again by quite disappointing for both banks. Meanwhile, the final write downs remain uncertain for both banks, but at least Bank of America plans to remain profitable in the fourth quarter. Combined, these factors make BAC and WB stocks worth watching!

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