Life Partners Holdings, Inc. (NDAQ: LPHI) may not be at the top of the list of some socially-conscious investors but it is definitely at the top for investors looking for a safe, high-growth investment. Life Partners is the premier player in what is known as the life settlement industry – an industry that buys life insurance policies for a fraction of face value and collects when the policy owner expires. It turns out that this is an enormously profitable business with net income increasing 515% and total business volume increasing 257% during the company’s most recent financial results.

Many companies in the financial sector have been troubled by their exposure to various types of debt. The rising cost of debt combined with the problems associated with securitized debt has been the trademark of this most recent downfall. However, life settlements offer an alternative investment that involves no debt and guaranteed income – after all, everyone dies at some point. Life Partners bundles and securitizes these life insurance policies and sells the package to institutions that are – now more than ever – looking for a safe investment shielded from the debt and credit markets.

So, why are the company’s shares so beaten down? Well, first of all some investors are uncomfortable with the fact that the majority of the company’s clients come from three referring brokers. Secondly, there is some pending litigation in Virginia that is in appeals court that could cause problems. Thirdly, many analysts and investors are accustomed to strong earnings announcements, so when things slow down, it could send the stock falling.

Trading with a P/E of just 14.8x earnings, many investors believe that this stock may be close to its bottom (since most of the above has been priced into the stock). Meanwhile, the company has instituted a million share buyback program under the belief that the company is substantially undervalued. So, what does this all mean in the end? Well, there are a lot of questions remaining, but this is definitely company worth watching going forward!

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IncrediMail Ltd. (NDAQ: MAIL) shares are trading up today but still off on the month after Google (NDAQ: GOOG) decided to boot the company from its AdSense program. Last Friday, the e-mail provider said it received notice from web search company stating that it decided to stop an advertising partnership between the two firms, which sent shares down more than 45 percent to a new 52-week low. Since then, shares have recovered somewhat but many are still unsure of what will happen now.

IncrediMail, which develops software to customize e-mails, relies on Google for over a substantial portion of its annual revenues. The company is now trying to clarify matters with the search giant and exploring alternative relationships with Google and other vendors. Interestingly, programs like Yahoo! Publisher and similar programs from Microsoft’s MSN can offer similar rates and would likely be willing to take the place of Google as an advertiser on their website. This means that the drop we have seen may be overdone since this issue would only be temporary.

The only real concern remaining is whether the drop was the result of fraudulent activity, which would mean some of the company’s revenues came as a result of illegitimate behavior. However, the company’s co-founder spoke with a member of the media not long ago confirming that this is not a fraud-related issue and that in a few days it will all be sorted out – with or without Google. This has many people purchasing the stock ahead of an anticipated announcement that all is again well.

In the end, this is bad news for existing shareholders but a great opportunity for new investors. There are many programs like Google AdSense that pay the same or more money per click or impression, so this problem should be able to be sorted out in a timely manner. This means that the 40%+ drop last Friday was majorly overdone and this could be a great buying opportunity. Combined, these factors make MAIL a stock worth watching!

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BioSante Pharmaceuticals, Inc. (NDAQ: BPAX) insiders appeal to be bullish on the stock as it approaches its 52-week low. The biopharmaceutical company, which is developing a female sexual dysfunction drug, saw executives and directors purchase some 151,000 shares in just the last month between $3.59 and $3.98. Meanwhile, not a single insider has sold stock – even when it was trading at a 52-week high last May. So, should individual investors consider buying into this stock?

BioSante currently has a market cap of $110 million with a strong balance sheet, $30 million in cash, no debt, and a promising drug in the pipeline – LibiGel. The new drug is a low-dose testosterone in a gel formulation designed to increase sexual desire in women. A recent study conducted by the Journal of the American Medical Association found that 43% of American women (40 million or so) are estimated to experience some degree of impaired sexual function. The company believes that LibiGel will be the first FDA-approved product for FSD, with an estimated 1.4 million off-label prescriptions written during 3006. The minimum estimated US market for LibiGel is $2 to $4 billion with blockbuster sales potential.

What does the competition look like? Well, Procter & Gamble (NYSE: PG) developed their own twice-weekly testosterone skin patch in 2004, but it was rejected by the FDA and only approved for use in Europe. Since then, they have failed to launch any additional safety studies, so it appears that they will not attempt approval in the United States. Meanwhile, the FDA recently sent warning letters to compounding pharmacies that are pushing “bio-identical hormone replacement therapy” products designed to do the same thing as the testosterone gel. Moreover, BioSante’s FDA approval enables patients to get insurance to cover the drug in many cases – which means more sales.

So, where does the drug stand now? LibiGel needs just 12 months of safety data before a new drug application (NDA) will be considered by the FDA. The Phase 3 trial for the drug launched last week and is designed to demonstrate the product’s safety in low doses. The first efficacy trial is now underway and the company plans to initiate a second in early 2008. Clearly, insiders are also bullish on the prospects of this drug as they are buying up a record amount of stock. Combined, these factors make BPAX a stock worth watching!

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Kellwood Company (NYSE: KWD) shares spiked today after a private investment firm is taking its $542.3 million cash offer for the company straight to shareholders. Sun Capital Securities Group offered $21 per share for the apparel maker today, which represents a premium over the stocks $16.51 closing price on Monday. Clearly, many shareholders are bullish on the news as shares rose over 10 percent today.

Sun Capital failed in its two previous attempts to take a buyout bid to the board of directors. “We are disappointed that Kellwood’s board is unwilling to enter into a constructive dialog with us regarding what we believe is a very compelling transaction,” said Jason Bernzweig of Sun Capital.

Sun Capital, which already owns 9.9% of the Kellwood, values its direct tender offer at $762 million but noted that it hinged on Kellwood ending its $60 million debt tender offer which destroys the company’s value. Otherwise, the firm will drop its buyout price to $19.50 per share.

Sun Capital also announced that it would be nominating its own slate of directors for election to Kellwood’s board at the 2008 annual meeting if the company fails to reach an agreement soon. Indeed, this may be their only option after two failed traditional attempts and a failed tender offer placed directly to shareholders.

So, will they be successful this time by going straight to the shareholders? Well, clearly shareholders are bullish on the idea of a direct tender offer, so it will be interesting to see what kind of response rates they are able to obtain. And even if they do not succeed, they may have built up a substantial enough stake to make a real run at the board of directors. Combined, these factors make KWD a stock worth watching!

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Transmeta Corporation (NDAQ: TMTA), well known for its patent battle with Intel, may face some scrutiny by its largest shareholder. Riley Investment Management demanded that the company provide records for an investigation of potential mismanagement by the company’s board of directors. Many analysts and shareholders are not surprised by the move, which comes after a litany of other jabs that the activist investor has taken against the company – all justified.

“The purpose of this demand to inspect the Company’s Books and Records is to investigate potential wrongdoing, mismanagement, waste of corporate assets or breaches of fiduciary duties by members of the Company’s Board of Directors and to assess the ability of the Company’s board to impartially consider a demand for action (including, without limitation, a request for permission to file a derivative lawsuit on the Company’s behalf) related to the items described in this demand,” said Riley in a statement.

Riley previously criticized Transmeta for awarding “staggering options grants” to certain executive officers, which would have diluted shareholders by more than five percent. The activist investor also said the company failed to adequately disclose the formula behind a hefty bonus payment awarded to General Counsel John Horsley, related to the company’s $250 million patent settlement with Intel.

Now, Riley has requested that the company provide details on executive compensation along with any business and/or social relationships between the board members and executive officers. Ever since Transmeta has obtained the $250 million Intel settlement, it appears as if things have gotten out of hand and Riley is here to clean up the mess! This is great news for TMTA shareholders who could start actually seeing the proceeds from the $250 million if this activity stops.

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Tellabs, Inc. (NDAQ: TLAB) has seen a lot of action recently ahead of its earnings announcement this week and continued speculation that it could be a buyout target. The telecommunications and technology company recently hit a 52-week low of $5.09, which is well off of its highs around $13 per share. However, unusual call option volume triggered a rebound in the stock price that has many investors now bullish on this troubled stock.

Last week, Tellabs saw nearly 10,000 call options traded, compared to only 1,753 puts and average daily volume of 1,350 contracts. There was a similar story on Friday with 15,200 call options traded and the trend has only continued into this week. This activity caused a noticeable rebound in the stock price that now sits closer to $6 per share – nearly 20% off of its 52-week lows.

Some of this movement is attributed to a new rumor that Nokia may be interested in acquiring the company. In the past, valuations for such buyout of TLAB have been pegged at $9 or $10 per share. There was also talk of a “rich offer” made by Nokia in the past, although they would not confirm this fact to the public. However, the Wall Street Journal’s commentary confirms that the talk was indeed out there and making rounds. Clearly, any such offer would be a windfall for shareholders at these prices.

Other analysts attribute the rise to key indicators that earnings may be better than expected. Verizon recently reported that slowing economic growth was not curbing its sales and that it would spend $23 billion over seven years to build out a fiber-based network that offers TV and faster Internet speeds for home users. This is great news for Tellabs, which is a leading provider of fiber-optical products for Verizon. Tellabs has a product that benefits directly from these trends.

In the end, there is clearly reason to be excited with Tellabs. The idea of a buyout is still just that – an idea. However, the company appears to be well positioned to take advantage of growing trends in the fiber-optics market. Combined, these factors make TLAB a stock worth watching!

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Many activist investors, like Carl Icahn and Bill Ackman, are well known for taking an activist stance in their investments and producing strong returns. However, the best investors are not always perfect and following them blindly could be a bad idea. Target Corporation (NYSE: TGT) and Sears Holdings Corporation (NDAQ: SHLD) are two recent examples of how activist investors can make big bets in the wrong direction.

William Ackman’s Pershing Square Capital Management, well-known for its stand-off with McDonalds and 22% annualized returns, has built up nearly a 10% stake in Target over the past year. The famous investor is now over 50% underwater on his investment that he insists is worth $120 a share in 36 months. The problem is that much of the retailer’s value is held up in real estate, which has declined substantially in value. Moreover, consumer spending and credit have led to a much tougher environment for retailers. So, where is the catalyst for a jump in share price?

Eddie Lampert, well-known for his involvement in the Kmart bankruptcy and high-profile clients, is also deep underwater on his retailer investment – Sears Holding Corporation. The retailer recently reported weak holiday sales results, lower gross margins and forecast a profit for the fiscal year below Wall Street estimates. Many have speculated that the activist planned to sell off the company’s real estate holdings in order to unlock value, but this is no longer a possibility thanks to the struggling commercial real estate market.

So, what are they doing now? Well, Ackman announced that he is starting a new fund solely to invest in Target with the expectation that shares will reach $120 a piece in 36 months once the blood drains off the streets. Meanwhile, there is no word on what Lampert plans to do with his position and he has not announced any sales. Many are expecting him to continue holding his stake until the market turns and he is able to unload the credit card operations to unlock at least some value.

In the end, we can trace both of these failures to a drastic change in the markets that caused problems with the underlying activist strategy. Since the two already built up large stakes, it was not possible to exit the stock quickly and they were left holding the bag. It is important for investors to consider economic forecasts before investing in any company – even those held by famous activists!

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The Brink’s Company (NYSE: BCO) must have some value after it managed to attract yet another high profile activist investor. Warren Lichtenstein’s Steel Partners, well-known for its relatively quiet activist involvement, disclosed a 6.2% stake in Brink’s along with a letter to the Board of Directors. Lichtenstein announced that he would be supporting the proxy contest of fellow activist Clay Lifflander’s MMI Investments and urged the company to complete a tax-free spin-off of one of its two business segments. Combined, the two activists hold a 14.6% stake in the armored-car transport company.

“We continue to believe Brinks is significantly undervalued and are disappointed that it has not implemented strategic alternatives recommended by us and the Company’s other significant shareholders,” said Lichtenstein in the letter. “We do not believe Brinks’ current strategy is in the best interests of the shareholders and cannot accept the status quo.”

Brink’s recently announced that it has retained the Monitor Group to assist it in the review of strategic alternatives, but the activist shareholders believe that this may be mostly for show. After all, they have been fighting with the company to take action ever since Pirate Capital’s first investment a few years back without success. Now, Pirate Capital has given up and Steel Partners has stepped in its place.

Steel Partners recommended that Brink’s first explore a tax-free spin-off of one of its two business segments in order to unlock value. In the event that this is not consummated, Lichtenstein urged the company put itself up for sale in a process that maximizes value for all shareholders. And in the meantime – due to the steep undervaluation of the common stock – the activist recommended that the company up its current $100 million share buyback program to $500 million.

Overall, this is great news for BCO shareholders as it could mean that the company’s stock could finally see some substantial appreciation. However, it is important to remain prudent as we have already seen several attempts to unlock value fail with this company. Ultimately, the success of this campaign will hinge on the upcoming proxy contest. Combined, these factors make BCO a stock worth watching!

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Borders Group, Inc. (NYSE: BGP) is quickly catching the attention of many investors as it continues to pursue a turnaround strategy that is beginning to show results. The company’s stock is down over 50% since the beginning of 2007 as it continues to struggle against larger competitors and online sales. However, many investors are hoping that newcomer CEO George Jones can successfully orchestrate a turnaround for the troubled bookseller.

Borders, the second largest bookstore in the nation after Barnes & Noble (NYSE: BKS), recently announced that it achieved same-store sales growth across its three business segments for the first time since the first quarter of 2004. Internationally, the company showed the strongest growth with sales jumping 26.9% and same-store sales jumping 10.8%. However, the company was set back by charges related to its divesture of Waldenbooks.

Billionaire activist investor William Ackman also recently reported increasing his stake in Borders Group to 22%. Ackman is well known within the investment community for achieving spectacular returns by placing large bets in troubled companies and working with them to turn around. He has managed to return over 20% annually since his hedge funds inception, which mirrors performance of the greatest investor of all time – Warren Buffet.

However, a confident investor and early results do not guarantee success for the struggling Borders Group. Ackman has shown he is not perfect after losing nearly half of his investment last year in Target (although he still insists it is extremely undervalued and remains invested) and the company still faces an uphill battle against not only Barnes & Noble but also online booksellers like Amazon.com (NDAQ: AMZN) that can offer customers cheaper prices and convenience. The bookseller still has a lot of work ahead of it if it, but we now know that it is on the right track.

In the end, Borders is a great turnaround play that should be kept on the radar of all value investors. The bookseller is has shown early success in its turnaround strategy while at least one famous investor has taken notice and put a substantial amount of money at stake. Combined, these factors make BGP a stock worth watching!

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PeopleSupport (NDAQ:PSPT) shares spiked nearly 10 percent today after IPVG Corp. upped its buyout offer to $17 a share or $385 million. The move comes after the company rejected a previous $15 per share offer, calling the offering price “inadequate” and complained that it failed to take into account the company’s strategic value and growth plan. Shareholders are hoping that the company will at least consider the new proposal, however, as it provides a further boost to the company’s shares.

IPVG sent a letter to PeopleSupport chairman and chief executive Lance Rosenzweig on Friday saying that it was “unfortunate” that PeopleSupport did not engage in serious discussions with the company “despite repeated attempts to have confidential dialogues regarding our proposal.” Some shareholders are clearly in support of a deal with shares rising close to the buyout price instead of surpassing it or falling below it in anticipation of rejection or in actual rejection of such a proposal.

Other shareholders believe that the company was correct in rejecting the $15 bid. Indeed, PeopleSupport revenues for 2008 are expected to be between $180 million and $190 million, which is higher than Wall Street estimates of $170 million. Offshore competitors for PeopleSupport are trading at about 2 to 3 times sales, which would translate to a valuation of around $18 per share, or $405 million for PeopleSupport. So, perhaps the new bid will get a little more attention.

Overall, PeopleSupport is like to continue seeing pressure from its largest shareholder who has pressured the company to conduct an auction to solicit other acquisition offers. Many are hoping that this offer will be at least considered by the company, however, given that it is close to the true valuation suggested by many analysts. Combined, these factors make PSPT a stock worth watching!

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