Best Buy Co. (NYSE: BBY) is the 800-pound gorilla of electronics retailers with a market capitalization of nearly $20 billion and a stellar record of revenue and earnings growth – but today its CEO admitted that it is not immune to a weak economy.

Brad Anderson, Best Buy's CEO and Vice Charmian, said in a statement that, “Soft domestic customer traffic in January, coupled with our near-term outlook, now indicate that our fourth-quarter revenue will fall short of our planned targets.”

The effect of lower fourth-quarter revenue projected into this year means that Best Buy is expecting 2008 earnings of only about $3.05 per share compared to previous guidance of $3.10-$3.20 per share.

Given an undeniably weak economy led by a dangerous housing market situation, lower guidance and weaker sales are no surprise, but Best Buy's response certainly is: the company plans on continuing to expand its U.S. retail space by 10% this year. There is certainly logic to this contrarian move in the spirit of Warren Buffett's advice “Be greedy when others are scared,” and Best Buy thinks it can leverage its strong brand and recently updated store format into new customers and sales even in a poor economy by cannibalizing business from competitors like Circuit City Stores Inc. (NYSE: CC). But, though Best Buy is certainly in a better position than Circuit City, taking sales from rivals only works to buoy growth if the total number of sales in the sector don't shrink too much – if the sales pie gets small enough it doesn't matter how many pieces you get, growth is still in trouble.

More than counting on a superior business, Best Buy executives have said they remain “upbeat about the long-term outlook,” but is this optimism justified? Interim Chief Financial Officer of the company, Jim Muehlbauer, admits that “The macroeconomic environment grew more challenging after the holidays [leading to] our post-holding results [not being] what we originally expected.” What should confuse investors is what makes CEO Anderson or CFO Muehlbauer think the “macroeconomic environment” is going to turnaround any time soon. As a commentator for the WSJ noted, foreclosed homes don't need home theaters with $2,000 flat-screen TVs.

A discussion of the company's prospects wouldn't be complete without mentioning the 800-pound gorilla of all retailers – Wal-Mart Stores Inc. (NYSE: WMT). Wal-Mart continues to expand its electronic offerings while stealing market share from specialty retailers across all sectors. With Best Buy under assault from not only the U.S. economy but the biggest corporate driver of the economy, now might not be the time to be greedy.

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Mediware Information Systems (NDAQ: MEDW) is under pressure to put itself up for sale by a major shareholder. Cannell Capital, which owns a 12.9 percent stake in the firm, sent a letter to the board of directors illustrating just how cheap MEDW was on both an absolute and relative basis. The activist hedge fund encouraged Mediware to interview an agent to solicit a transaction that could result in an auction or merger in order to produce the highest economic benefit to shareholders. So, is this a company worth buying?

Cannell believes that there is a massive valuation disparity between Mediware and its peers. In particular, the hedge fund showed that the company’s EV/LTM EBITDA was a mere 3.2x compared to peer levels of between 16x and 18x. Similarly, its EV/LTM Sales was just 0.7x compared to peer levels of between 2.1x and 2.6x. It is also useful to note that Mediware’s market capitalization stands at just $50 million, which means that a substantial portion of the company’s income is devoted to simply paying the costs of remaining public.

So, what does all of this mean? Well, Mediware would make for a cheap acquisition that could become even cheaper if the suitor accounts for savings in administrative costs associated with being a public company. With the company’s shares well off of their $10.44 highs, shareholders are more likely than ever to support such a transaction. Mediware also has many potential strategic suitors, including Cerner Corp. (NDAQ: CERN), Eclipsys Corp. (NDAQ: ECLP), and Global Med Technologies Inc. (GLOB).

In the end, Mediware is a great candidate for this type of transaction given its valuation disparity and potential synergies. Whether or not management decides to pursue such a transaction remains to be seen, but this is definitely a stock worth watching over the next few months!

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Daniel Loeb’s Third Point is one of the most successful activist hedge funds on Wall Street with an annualized return right around 22%. Recently, the hedge fund reported its holdings in its mandatory Schedule 13F filing with the Securities and Exchange Commission. The regulatory filing showed a series of interesting bets that are definitely worth exploring given the funds impressive track record. So, without further ado, let’s take a look at Daniel Loeb’s major holdings!

MasterCard Incorporated (NYSE: MA) is one of the fund’s largest holdings with a stock position valued at around $322.8 million and $11.5 million worth of call options. MasterCard was somewhat beaten up after many speculated that a slowdown in U.S. consumer spending would hurt the firm’s earnings. However, the stock has shown great resilience and recently announced record profits yet again. Since the firm doesn’t issue cards itself - only collects transaction fees - it is also not exposed to any direct credit risks. This misconception may be artificially keeping the stock down, which could make it a compelling stock pick.

Cypress Semiconductor Corporation (NYSE: CY) was another major element of Daniel Loeb’s portfolio. The semiconductor has been beaten down so far this year amid concerns about its earnings as well as its potential acquisition of Simtek Corporation - which will lead to less cash and more debt. The activist investor has been attempting to unlock value in the company for some time after arguing that its implied value of the business is understated by at least 50 percent early last year. In particular, the hedge fund wanted the company to explore ways of divesting its Sunpower (NDAQ: SPWR) stake as soon as possible. Since this was before the drop in 2008, we can expect the firm to be only further undervalued now.

Third Point is also bearish on several stocks including Arthrocare Corp. (NDAQ: ARTC), Neustar Inc. (NYSE: NSR), and United Therapeutics Corporation (NDAQ: UTHR). Loeb also holds a $13.2 million position in the Proshares UltraShort QQQ ETF indicating that he continues to be bearish on the overall economy. Finally, the activist also managed to successfully exit his stake in BEA Systems, Inc. (NDAQ: BEAS) after Oracle Corporation (NDAQ: ORCL) agreed to purchase the company for $7.85 billion. All in all, Daniel Loeb’s Third Point continues to see great successes and his holdings are definitely worth watching!

Investors can view the rest of Daniel Loeb’s holdings in his Schedule 13F filing with the SEC. Investors can also track Daniel Loeb’s future stock holdings and setup free alerts when he trades at SECFilings.com!