Syms Corp. (OTC: SYM), which delisted its stock in mid-January and plans to deregister tits shares in April, may find itself in court with two activist shareholders as a result. Barington Capital and Esopus Creek Advisors, who collectively own 9.8 percent of the company, sued Syms alleging that its directors broke their fiduciary duty to investors by enabling the company to delist. The activists are also seeking a copy of the company’s shareholder list, presumably to see if others are interested in joining the lawsuit.

“The group believes that such actions will destroy shareholder value,” said Barington and Esopus in a letter to the board. “Since the Company announced on December 21, 2007 that it was delisting and deregistering its shares, the price of Syms’ stock has fallen by over 42%, destroying over $104 million in market capitalization.”

Syms countered the argument by saying that investors will still be able to buy and sell shares on the pink sheets, while the company will save $750,000 per year in costs associated with being a listed company. The company also indicated that management will be better able to focus its attention and resources on continuing to improve operations and enhance shareholder value.

Many shareholders, however, are convinced that the real motive behind the delisting is to lower the stock price enough so that management can complete a management-led buyout at an inexpensive valuation, leaving shareholders in the dust with nothing to say for their investment. There is speculation that this has long been a consideration of store founder Sy Sims.

Barington and Esopus have begun registering their shares in their own name in order to prevent this process. If the company has more than 300 shareholders on record, then it cannot deregister itself without approval from the shareholders. As a result, the two activists are encouraging other investors to do the same before it is too late and the value of their investment is lost.

In the end, this is an interesting story that is worth following. If the activist investors are able to hold off any deregistration, the company may decide that it is best to relist and deal with the costs rather than remain traded on the OTC markets. This may cause a jump in the share price if the stars align. Combined, these factors make SYM a stock worth watching!

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Mortgage insurance stocks have been a rollercoaster ride in recent days amid speculation that some may be going out of business while others would be poised to take over entire markets. Good news from bond insurers led to broad increases yesterday, but bad news beat PMI stocks back down to reality today. The mortgage meltdown is far from over and the future of these companies remains uncertain.

MGIC Investment Corporation (NYSE: MTG) shares hit a 15-year low after dropping more than 30 percent today. The nation’s largest mortgage insurance company announced that paid losses could reach $2 billion this year as it struggles to accurately forecast its losses amid the mortgage meltdown. The company is struggling with not only a dramatic increase in delinquencies, but also an increase in the cost of each claim as fewer delinquent homeowners are resuming payment.

Home buyers typically purchase mortgage insurance from companies like MGIC when they put down less than 20 percent of their home’s value, which makes most of their customers those with exotic mortgages (the ones that don’t require huge down payments). MGIC said it had 107,120 delinquent loans by the end of 2007, which is a 16,000 loan increase from the end of the third quarter. Clearly, there is still trouble in the housing market that is only likely to continue.

The PMI Group, Inc. (NYSE: PMI), another major provider of private mortgage insurance, also saw its shares decline more than 15 percent today after the bad news from MGIC. Interestingly, the stock soared yesterday after bond insurers Ambac and MBIA announced that they don’t expect to pay as much as they expected in claims and that the value of their assets is far higher than the market initially believed. Unfortunately, this may not ring so true for mortgage insurers as compared to bond insurers.

In the end, the mortgage markets are still in freefall as foreclosures continue to rise and delinquencies continue to increase. Mortgage insurance companies made the mistake of insuring risky loans with exotic mortgages, and that decision is likely to cost them going forward. Nobody knows the extent of the damage yet, but it may be wise to stay away from these companies for now!

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Motorola, Inc. (NYSE:MOT) shares fell over 20 percent today after the company posted a disappointing operating loss in the current quarter due to continued weakness in its cell phone business. The mobile device maker warned of further market share losses this quarter and backed off its forecast for its mobile devices division to return to profitability during 2008. Shareholders are now questioning whether the company will be able to pull itself out of its current downward spiral and turnaround its cell phone business at all.

The news is likely to disappoint activist investor Carl Icahn, who has amassed a four percent stake in the company. The billionaire investor continues to insist that Motorola shares are undervalued with the cell phone business showing no value at all. As a result, he contends that the company should spin-off the cell phone business from the rest of the businesses in order to unlock value for shareholders. Unfortunately, now may not be the best time as a turnaround is expected to take much longer.

However, Motorola’s cell phone business may prove difficult to turnaround. They are losing market share, which makes them smaller, which makes them less competitive on costs, which makes their phones less compelling, which loses more market share. In other words, the company is likely to see its margins on cell phones shrink, which may force it to raise prices. This will only cause problems, particularly in our current economic condition where consumers are pinching pennies.

Right now, Motorola executives say they are focused on cutting costs and getting the mobile devices business back to profitability. Meanwhile, shareholders may be beginning to regret not putting Carl Icahn on the board of directors when they had the chance not long ago. For now, they will have to remain content and deal with a dropping share price.

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