Consolidated-Tomoka Land Company (AMEX: CTO) board members may soon be forced to fight for their jobs after Wintergreen Advisors LLC disclosed a 9.87% stake (and 25%+ economic stake) in the company and nominated three of its own candidates to the board of directors. Shares in the company have slid from their 52-week high of $80.50 to $42.50 before recovering marginally to their current level of $51.29 amid a decline in the U.S. real estate market. Shareholders are hoping that Wintergreen will be able to step in and help turn around the troubled company - and new blood could be just the trick.

Consolidated Tomoka began as a timber company and was perhaps Florida’s largest landowner with over 2 Million acres in the early 20th century. After dropping initially do to increased liquidity, CTO began a steady march upward. Today, CTO continues to own nearly thousands of acres in Florida, including 10,600 in the City of Daytona Beach. In addition, the company owns the equivalent of 284,000 acres of oil, gas, and mineral subsurface interests with 2 producing oil wells on the company’s interests. Management undertook a new strategy in 2000 designed to use the tax-deferred proceeds of land sales to purchase commercial property with long term triple-net leases dispersed over a larger area. Unfortunately, the market collapsed soon after it started paying off…

Investors are now stuck in a limbo after the director of the board declared his retirement and the company failed to offer any meaningful updates on its strategy or direction. Wintergreen is seeking to change that with a set of new directors and a series of proposals. The activist hedge fund urged the board to increase the number of directors in order to ensure that changes are put in place and amend their bylaws to eliminate the need for the board to make proposed changes only with a shareholder vote.

Wintergreen recommended the following actions in their letter to the board:

1. Align management compensation to the success of the company in achieving its stated goals rather than having the bonus and compensation structure revolve around selling properties out of inventory.
2. Review the growth and level of company operating costs in order to explore areas of reduction.
3. Hire outside advisors to develop a strategy to better address the long-term goals of the company.
4. Hire forensic accountants to review past years’ activities to verify that all proper processes and procedures are in place to avoid conflicts of interests between directors, officers and employees.
5. Improve public disclosure to clarify what actions have been taken and are being taken to improve long-term shareholder value.
6. Review company activities to determine whether or not the appropriate authority and responsibility resides in the company officers and the board of directors.

In the end, these proposals would help Consolidated-Tomoka identify the best strategy going forward and make sure that management and shareholder interests are fully aligned. It will be interesting to see if shareholders will support the new proposed directors and how the changes will affect the company going forward. Combined, these factors make CTO a stock worth watching!

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Fortune Brands, Inc. (NYSE: FO) has long been hailed as one of the best fundamental plays in the market by value investors, but when can investors expect a return to former glory? The diversified conglomerate holds premium brands that are widely considered monopolies in their respective markets, but investors continue to value the company at a meager 12x forward earnings. The company is trading down 20% on the year and continues to decline amid economic weakness and a decline in consumer spending. So, is this stock on sale right now?

Fortune Brands controls many of the most recognizable brand names in the industry. Its spirits and wine division controls Jim Bean, Makers Mark, Knob Creek, Sauza, Courvoisier, Dekuyper, Clos du Bois, and Canadian Club. Its hardware division owns Moen, Aristokraft, Therma Tru, Master Lock, Omega, Waterloo, Kitchen Craft, and Diamond. Its golf division owns Titleist, Foot Joy, Pinnacle, Cobra, and Scotty Cameroom. Combined, these brand names give this company a sustainable competitive advantage over others operating in the area over the long run.

Many investors are shying away from the company because 44% of its gross revenues come from hardware and home sales - not the best market in the world right now. Others are concerned with the company’s relatively high debt load, which management has said it would begin paying down. Fortunately (no pun intended), the company’s PEG ratio stands at a reasonable 1.44 given the slowdown while its debt-to-equity ratio stands at a manageable 0.769. It is likely that earnings will slow, but much of the slowdown may have already been built into the price. Furthermore, the company is trading at a substantial nearly 50% discount to its enterprise value.

Fortune Brands has also taken action to buy up cheap brands at today’s depressed levels. Recently, the company announced that it plans to purchase Absolut to supplement its existing wine and spirits division. The most is expected to accredit earnings within a reasonable amount of time and should help boost shareholder value. It will be interesting to see if the company makes any further acquisitions; however, it is important to keep an eye on their level of debt in the meantime.

In the end, Fortune Brands is a strong company that is caught in a decline thanks to the tough housing market and a decline in consumer spending. A lot of the weakness in its earnings has already been priced into the stock as it trades with a forward PE of just 12x and a PEG of just 1.44. Management remains committed to paying down the debt on the stock while eyeing acquisitions in today’s cheap markets. Combined, these are smart moves that could end up generating substantial shareholder value over the next few years!

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SIMTEK Corporation (NDAQ: SMTK) shares continued their rise today after Cypress Semiconductor (NYSE: CY) announced that it would explore a potential acquisition of the company. Cypress offered few details other than noting that discussions could result in a transaction such as a merger, acquisition or stock, or purchase of a division or business. SIMTEK shares jumped over 60% on the news, despite the fact that there has been no set offer or assurances that a deal will even be made in this difficult credit environment. So, what should you do?

SIMTEK shares are trading well off their 52-week highs of around $6.71 after the company cut its revenue and profit forecasts in late October. Shares are now trading at a five year low and Cypress already owns a 6% stake in the company with warrants that could boost its interest to 19.3% if exercised. Cypress also stands to save money on royalty payments to SIMTEK related to their co-developed 4-megabit chip scheduled for delivery next quarter. Combined, these factors could make for a relatively cheap acquisition in terms of cash outlay at this point.

SIMTEK chief executive Harold Blomquist said his company had no warning that Cypress was interested in an acquisition but was not surprised given their very healthy working relationship. Many analysts are not all that surprised either given the fact that the two companies are joint development partners and suggest that the company could sell for between $3.15 and $3.50 per share. Given the health of the credit market and the fact that this is a strategic buyer, it is unlikely that any other bidders will emerge.

In the end, this is great news for SIMTEK shareholders who saw their shares hit new five year lows just days ago. Cypress’ acquisition would make a lot of sense from a business standpoint and would come at a very cheap price while SIMTEK shareholders would be rewarded with a fair value for their stock. Combined, these factors make SMTK worth watching!

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