TransAlta Corporation (NYSE: TAC) directors are facing increasing pressure to sell after a popular activist hedge fund added its voice to a chorus of dissident shareholders. The Children's Investment Fund Management, known as TCI in the investor community, filed its Schedule 13D with the SEC last week showing a six percent stake and demanding some changes. The activist hedge fund wants the company to consider an auction or stragic partnership to boost shareholder value.

Here's a transcript from the letter to the board:

TCI believes  that the public  proposal by LS Power  Equity  Partners and Global Infrastructure  Partners  published  on 21 July 2008 to  acquire  TransAlta  for Cdn$39 per share, significantly undervalues the company.

TCI urges the Special  Committee to immediately  undertake a review of strategic alternatives,  complete  this  expeditiously  and  take all  necessary  steps to maximise value for shareholders.

Further, TCI agrees with the  representations  made to you by Seneca Capital in its  public letter dated 22 July 2008.

TCI  would  welcome  an open and  direct  dialogue  with the  Special  Committee throughout the strategic review process.

TransAlta is a wholesale power generator and marketer focused on the western regions of Canada and the United States. The company owns, operates and manages a contracted and geographically diversified portfolio of assets, and has capability in generation fuels, including coal, natural gas, hydro and renewable energy. Approximately 70% of its capacity is contracted under government-mandated power purchase agreements or long-term contracts.

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Cablevision Systems Corporation (NYSE: CVC) management may find themselves in hot water after an acitivst hedge fund built up a substantial stake in the cable operator. Harbinger Capital disclosed an 8 percent stake in the company and demanded changes in a Schedule 13D filing with the SEC. The activist hedge fund suggested that shares of Cablevision are undervalued and the company must take certain actions to unlock value.

Traditionally, activist hedge funds aim to force companies to unlock value through a variety of so-called strategic alternatives. These can include a sale or breakup of the company, a change in capital structure, a share buyback or a special dividend. Companies that aren't open to taking these actions will typically face an expensive proxy fight, which involves the activist hedge fund nominating its own directors to the company's board.

Harbinger Capital has experience in this industry as well. Media General and The New York Times were both subjected to demands from the activist hedge fund. Representatives from the hedge fund won three seats on the board of MEdia General while the New York Times agreed to nominate two of its directors after it threatened a proxy fight. So far, Cablevision has agreed to institute its first-ever dividend and is holding meetings with shareholders to discuss other ideas.

Cablevision shares are trading up marginally on the news, moving to $32.47 per share in mid-day trading. It will be interesting to see how many changes Harbinger can force upon Cablevision to unlock value, or whether they will be forced into a proxy battle to overthrow management and institute them themselves.

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HSN, Inc. (NDAQ: HSNIV) complted its spin-off from IAC Interactive (NDAQ: IACI) today as a part of Barry Dillar's move to unlock value for shareholders. HSN is a leading multi-channel interactive retailer with some of the most dynamic brands and experiences in the retailing industry. As an independent company, investors are hoping that shares will be valued much higher than it was as a part of IACI. However, some experts aren't so sure that value will be unlocked...

Traditionally, spin-offs have outperformed the S&P 500 by a wide margin during their first three years as a public company. The reason is simply because parent company shareholders often have little appetite for the new spin-offs while they are also loaded with debt and have no fall-back. This combination of factors often lead to a sell-off during the first year that leaves room for enterprising investors to jump in and realize substantial gains as the stock returns to a fair value.

Chief Financial Officer Tom McInerney said in an interview that the value of the new companies should be much more than it is now and he hopes that it will be very obvious in a year. However, some analysts aren't so confident in additional value being unlocked. HSN was considered the division that was most undervalued, but analysts insist that HSN's problems are significantly worse than expected. Other businesses under the IACI umbrella are also continuing their decline early on.

In the end, these spin-offs may present opportunities to shareholders, but not in the obvious way. Many believe that the shares of these new companies, like HSNi, will fall substantially early on. Only after this initial fall will investors have a good entry point to get in and profit. The reason? Parent company shareholders will likely sell the new spin-offs while the performance of the companies continues to deteriorate in these tough markets.

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Epicor Software Corporation (NDAQ: EPIC) may be in for a shake-up after an activist hedge fund unveiled a sizable stake in the software firm. Elliott Associates disclosed a 9.9% stake in the company and is inquiring about possible strategic alternatives in a Schedule 13D filing with the SEC. The hedge fund has been steadily purchasing shares since June, but acquired the majority of its stake during the past month. So, is this a stock investors should watch?

Activist hedge funds like Elliott Associates are known for pushing companies to pursue strategic alternatives to unlock value for shareholders. Strategic alternatives refer to efforts designed to sell all or parts of a company, spin-off business divisions, change the capital structure, or pursue a share buyback or special dividend. All of these efforts are designed to return immediate value to shareholders like Elliott Associates and YOU!

Epicor Software Corporation designs, develops, markets and supports enterprise application software solutions and services primarily for use by mid-sized companies and the divisions and subsidiaries of larger corporations worldwide. The company's products include back office applications for production management, supply chain management, retail management and financial accounting, as well as front office customer relationship management and service management.

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Pershing Square's William Ackman is well known on Wall Street for being an agitator for change. His controversial views on bond insurers made him billions on the short-side while a recent well-timed bet on Longs Drug Stores (NYSE: LDG) netting him several hundred million in mere weeks. Earlier this week, Pershing Square reported its most recent holdings in a Schedule 13F-HR filing with the SEC, which details each of its holdings.

Ackman's largest purchase was in Dr Pepper Snapple Group (NYSE: DPS) in which he acquired over 21 million shares at an average price of $24.70 per share. The activist investor also nearly doubled his stake in the troubled Wendy's (NYSE: WEN) restaurant chain at an average price of $27.10 per share. And finally, many investors are now well aware of Ackman's well-timed purchase of Longs Drug Stores at an average price of $43.50 just weeks before its acquisition by CVS was announced.

Ackman also reduced his holdings in Cadbury Plc and Target Corporation (NYSE: TGT), but still holds a total of nine stocks with a total value of $2.4 billion through his Pershing Square Capital Management hedge fund and has returned over 30% annually. The hedge fund currently holds, among other things, Barnes and Noble, Sears Holdings Corp, Borders Group, and a short position in MBIA Inc. Investors looking to piggy-back on this legendary investor may want to consider purchasing some of his recent holdings like Wendy's or Dr Pepper.

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The Security and Exchange Commission has used one tool to help investors find SEC filings since the 1980s. Its name was EDGAR and it was considered by many to be crude and difficult to use. The SEC announced on Tuesday that it would be introducing a new system, dubbed IDEA, to replace EDGAR as a tool to help investors find the information they need from regulatory filings.

IDEA will supplement EDGAR to start and eventually replace it altogether. SEC Chairman Christopher Cox said at a press conference that the new system will give investors faster and easier access to key financial information about public companies and mutual funds. Unlike EDGAR, IDEA will use data-tagging software to sort financial data.

“This is not just a new name for EDGAR, this is a fundamental change in the way the SEC collects, manages and distributes information,” Mr. Cox told a news conference on Tuesday. Mr. Cox has been well known for embracing new technologies in an attempt to update the SEC's databases and make them more accessible for investors.

The move comes after the SEC's push for public companies to begin reporting under the so-called extensible business reporting language, or XBRL, protocol. This protocol uses digital tags attached to each piece of financial data to allow investors to easily find and compare key figures. The largest public companies may be forced to file in XBRL in early 2009, according to the SEC.

IDEA will be provided free of charge to the public, like EDGAR, and is expected to be available starting later htis year. Meanwhile, the SEC said that EDAR filings will continue for the indefinite future.

Target Corporation (NYSE: TGT) shares fell despite announcing higher-than-expected second-quarter earnings. Earnings for the quarter came in at $0.82 per share on $15.47 billion in revenues, while its retail segment rose 5.7 percent. The catalyst behind the decline is likely the continued talk of a weak and soft sales environment. Moreover, investors were less than comforted with a drop in gross margins and a fall in the profitability of its credit card operations.

Target's net income fell on lower clothing and home goods sales as the government rebate checks begin to wane. The retailer fell behind Wal-Mart Stores (NYSE: WMT) once again as consumers continue to see bargains. Customers that are struggling with higher food and fuel prices, rising joblessness and the worse housing market since the Great Depression are quickly switching their spending from high-class Target stores to discount Wal-Mart stores.

Target may be a good bet over the long-term as the U.S. economy recovers, but until then, Wal-Mart may continue to be the smart bet on retailing. Wal-Mart, Costco, Sam's Club, and various dollar stores have all posted higher than expected sales as consumers rush to spend rebates at their stores. Meanwhile, Target and other higher class retailers are experiencing problems. Shares of Target dropped $0.22, or 0.44%, to $49.82 during today's trading session.

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Take-Two Interactive Software, Inc. (NDAQ: TTWO) shares dropped sharply after Electronic Arts Inc. (NDAQ: ERTS) dropped its $2 billion hostile bid and instead opted to pursue private talks with the company. Shares fell during today's trading on concerns that EA would walk away entirely or come back with a lower bid. However, on the upside, analysts now believe that a deal will be more probable with friendly talks in the works.

Many analysts believe that EA is going to take a second look at the buyout since Take-Two's blockbuster "Grand Theft Auto" game will come out before any takeover could take place. After all, the original purchase price was predicated on the distribution of that game during Christmas of this year. As a result, the new offering price, if it is negotiated, may be lower than many investors expect. Others insist that the game will add value to the Take-Two takeover.

Many experts believe that GTA IV has already been priced into Take-Two's stock price. The video game has already sold some 11 million units and pulled in revenues of $500 million in its first week. As a result, the company has increased its estimates for fiscal 2008 revenues from a range of $1.4 billion to $1.5 billion from $1.25 billion to $1.4 billion. Take-Two has refused to sell the company before its release, although some analysts now believe a takeover should be closer to $28 per share.

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Timminco Limited (TSE: TIM) shares fell sharply earlier this week after the company reported lower-than-expected sales and made some questionable statements to investors. Short-seller Asensio has been making a bear case on the stock for some time, and it now appears like many of their predictions are coming true. Shares fell sharply after the news hit the market.

Timminco's 221 million tons of solar silicon shipped fell short of expectations due to contamination issues previously brought up by Asensio's research and denied by CEO Heinz Schimmelbusch in a May 30th article that appeared in the Globe and Mail. Earlier this week, the company elected to hold back 70 tonnes of silicon due to higher-than-expected phosphorous levels.

Asensio's issues with Timminco deals with its accounting for returns in sales recognition. A report on July 22nd issued by the short-seller questioned statements made by company officials that Timminco's customers were declining to return even highly contaminated parts of ingots for "extra credit offered by Timminco".

The big question going forward is whether or not the average selling price would decline due to returned material. CFO Rober Dietrich reiterated that there were no returns in the quarter, but did not shed any light on statements made by other executives mentioned above. As a result, Asensio believes there exists a possiblity of fraud within the high-flying company.

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The internet has become the new operating system with many companies moving many of their operations online. Microsoft Corporation (NYSE: MSFT) holds the monopoly on desktops and had the lead on web browsers until recently when competitor Firefox took a large share of the web browser market. So, how much is Firefox worth and should Google Inc. (NDAQ: GOOG) consider looking at Firefox?

How much does Firefox make? SpreadFirefox.com indicates that 622,003,431 people have downloaded the Firefox web browser with experts estimating that the firm makes $1 per download from the Google search box in the corner. The numbers suggest that the company is making between $100 million and $200 million per year in gross revenues with solid growth rates.

Additional revenues could be easily realized through other browser add-ons, default homepage ads, and other techniques. Since the Mozilla Foundation is more of a non-profit organization, revenue-generating activities have been kept relatively simple and limited in scope. Moreover, changes may alienate some users. Regardless, there is ample opportunity for increases.

Next, expenses must be considered. Mozilla's employee count is estimated at around 90 with more hiring planned in the future. Assuming that the firm has 100 full-time employees at $100,000 per employee, plus $50 million a year in other equipment/service costs, total expenses are around $60 million per year. This pegs the annual gross profits at around $40 million to $140 million.

Public companies also face additional costs that must be included in the net profit calculation. Sarbanes Oxley compliance costs around $5 million a year with taxes taking out an additional chunk of change. This would leave the firm with around $40 to $90 million in net income after all is said and done.

Investors know that public companies all trade at earnings multiples based on growth rates. Given the market growth, investors could expect a minimum price-to-earnings ratio of 25x earnings, which implies a valuation of around $1 billion to $2.2 billion. This is relatively conservative given the recent valuation of Facebook by Microsoft and acquisitions by Google.

Of course, Mozilla has repeatedly insisted that it would not go public. However, growing pressure on Google to find new revenue growth streams may force them to take a look at the company (Microsoft wouldn't have a chance) while the increasing valuations may be too much for some to resist.

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