SourceForge, Inc. (NDAQ:LNUX) is starting to feel the pressure from a large institutional shareholder calling for the web services company to unlock value through a share buyback. Trivium Capital Management, which owns a 10.1 percent stake, recommended on many conference calls and discussed with management the possibility and importance of a stock buyback. Many investors are grateful for the intervention as they have had similar concerns about the company’s overcapitalization and fear that it may make acquisitions that could hurt it going forward.

The activist hedge fund argues that SourceForge has gone through many transformative changes during the past year, but the overall business plan has been mediocre at best. This has resulted in a modest enterprise value of $60mm with a total market capitalization of $120mm, leaving the equity value of the business at $60mm. Clearly, this is unacceptable in terms of the valuation metrics that Wall Street is ascribing to the business prospects of the firm. The board has a fiduciary responsibility to shareholders to close this valuation gap and enhance shareholder value.

Trivium suggested that a share buyback may be the best option as it could result in a stock price between $5 and $15 per share. A share buyback is also seen as necessary given that its 2008 to 2010 earnings are seen to be highly accretive to EPS; the company has excess cash that stands at about 50 percent of equity value; it would send a message to investors and employees that the company believes in itself; and it might increase the share price which would benefit shareholders. For these reasons, the activist hedge fund recommends that the company pursue an initial 10 million share buyback and consider selling Collabnet in order to fund additional buybacks.

In the end, Trivium understands that economic times are difficult and SourceForge is in a transitional phase, but still insists that they should look to unlock value rather than pursue acquisitions. Moreover, if the company is unable to execute in 2008 and 2009, the hedge fund believes that management should pursue strategic alternatives, which could include a sale of the company. Combined, these factors make LNUX a stock worth watching closely over the next few months!

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Toshiba Corporation' (OTC: TOSBF) promotion of its HD DVD format as the successor to DVD is seen as coming to an end. HD DVD and Sony Corporation's (NYSE: SNE) Blu-ray format both offer superior sound and audio quality as well as total data capacity compared to DVDs, but they were fighting eachother to become the accepted standard in what amounted to an updated version of the Betamax versus VHS war of two decades ago.

Originally the battle was seen as a stalemate with no clear edge for either HD DVD or Blu-ray technologically or from industry support, but this changed rather abruptly in the last few weeks with Warner Bros. Studio announcing it will only release movies in Blu-ray followed by Wal-Mart Stores (NYSE: WMT) decision to stock only Blu-ray movies and players. This left Dreamworks Animation Studios, Universal Studios and Microsoft Corporation (NASDAQ: MSFT) as the only major backers of HD DVD.

Though about one million stand-alone disc players have been sold for each format, the inclusion of a built-in Blu-ray player in the Playstation 3 was seen as a major gamble that may now pay-off for Sony. The entire movie market is also anxious to see a format winner decided as consumers are hesitant to buy either standard when there is a chance the equipment and discs will become obsolete.

Toshiba has not made an official announcement saying it will discontinue its HD DVD format, but an anonymous insider at the company says the anticipated move will likely come at a meeting tomorrow. Despite having sunk billions of dollars into the format, Toshiba's stock responded positively to the speculation because with HD DVD all but dead investors want to see the company cut its losses and instead move money into areas of its core competency such as computer chips, especially flash memory.

So, who are the winners and losers in Blu-ray's victory? Well, Sony is the most obvious big winner as it owns the format's technology and its PS3 is seen as getting a sales advantage because it includes the player. Indirectly, all movie studios and retailers will benefit as consumers are much more willing to invest in a new technology once it becomes the standard. The biggest loser is Toshiba, but the extent of the loss will really be determined by how the company rebounds and invests its newly freed capital - after all, Sony lost the last standard battle with its Betamax format but it not only survived but thrived.

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GenCorp Inc. (NYSE:GY) is taking fire from several activist hedge funds bent on unlocking value in the company’s shares. Pirate Capital, Carl Icahn, Steel Partners, and Sandell Asset Management have all taken stakes in the defense company and pushed for changes in order to unlock value for shareholders. This “who’s who” list of activist investors has many believing that changes may finally be implemented to help jump the company’s lackluster share price. So, should you look at picking up some shares of GenCorp?

Warren Lichtenstein’s Steel Partners has been a GenCorp shareholder for several years and first agitated for change in December of 2002. The activist hedge fund continued the assualt that culminated in a $700 million bid for the defense company in 2004. The company then issued new stock that effectively raised the takeover price by $127 million and Steel Partners withdrew its bid. Shortly after, Lichtenstein announced his first proxy contest that was eventually dropped when the company added a corporate governance expert to its board. Now, Steel Partners is renewing its push to unlock value by nominating a new slate of six directors that they believe can help unlock value.

Thomas Sandell’s Sandell Asset Management is another activist hedge fund that began its push for changes in March of 2005. The firm requested that the company make more changes to improve governance and also sell a chemicals unit. More recently, the hedge fund demanded that the company remove its anti-takeover measures and allow large shareholders to call special shareholder meetings. Clearly this would lend more credibility to the board, but would also open the door for hedge funds like Steel Partners to step in the door.

Thomas Hudson’s Pirate Capital was yet another activist involved with the company back in 2006 when it nominated its own directors to the company’s board of directors. The move was mollified when the company agreed to abandon its “poison pill” anti-takeover protection, but Pirate succeeded in winning three seats. Pirate noted that the company had substantial value tied up in its real estate that it believed should be unlocked through a strategic transaction. In particular, the hedge fund was interested in the company’s Sacremento real estate holdings.

In the end, there are a lot of activists circling around this stock. No doubt, Steel Partners is most interested in unlocking GenCorp’s real estate value while Sandell is bent on making governance changes and selling a chemical unit. Whether or not the hedge funds will succeed in getting their wishes remains to be seen, but this is definitely a stock that is worth watching over the next few months - with three activist involved, the odds of change are much higher!

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