Sara Lee Corporation (NYSE: SLE) may be experience a shakeup after the leader of an activist hedge fund gained a seat on the board. Jeffrey Ubben or ValueAct Capital was installed late last week onto the board of Downers Grove-based Sara Lee. Last winter, the activist hedge fund bought up a 5 percent stake in the company amid its multiyear turnaround effort.

Activist investors like ValueAct Capital typically buy into situations where they preceive value is being obstructed by something that they can fix. Usually, this object is bad management, poor capital structure, or other similar factors. While most activists are considered quite determined and even bordering on mean or evil.

However, ValueAct Capital has taken a completely different tone in this case. The hedge fund said at the time of its purchase that it had no plans to push for any significant strategic changes at Sara Lee and was comfortable with the firm's direction. Regardless, many investors are hoping that the hedge fund will work to help management act more quickly to unlock value.

Christopher Growe of Stifel Nicolaus isn't expecting a major change in the company's direction. The analyst insists that ValueAct has historically worked in unison with management to turn a company's performance around. He added that the presence of ValueAct on the board will also keep the transformation of the business moving along and could add a sense of urgency.

Sara Lee is a global manufacturer and marketer of brand-name products for consumers worldwide focused primarily on meats, baking, beverage and household products categories. The company's operations are organized around six business segments with its significant customers including mass retailers and supermarket chains in the USA and EU.

Related Companies
ConAgra Foods Inc. (CAG)
Bridgford Foods Corporation (BRID)
Kraft Foods Inc. (KFT)
The Hain Celestial Group (HAIN)
Campbell Soup Company (CPB)

Liberty Media Corporation (NDAQ: LMDIA) announced that its board is taking steps to convert the tracking stock for Liberty Entertainment into shares in a subsidiary that would hold the unit's assets. In effect, Liberty Media Corporation will spin-off Liberty Entertainment into its own independent public company. This division includes DirecTV Group, Starz Entertainment, FUN Technology, Liberty Sports Holdings, GSN and Wild Blue Communications.

The current plant would put 50% of DirecTV; 100% of Starz, FUN and Liberty Sports; 50% of GSN; and 37% of WildBlue into the new subsidiary. Liberty Entertainment would also be responsible for about $2 billion in debt, which was incurred when the company acquired DirecTV from New Corporation in April. The move will be tax free for existing holders of the tracking stock and will result in a new company called Liberty Entertainment Inc.

Spin-offs like this one can represent opportunity for investors willing to get their hands dirty. Successful spin-offs occur parent companies are looking to unload debt onto a new public entity while divesting their non-core assets. Liberty is a good example in that they are unloading their debt, but they are only giving up a portion of their stake in their entertainment subsidiaries. This means that the new subsidiary will not have complete control over the future of some divisions.

Successful spin-offs also rely on well-incentivized management to take the reins and work to unlock value in the divisions. Unfortunately, Liberty Entertainment will not only lack the control over key divisions, but will also be run by the same management as the parent. Combined, these factors mean that management may be less likely to take action to unlock value or take dramatic measures to improve the businesses.

In the end, Liberty Entertainment's spin-off does not share many of the characteristics that make spin-offs attractive for investors. The only remaining benefit is the fact that investors can assign the entertainment division with a higher valuation given the pure-play nature.

Related Companies
CBS Corporation (CBS)
Cablevision Systems Corporation (CVC)
The Walt Disney Company (DIS)
Time Warner Inc. (TWX)

Hill-Rom Holdings, Inc. (NYSE: HRC) shares could be headed higher after a popular hedge fund disclosed a large stake. Breeden Capital Management disclosed a 5.25% stake in the provider of medical technologies and equipment, which is up from its stake disclosed in the second quarter. The language in the Schedule 13D filing with the SEC was fairly standard, however, reserving the right to contact management but detailing very little.

Shares of Hill-Rom are up 6.5% for the year-to-date after spinning off from parent Hillenbrand Industries. During its last quarter, Hill-Rom reported better-than-expected earnings and raised its full-year outlook. Fundamentally, the stock is trading with a PEG ratio of 1.56, which implies that it is valued higher than its peers even considering its higher growth. On average, analysts have a "hold" rating on the stock with a 12-month price target of $33 per share.

Breeden Capital Management is known as an activist hedge fund among investors and is led by Richard Breeden - a former Chairman of the Securities and Exchange Commission (SEC). The hedge fund is no stranger to activism and many are speculating that it may be interested in taking some action in this holding. Others suggest that they may simply be interested in the upside that often results from a company spun off from a parent. Regardless, their involvement makes the stock worth watching.

Hill-Rom Holdings, Inc., formerly Hillenbrand Industries, Inc., is the manufacturer and provider of medical technologies and related services for the health care industry, including patient support systems, non-invasive therapeutic products for a variety of acute and chronic medical conditions, medical equipment rentals and health information technology solutions. Hill-Rom's product and service offerings are used by healthcare providers across the healthcare continuum in hospitals, extended care facilities and home care settings.

Related Companies
Invacare Corporation (IVC)
Misonix, Inc. (MSON)
Steris Corporation (STE)
ThermoGenesis Corp. (KOOL)