EchoStar Holding’s (NDAQ:SATS) spin-off from EchoStar Communications (NDAQ:DISH) made a spectacular debut this week as investors hope that the breakup will help Wall Street assign more accurate values to the newly divided companies, especially their non-satellite operations. The transaction should also allow for better incentivization for employees, greater operating efficiencies, and better access to financing. Shareholders are hoping that these factors will help boost the share price of the new companies.

The new spin-off SATS is poised to close out the week with a market cap of around $2.9 billion after jumping more than 70 percent on its debut. This would more than compensated for the 5.5 percent drop in DISH shares and create a combined market cap of around $18.6 billion, compared to $16.9 billion before the breakup. This illustrates that value has already been created for shareholders by the spin-off – in fact, substantial value of over 10 percent!

Rumors of a possible AT&T buyout of the Dish Network made its rounds this fall, but this new spin-off all but diminishes that possibility. However, the rumored buyout may have given investors an idea of pricing after some speculated AT&T would be willing to pay upwards of $56 per share for the combined company. This would have valued it at roughly where it is at now, suggesting that the spin-off was a success.

In the end, this is all great news for shareholders who have already realized a substantial gain in their investment through the spin-off. Meanwhile, spin-offs themselves have been shown to outperform the overall market during their first few years as a separate company, which is only good news. Combined, these factors make SATS a stock worth watching!

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Target Corporation (NYSE:TGT) is facing mounting pressure from investors to improve returns, but it could come at the expense of bond investors. William Ackman’s Pershing Square disclosed that it now holds a 10 percent stake in the discount retailer and hinted that it may take action to unlock value for shareholders. The likelihood that these actions could weigh on Target’s balance sheet spooked many credit investors who believe that this is the wrong course of action.

Many credit investors insist that Target is best off cutting costs and preserving its cash in the face of increased economic uncertainty and earnings misses. This pragmatic approach would preserve the company’s liquidity and integrity while slowly turning it around. William Ackman, however, is working against the clock with large option positions and will likely push for more aggressive financial policies in order to boost the share price in the short term.

Pershing Square has already pressured Target to sell off its credit card assets, but this sale is no longer likely given the financial firms that would be potential buyers are struggling themselves. Meanwhile, the company has already instituted a $10 billion share buyback program that caused Fitch to cut its credit rating. Many now believe that the activist may be interested in leveraging the balance sheet in order to obtain cash for an increased share buyback or special dividend.

Pershing Square’s investment in Target is already deep under water – down nearly 50% thanks to Target’s weak stock performance. Ackman assured his investors that the stock is significantly undervalued, saying the stock could go to $120 in three years if the company completes the stock buyback, sells the credit card unit and explores a potential real estate transaction. Combined, these factors make TGT a stock worth watching!

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Reddy Ice Holdings Inc. (NYSE:FRZ) may face problems with its proposed buyout after concerns surfaced that GSO Capital Partners may not be able to obtain the financial needed from Morgan Stanley to complete the $1.1 billion transaction. Perhaps equally troubling is the low $21 million breakup fee that would give GSO Capital little reason to try and salvage the deal if things went bad. Shareholders also remain divided on whether the company would best be sold or kept under current management.

The news only adds to other bad news that has already clouded the deal. The management of Reddy Ice was hit by shareholder protests against the price spearheaded by players like Noonday Asset Management and Shamrock Activist Value Fund. Meanwhile, GSO announced that it would need more time to secure the financing necessary to complete the transaction given the current market conditions. And problems only compounded as the company missed its July earnings targets as the CEO and COO announced that he was leaving the company.

Unfortunately, there is little left to support a $25 share price short of a merger actually being consummated. It will be interesting to see whether or not GSO and the company can complete the transaction, otherwise shareholders will be left with an underperforming company that can’t sell itself and lost its CEO and COO. There appears to be only problems left with this stock now…

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