Berkshire Hathaway (NYSE:BRK) revealed yesterday in a 13F/A filing with the SEC afterhours that it had taken a 5.5% stake in Target Corp. (NYSE:TGT) with purchases dating back to June 30th. This news isn't particularly suprising given Buffet's investment in competitor Walmart; however, share in the retailer climbed over 1% today on the news as investors look to follow the Oracle of Omaha's lead. According to the filing, Buffet's average price was $50.30, which means he is already sitting on a nice 17% profit as shares near $60. Buffet is known for investing for the long-term in significantly undervalued companies, meaning that he is likely expecting much more upside. Investors should keep an eye on future SEC filings by Buffet, in particular Form 4s which indicate further purchasing of TGT shares.

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Merck & Co. Inc. (NYSE:MRK) agreed to buyout Sirna Therapeutics (NDAQ:RNAI) at a 100% premium yesterday in a transaction worth $1.1 billion. This acquisition is noteworthy because it is the first time that a large pharma player recognized RNAi technologies as a key technology. RNA interference (RNAi) technology selectively catalyze the destruction of the RNA transcribed in a single gene, allowing the drug to produce a highly specific, potent, and long-lasting effects to treat diseases much more effectively. Most notably is its potential for treating cancer, which is the reason Merck gave for the buyout.

This acquisition helped boost other RNAi players, like Alnylam Pharmaceuticals Inc. (NDAQ:ALNY), which rose 20% in today's trading, and Nastech Pharmaceutical (NDAQ:NSTK), which rose 5% today. If other larger pharma players take interest in the RNAi technologies, these two companies would be likely acquisition targets, which makes them stocks worth keeping an eye on!

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Marsh & McLennan Companies, Inc. (NYSE:MMC) has found itself engulfed a whirlwind of M&A activity as yet another buyer has surfaced that is interested one of its divisions. This time the Sunday Times has reported that founder Jules Kroll is interested in buying back Kroll Inc. for $1.9 billion, a company which MMC purchased from Jules just two years ago.

The company has also been under pressure from shareholders to sell off its Putnam Investments division, which has been the subject of many acquisition offers and partnership requests. Finally, the Sunday Times also reported a few weeks ago that the Willis Group had made an offer with backing from Kohlberg Kravis Roberts LLC, which was later rebuffed by MMC and said to be merely "conjecture and speculation" by the Willis Group. Combined, all of these factors are causing shareholders to consider the notion of breaking up the company, which could result in substantial premiums to the current market prices. This is definitely a stock worth keeping an eye on!

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Infocrossing, Inc. (NDAQ:IFOX) revealed in a 13D/A filing with the SEC today that RLR Capital Partners has upped its stake in the company to 6.2% from 5.1% in June of this year. The fund has averaged in at around $11 since that time as the stock rose to the high $12s, netting them a nice 14% profit so far. The company also said in their original 13D filing in June that they have other plans for the company:

"The Fund originally acquired Shares for investment in the ordinary course of business because the Reporting Persons believed that the Shares, when purchased, were substantially undervalued and represented an attractive investment opportunity. The Reporting Persons have communicated with management of the Issuer, and expect to continue to do so, regarding the Company's business and prospects. On June 15, 2006, the Reporting Persons sent a letter to the Issuer regarding the Reporting Persons' prior meetings with the Issuer and forthcoming value creating strategic and capital structure opportunities. A copy of the letter is attached hereto as Exhibit 1 and is incorporated herein by reference.

We believe that the coming months will offer Infocrossing the opportunity to explore value creating strategic and capital structure opportunities.  No other independent U.S. company in your industry  offers the range of service capabilities you provide. We are confident that you and your board will focus on the best available alternatives to capitalize on your very favorable industry positioning in order to enhance shareholder value." (Read More)

IFOX is currently trading at a discount to its enterprise value; however, it's PEG shows that it may be slightly overvalued if it cannot improve its growth in the coming quarters. However, with a hedge fund in the game to keep the company on track and mindful of shareholder concerns, this may turn out to be a stock worth watching. Any changes in capital structure or strategy could help the company cut costs and improve their bottom line.

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Rinker Group (NYSE:RIN) received a buyout offer for $11.7 billion (or about $65 per share) in cash from Cemex (NYSE:CX) on Friday that it today called "highly conditional" and one that "materially undervalues the company". With the stock currently trading above $71, investors are clearly looking for more too.

According to the SC 14D9 filing with the SEC:

"On Friday 27 October 2006, Cemex S.A.B. de C.V. (“Cemex”) announced that it intends to make a cash takeover offer for Rinker Group Limited (Rinker) at US$13.00 per share, equivalent to A$17.00 per share (based on an average exchange rate of A$1.00 to US$0.7645). A copy of that announcement was sent to Rinker by Cemex and is attached.

Rinker Chairman John Morschel said the Cemex announcement indicates that the unsolicited, hostile offer will be highly conditional.

'The preliminary view of the Rinker Board is that the proposed offer is opportunistic and materially undervalues the company,' he said.

Mr Morschel said Rinker’s performance of 40% compound annual growth in earnings per share over the past five years, together with strong growth in revenue (19% p.a. compound) and earnings before interest and tax (33% p.a. compound), has made it one of the best performing construction materials companies in the world.

'Directors will keep shareholders fully informed of further developments and will provide a formal recommendation on the offer in ample time for shareholders to make an informed decision,' he said.

'Shareholders should take no action in relation to Cemex’s offer at this time or any document received from Cemex until they receive the directors’ formal recommendation.'

Rinker has retained UBS as its financial adviser in relation to the proposed offer." (Read More)

This stock is definitely one to keep an eye on as both management and investors are looking for a better offer. It is not uncommon in these situations for the bidder to raise the bid one or more times to satisfy at least one of the two groups.

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Energy Partners, Ltd. (NYSE:EPL) provided an update on its search for strategic alternatives in an 8K filing with the SEC today. In an attached press release, Chairman and CEO Bachmann said:

"We are committed to continuing our process of exploring all options to maximize stockholder value, including a possible sale of the Company. A number of parties have already signed or have agreed to sign confidentiality agreements, and we are entertaining interest from others. Woodside's ultimatum and disingenuous rhetoric will not deter our Board of Directors from pursuing the best interests of all EPL stockholders.

"Woodside's self-serving behavior is very disappointing. We have not heard a word from them since our Board announced its process to explore strategic alternatives on October 12, 2006, and they have not sought to participate in this process, as many other companies are doing. In addition, Woodside has backtracked on its promise to pass through to EPL stockholders the savings from a reduced Stone termination fee, effectively reducing its original offer." (Read More)

If the company can successfully find another buyer, it could mean a significant premium to today's prices. With "a number of parties" having already signed confidentiality agreements, this buyout possibility may have some merit. This makes EPL a stock definitely worth watching as the company continues to explore its options.

Cheniere Energy Inc. (AMEX:LNG) revealed today in a 13D filing with the SEC that SRM Global Master Fund had taken a 6.5% stake in the company. The filing said that the fund would review their investment on a continuing basis and may engage in discussions with management concerning the business and future plans. The real story here is in SRM Global, however.

SRM Global is a relatively new hedge fund, launched by Jon Wood - who brought in over $2.4 billion for UBS in six years before launching his own fund. This new hedge fund focuses on trading shares of organizations that are merging, capital structure arbitrage (price difference between related corporate securities), and investment in industries and stocks that are not doing so well or are in trouble. Given his incredible track record, any investment by SRM Global makes this stock definitely one worth watching.

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Hillenbrand Industries, Inc. (NYSE:HB) said today in a press release that the company would consider splitting its healthcare and funeral businesses into two seperate publicly traded companies, after having evaluated strategic alternatives for the company.

According to the press release:

"Hillenbrand's Board of Directors and senior leadership recently evaluated a range of strategic alternatives, with input from its financial advisors Citigroup Corporate and Investment Banking and Goldman Sachs Group. These alternatives included the continuation of Hillenbrand's current operating structure, the sale of one or both of its businesses, returning cash to shareholders through an increase in balance sheet leverage, and the spin-off of or split off of one of its businesses. Having reviewed and fully endorsed the operating strategies presented at today's Investor Conference, management and the Board concluded that separating Hillenbrand's current operations into two publicly traded companies merits further, more detailed consideration as a means to position Hillenbrand's market-leading healthcare and funeral services businesses for sustained growth and value creation."

The company also has the full support of the Board as well as outside advisers that the company had hired to investigate the issue. The Chairman of the Board of Directors said:

"Under the leadership of Peter Soderberg, our new CEO, the management team has been working diligently to develop a motivating and achievable plan for growth for its two operating companies. I am pleased to report that the strategy we unveiled today has the enthusiastic support of the Board. Concurrently, the Board and management have been working with outside advisors to explore the alternatives available to enhance shareholder value and best assure achievement of our strategic vision. We believe the Board should undertake further exploration of the merits and mechanisms of a potential separation of the healthcare and funeral services businesses into two publicly traded companies."

Companies that restructure through splitting operations generally see significant gains as independent companies. By focusing on one area instead of many, companies are often able to cut costs and streamline operations while improving revenues through more effective marketing. This is especially true for unrelated businesses that exhibit little or no synergy within the same company. Combined, these factors make this company one to watch closely as the Board continues to investigate the possibility.

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Visteon Corp. (NYSE:VC) is again seeing its stock being accumulated by Pardus Capital. The hedge fund rose its stake in the company to 15.6%, but did not make additional comments about their strategy or plans. See our previous article for more information about Pardus' interest in the company.

In past filings, they noted that they would:

"continue to engage in discussions from time to time with management, the Board of Directors, other shareholders of the Issuer and other relevant parties concerning, among other things, the business, operations, board composition, management, strategy and future plans of the Issuer. In the context of these discussions, the Reporting Persons have raised with the Issuer the possibility of an individual suggested by them joining the board, and have been informed that the Issuer has taken this matter under advisement."

The company continues to struggle after Pardus' last purchase in September after Valeo withdrew its bid for the company. The stock is, however, up over 3% today on the news. This stock is definitely one worth watching as Pardus has a large stake in the company and continues to accumulate shares.

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The Mills Corporation (NYSE:MLS) may be recapitalized with an additional $1.2 billion by Gazit-Globe Ltd, according to a 13D/A filing with the SEC. Many investors are concerned that the company may sell itself at its current prices, which are significantly lower than historical levels. This new recapitalization offer would allocate enough money for the company to rebuild itself and recover some of its lost value. Investors applauded the idea as the stock moved up 14% today on the news.

A letter filed with their 13D/A gave more details:

"Chaim Katzman, Gazit-Globe’s chairman, said his company’s goal is to recapitalize what it views as a struggling Mills Corporation, and that it is prepared to 'invest up to $1.2 billion into Mills' in accordance with the terms outlined in the Schedule 13D that Gazit has filed with the Securities and Exchange Commission [seen below].

'It is not a question of whether or not the board must take action to ensure the continuity of Mills in order to restore profitability and leadership in the industry,' said Katzman, 'but rather what kind of action is necessary and appropriate.'

'At this point it is clear to us that an outright sale of the company is not in the best interests of shareholders,' continued Katzman. “We’re urging the Mills’ board of directors in the strongest terms possible to consider our recapitalization proposal.'

'We believe Mills can and should be rebuilt, and not sold,' said Katzman, who added that his recent discussions with Mills leadership left him concerned that the company might elect to simply sell itself at a distressed price. 'We have helped build and rebuild companies over the years. We know how to take companies such as this and re-energize them so that maximum shareholder value is achieved.'" (Read More)

In an earlier filing, they detailed the capitalization amounts and other considerations:

"As you are aware, we are also a significant stockholder in the Company with an approximate 4.9% [now 9%] ownership interest. Due to our ownership position, we are not in a position at this stage in the process to execute the confidentiality agreement the Company has circulated as a precondition to obtaining material non-public information. Rather, we strongly encourage the Company to make all relevant financial and other information public as soon as possible so that we, and other potential bidders who may have similar issues to ours, may participate in the bidding process and enhance stockholder opportunities to achieve the best value for the Company.

Based upon our extensive review of the currently available public information, and, as discussed below, our in-depth property analysis, we are prepared to recapitalize the Company by investing new capital in the form of common stock. The cash amount would be up to $1.2 billion at a price per share of $24.50. This new common stock would be classified as Series B and would entitle Gazit to a majority of the seats on the Company’s board. The new common stock would also be convertible into the currently outstanding series of common stock. This new investment would be in addition to our current holdings of the Company's common stock." (Read More)

This is definitely a stock to keep an eye on as this situation unfolds. If Gazit-Globe is successful in recapitalizing the company and rebuilding shareholder value it could mean a significant return in the medium-term.

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USI Holdings Corporation (NDAQ:USIH) announced in an 8K filing with the SEC yesterday after the bell that they received a buyout offer from a private equity firm. The company gave no details as to the buyout price; however, they stated that they would review the offer. According to the associated press release:

"USI Holdings Corporation today announced that in response to an indication of interest received from a private equity firm in acquiring all of the outstanding common stock of the Company, the Board of Directors of the Company has formed a Special Committee consisting of outside directors to review the proposal and consider all of the Company's options. Lazard Frères & Co. LLC and Dewey Ballantine LLP have been engaged by the Special Committee to assist in its review. No assurance can be given that any transaction will be entered into or consummated." (Read More)

Investors pushed the stock up 7% in today's trading on the news. The company is currently undervalued, trading at a 20% discount to enterprise value with a PEG ratio of only 0.91. The company also has healthy profit margins and an excellent track record. This is definitely a stock to watch as the buyout premium cuold easily end up being higher than the 7% jump we've seen so far today.

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Clear Channel Communications, Inc. (NYSE:CCU)
Press Release by the Company
The company confirmed today that its Board of Directors is evaluating various strategic alternatives to enhance shareholder value. The company has retained Goldman, Sachs & Co. as its financial advisor in connection with its evaluations. The stock moved up 6% after-hours today on the news, despite the fact that the Company said it "does not intend to comment further publicly with respect to the exploration of strategic alternatives unless a specific transaction is approved by its Board."

ImClone Systems, Inc. (NDAQ:IMCL)
8K Filing by the Company
After two months of fighting, Carl Icahn has finally succeeded in taking over the company in a "bloodless coup", with the help of some nice severance packages. Investors applauded the new management as the stock rose over 5% in today's trading. Icahn said in a prepared statement: "My immediate priorities as chairman are to investigate the reasons why the relationship between ImClone Systems and its partner, Bristol-Myers Squibb, has seriously deteriorated over the past few years and to act expeditiously to find a qualified CEO with biotechnology experience."

Integral Systems, Inc. (NDAQ:ISYS)
8K Filing by the Company
According to the filing, "The Company’s efforts to date in connection with exploring strategic alternatives have focused principally on a possible sale of the Company. Because discussions with potential interested parties have to date not resulted in any proposal, agreement or transaction involving a sale of the Company, the Board of Directors of the Company has, after consultation with the Company’s outside financial advisors, decided to explore and evaluate other strategic alternatives to maximize stockholder value while continuing to explore and evaluate a possible sale of the Company."

Martha Stewart Living Omnimedia, Inc. (NYSE:MSO) moved higher today by 4% after CNBC mentioned that the company could become a private buyout target. Whether or not this rumor could be substanciated is the cause of much debate on the street. Many argue that by going private Martha Stewart would be able to again take a position as head of the company after being banned by the SEC after her insider trading fiasco. Moreover, the company is slowly beginning to improve their bottom line. However skeptics are quick to point out that there are many risks that still exist, and it would not be prudent for management to consider such a transaction while these remain on the table. Whether or not these rumors turn out to be true remains to be seen; however, this is a good stock to keep on the radar incase such a transaction ever materializes.

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The Gap, Inc. (NYSE:GPS) revealed today in a Form 4 filing with the SEC that Chairman Robert Fisher sold one million shares on October 19th and 20th at prices averaging $19.45. Although the majority of this sale was by trusts, Fisher did personally sell over 250,000 shares. This sale comes as Gap recently moved higher after it announced that it would launch on online shoe store to compete with Zappos.com, called Piperlime. Many insist that Piperlime does not have a chance at competing with Zappos or other online shoe stores, and will actually lose money as a result of their liberal shipping and return policies. Whether the sale of shares is simply a diversification move or a hint to future problems with Piperlime or other areas of the company remains to be seen.

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Douglas Emmett, Inc. (NYSE:DEI) began trading on the NYSE today after adding shares and pricing itself on the upper end of its $19 to $21 range. According to their S-11 filing with the SEC:

"We are one of the largest owners and operators of high-quality office and multifamily properties in Los Angeles County, California and have a growing presence in Honolulu, Hawaii. Our presence in Los Angeles and Honolulu is the result of a consistent and focused strategy of identifying submarkets that are supply constrained, have high barriers to entry and exhibit strong economic characteristics such as population and job growth and a diverse economic base. In our office portfolio, we focus primarily on owning and acquiring a substantial share of top-tier office properties within these submarkets and which are located near high-end executive housing and key lifestyle amenities. In our multifamily portfolio, we focus primarily on owning and acquiring select properties at premier locations within these same submarkets. We believe our strategy generally allows us to achieve higher than market-average rents and occupancy levels, while also creating operating efficiencies." (Read More)

This IPO comes as the REITs are seeing renewed strength in commercial real estate while the overall housing sector continues to suffer with purchasing slowdowns and higher interest rates. DEI is only the fourth company to raise over $1 billion this year through an IPO, following Mastercard, SAIC, and Warner Chilcott. This stock is definitely one to watch as the commercial real estate market continues to make inroads.

CSK Auto Corp. (NYSE:CAO)
13D/A Filing by Karsch Capital Management
Karsch announced today in an amended 13D filing that it wants the company to include in its proxy materials for the next annual meeting a proposal that the company immediately hire an investment banking firm to pursue a sale. This is the second letter that the fund has sent to the company containing such demands.

IntercontinentalExchange, Inc. (NYSE:ICE)
13D/A Filing by Goldman Sachs
Goldman Sachs revealed today that it is still actively selling its stake in IntercontinentalExchange along with Morgan Stanley. The two financial institutions were both initial partners with ICE (an OTC and Energy exchange) since its IPO in 2005.

NetManage, Inc. (NDAQ:NETM)
8K Filing by the Company
The company revealed in an 8K filing with the SEC today that their Board "has determined not to enter into negotiations with Riley Investment Management, LLC and Zeff Capital Partners, L.P., each a stockholder of NetManage, regarding their interest in acquiring all outstanding shares of NetManage common stock that they do not already own." The offer was for $5.25 per share in cash.

The Wall Street Journal reported today that Tribune Company (NYSE:TRB) has caught the eye of at least three private equity firms, and could begin receiving bids for the company this month. We first began reporting on this rumor back in September, when there was talk of a LBO in the future. According to the WSJ, Madison Dearborn Partners, Providence Equity Partners and Apollo Management make up one of the groups, while Thomas H. Lee Partners and Texas Pacific Group have combined to form another, citing sources with knowledge of the situation.

Since buyouts typically come at a significant premium to the prevailing market price, this stock may be worth watching. Moreover, the possibility of a bidding war between two groups of funds make it not only a safer bet that a buyout would go through, but also more likely that it would go through at a higher price. The stock is currently trading up around 2.5% on the news.

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Talk America (NDAQ:TALK) moved down 10% today after Sun Partners withdrew its $9 cash bid for the company (covered in a previous article). According to an 8K filing with the SEC:

"On October 23, 2006, Talk America Holdings, Inc. issued a release announcing that Sun Capital Securities Group, LLC (“Sun Capital”) had advised Talk America that it has determined, after extensive due diligence review and consideration, that it would not make a definitive offer to acquire Talk America at a price greater than the $8.10 price per share provided under Talk America’s September 22, 2006 merger agreement with Cavalier Telephone Corporation and, accordingly, that Sun Capital was withdrawing its earlier conditional proposal to acquire Talk America."

Currently the stock is trading at around $7.85 per share, which represents a 3% discount to the $8.10 offer, which is still likely to go through. However, some investors are now concerned that Sun Partners may have found a problem in their extensive review of the company that may jeapordize the $8.10 per share offer.

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Quipp, Inc. (NDAQ:QUIP) may soon find itself in hot water as hedge funds Henry Partners and Matthew Partners (9.4% owners) demanded that the company immediately put itself up for sale or institute other measures designed to help unlock shareholder value. The hedge funds made seven comments/demands, highlighted in a letter attached to a 13D filing made today:

"1. We believe the best strategic alternative is for Quipp to agree to be sold now to the highest bidder in an arms-length transaction. We believe that Quipp's shareholders should then have the opportunity to decide at a special meeting whether or not the agreed upon consideration is acceptable to them. For the record, we have no intention of being a bidder for Quipp.

2. We are strongly opposed to, and would not support, Quipp making any additional acquisitions. Our opposition to such a step is based on the consideration paid in the Newstec acquisition, and the subsequent poor results of that unit as disclosed in Quipp's quarterly filings.

3. We are also strongly opposed to Quipp parting with any more of its cash reserves, unless such cash is distributed, or otherwise returned, solely to Quipp's shareholders.

4. We are strongly opposed to, and would not support, any effort by Quipp to pursue a "going dark" process. We believe that any cost savings purportedly offered by such a step are far outweighed by the potential further loss of both public market value and transparency that "going dark" actions typically result in.

5. If, for whatever reason, Quipp is not sold to a third party in the near term, we believe that Quipp should continue for the time being as a publicly-traded entity, with management focused solely on managing the now-existing business for maximum profitability, rather than seeking further acquisitions.

6. In conjunction with Quipp continuing as a publicly-traded entity, we would expect a further reshaping of the membership of the Board of Directors such that more representatives of Quipp's major shareholders are offered the opportunity to serve on Quipp's Board in place of its current members, some of whom may wish to retire from the Board. As one of Quipp's largest shareholders, we would expect to participate in that process.

7. As a further part of Quipp continuing its public company status, we strongly believe the shareholder rights plan should be repealed and not reinstated without the prior approval of Quipp's shareholders, and that all Quipp directors be required to purchase in the open market, with their own funds, a realistic, yet meaningful quantity of Quipp shares so as to align more closely their thinking with that of the actual owners of the business." (Read More)

Investors have struggled with the company for several years, as it moved down from $16 in 2004 to its current range between $7 and $8 per share. If these hedge funds can succeed in putting the company up for sale, it could result in quick short-term gains. However, even if the company cannot be sold, if the funds are successful in instituting their own Board members, it could spell a turnaround for the company in the medium to long term. Board members are typically (essentially) chosen by the company's management, and therefore rarely enforce measures designed to help shareholders at the expense of management. With large investors holding seats on the Board, more measures could be instituted to unlock shareholder value and curb spending.

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ExlService Holdings, Inc. (NDAQ:EXLS)
S-1 Filing by the Company
ExlService IPO'd today at $13.50 per share, above its expected range of $10 to $12 per share. The stock moved up to $17.13 after its debut, up nearly 27%. ExlService Holdings, Inc. is a recognized provider of end-to-end offshore services, including Business Process Outsourcing (BPO), research and analytics, and risk advisory services. It primarily serves the needs of Global 1000 companies in the banking, financial services and insurance sector.

Granite Construction Incorporated (NYSE:GVA)
Press Release
Granite Construction issued a statement today in response to rumors that the company is a potential takeover target. According to the company "they are not aware of any developments that would substantiate a rumor contained in a news article issued yesterday that speculates of a possible takeover of Granite Construction."

Optimal Group, Inc. (NDAQ:OPMR)
13D/A Filing by Clinton Group
Optimal Group received a letter from the Clinton Group today, via a 13D filing with the SEC, urging them to return a portion of their large cash position to shareholders through a special dividend or share buyback. Moreover, the letter demanded that the company immediately attempt to put itself up for sale. If any of these actions materialize, it could mean significant returns for shareholders in the short term.

Google Inc. (NDAQ:GOOG) reported in an 8K filing after-hours yesterday that they topped earnings estimates by $0.20, coming in at $2.62. The company impressed analysts with a net income that nearly doubled to $733.4 million while they reported that their foreign market share rose from 39% to 44%. These results suprised analysts as the stock traded up over 6% at open today.

The primary concern that investors had going into the quarter was the fact that Google was spending too much money without showing significant improvements in their bottom line. The numbers released yesterday relieved these concerns as well as some copyright infringement concerns that investors had concerning the acquisition of YouTube. The company noted that federal legislation protected the company so long as it made "good faith" efforts to remove material that infringed on intellectual property rights. All together, this release boded well for the company, as many investors are expecting Google to hit $500 before heading lower.

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Texas Industries, Inc. (NYSE:TXI) may be targetted by Nassef Sawiris/NNS Holding, who disclosed a 2.3% stake in the company today via a 13D filing with the SEC. Mr. Sawiris also disclosed a series of derivative holdings, which (if exercised) would give him a 9.1% stake in the company. In the 13D filing, Nassef opened up the possibility for a sale of the company:

"The Reporting Persons purchased the Securities based on the Reporting Persons’ belief that the Issuer’s common stock at current market prices is undervalued and represents an attractive investment opportunity. However, Mr. Sawiris has had communications with the Issuer and it is anticipated that Mr. Sawiris may, from time to time, have discussions with management, the board of directors and other shareholders of the Issuer.

Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of shares of the Issuer’s common stock at prices that would make the purchase of additional shares desirable, the Reporting Persons may endeavor to increase their position in the Issuer through, among other things, the purchase of shares of the Issuer’s common stock or options on such shares on the open market or in private transactions, through a tender offer or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

The Reporting Persons intend to actively monitor efforts by management to increase stockholder value. The Reporting Persons may also decide in the future to propose a transaction whereby all or a portion of the Issuer be sold, and in connection therewith the Reporting Persons may seek to participate in such transaction or seek to acquire control of the Issuer in a negotiated transaction or otherwise. If it should acquire control of the Issuer, it may transfer all or part of it to affiliated or unaffiliated persons. The Reporting Persons also may seek in the future to have one or more representatives elected to the board of directors or to propose other matters for consideration and approval by the Issuer’s stockholders or board of directors." (Read More)

It is worth noting that Mr. Sawiris is involved in the heavy materials business himself, which enhances the odds of a potential sale of the company. And although Texas Industries isn't particularly cheap at these levels, it does have a nice piece of the heavy materials market share in the southern United States. This is definitely a stock to watch as this situation unfolds, as any sale of the company would command a premium to the current market price. The stock is currently up over 3% on the news.

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Cypress Semiconductor (NYSE:CY) reported Q3 earnings of $0.16/share, beating estimates by $0.02. The company also announced that it would terminate its plan to explore the possibility of a sale. The president and CEO of the company said:

"Cypress's third-quarter revenue of $290.2 million was up for the sixth consecutive quarter, reaching its highest point since the fourth quarter of 2000, the Company's all-time revenue record quarter. Net income also increased for the sixth straight quarter. Our gross margins were affected by manufacturing limitations which we expect to improve going forward."

The stock moved down almost 10% in early trading today on the news that the company would no longer be exploring a buyout. Right now, the company is overvalued in terms of its PE/G; however, it does have a sizable cash position that could be used to improve operations or returned to shareholders through dividends or share buybacks. This news also comes after SAC Capital made several sizable purchases in the company, revealed in recent 13G filings with the SEC. If the stock continues to get cheaper while SAC Capital and other insiders continue to hold their shares, CY could become an attractive investment opportunity in the near future.

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Integrated Device Technologies, Inc. (IDTI)
Texas Instruments Incorporated (TXN)

NYMEX Holdings (NDAQ:NMX)
S-1 Filing by the Company
NYMEX Holdings - parent company of the New York Merchantile Exchange - revealed today in an ammended S-1 filing with the SEC that they see an IPO price of $48 - $52 per share. With the recent M&A activity surrounding exchange companies, NYMEX (the world's third largest future's brokerage) is likely to see significant upside after it IPOs.

Time Warner Cable (NYSE:TWC)
S-1 Filing by the Company
Time Warner Cable - a subsidiary of Time Warner - revealed today in an S-1 filing with the SEC that it planned to IPO. Many investors maintain that cable companies are among the best cash flow generators in the market today; however, there are very few pure plays. With the TWC IPO, there will not only be a pure play, but also a boost for TWX, who owns over 8% of class A shares and all of the class B shares.

Abbott Laboratories (NYSE:ABT) reported in an 8K filing with the SEC that their Q3 results are inline with estimates while guiding within analyst estimates. The company also announced a $2.5 billion share buyback program. According to the press release, "The purchases may be made from time to time as market conditions warrant and subject to regulatory considerations. The timing and amounts of any purchases will be determined by the company's management. The share repurchase authorization has no time limit and may be discontinued at any time." This news comes as the company's stock is struggling to make progress beyond its $40-50 range that it has been locked into since mid-2003. The buyback would represent 3.4% of the company's current market cap.

Related Companies
Boston Scientific Corp. (BSX)
Johnson & Johnson (JNJ)
Bayer AG (BAY)

First Mercury Financial Corporation (NYSE:FMR) opened for trading today on the NYSE at $17.00 per share - in the middle of its $16 - $18 range. The stock is currently trading at $19.30 in intraday trading today, moving up 13%.

FMR markets and underwrites specialty commercial insurance products, focusing on niche and underserved segments where the company has underwriting expertise and other competitive advantages. More specifically, the company focuses on underwriting insurance in the security industry, which includes security guards and detectives, alarm installation and service businesses, and safety equipment installation and service businesses, which they have done for over 33 years. Although this gives the company a great edge in this industry, the lack of revenue diversification does increase the risk of investment. However, unlike most companies, First Mercury filed 10Q statements dating back to 1996 before its IPO, giving investors a good look into its business. These documents show a company that has a strong balance sheet and a business that continues to grow in a great niche. This is definitely a stock to keep an eye on for possible investment after the IPO dust settles and a fair valuation can be calculated.

Marvell Technology Group Ltd. (NDAQ:MRVL)
8K Filing by the Company
Marvell Technology announced today in an 8K filing with the SEC that the company was meeting with leaders at Intel today to further discuss their acquisition of Intel's communications and application processor business for $600 million plus the assumption by Marvell of certain liabilities.

SAC Capital
13G Filings (CY and PPCO)
SAC Capital revealed in two 13G filings today that it has raised its stake in Cypress Semiconductor Corporation (NYSE:CY) to 5.4% and Penwest Pharmaceuticals Co. (NDAQ:PPCO) to 6.2%. CY and PPCO are both undervalued companies that may be of interest for value investors, especially with this fund purchasing.

Yahoo Inc. (NDAQ:YHOO)
8K Filing by the Company
Yahoo announced Q3 EPS of $0.11, which was in-line with estimates. The company also revealed a $3 billion share buyback program over the next five years. The company's share price has been falling recently after failing to effectively compete with Google in the online advertising market. Moreover, the acquisition of YouTube only puts Yahoo further behind in the eyes of many investors.

Glenn H. Nussdorf revealed today in a 13D/A filing that he intends to explore the possibility of acquiring Parlux Fragrances Inc. (NDAQ:PARL) through a business combination. Shares of PARL moved up over 12% on the news to settle at $7.14. According to the filing:

"Mr. Nussdorf has begun to explore the possibility of making an acquisition proposal to acquire the Company in a business combination transaction. As part of such exploration, Mr. Nussdorf and/or his representatives have had preliminary discussions with the Company's management and have had preliminary discussions with potential financing sources to obtain the funds necessary for such a transaction. Mr. Nussdorf has made no decision at this time as to whether to pursue an acquisition proposal and no assurances can be given as to whether or not Mr. Nussdorf will submit such a proposal to the Company. In addition, if Mr. Nussdorf submits such a proposal, there can be no assurances as to whether it would be acceptable to the Company or whether any such proposal would result in a definitive agreement being executed." (Read More)

We first brought up the possibility of this buyout back in July, when Nussdorf first acquired 5% of the company and sought permission to purchase an additional 15%. Now, just about a month later, Nussdorf owns approximately 10.6% of the company and is still buying. It is likely that Nussdorf will use E Com Ventures, Inc. (NDAQ:ECMV) as a vehicle to purchase Parlux, as it is one of Parlux's largest customers. PARL remains undervalued and any buyout would likely come at a premium to the current price, so this is a stock that is definitely worth keeping an eye on as the situation progresses.

Related Companies
E Com Ventures, Inc. (ECMV)
Avon Products, Inc. (AVP)
Inter Parfums, Inc. (IPAR)

Lear Corporation (NYSE:LEA) disclosed in an 8-K filing with the SEC today that billionaire investor Carl Icahn had purchased $200 million worth of shares in a private placement deal with the company. The deal comes as the company has been facing problems executing its restructing plans in an effort to improve their fundamentals. Investors applauded the help, as the stock rose nearly 15% in intaday trading.

According to the filing:

"On October 17, 2006, Lear Corporation ('Lear') entered into a Stock Purchase Agreement (the 'Purchase Agreement') with Icahn Partners LP, Icahn Partners Master Fund LP and Koala Holding LLC (collectively, the 'Icahn Stockholders') pursuant to which Lear agreed to issue and sell to the Icahn Stockholders 8,695,653 shares of Lear’s common stock (the 'Common Stock') at a price per share of $23.00, for an aggregate purchase price of approximately $200,000,000 (the 'Offering'). Certain of the Icahn Stockholders are current stockholders of Lear."

Carl Icahn is well known for his activist approach to enforcing change within companies - most recently ImClone Systems (IMCL). Although investors clearly welcome his help, analysts remain divided with some calling this an opportunity to "aggressively" sell any open positions. Lear's stock is down from over $60 per share in 2004 to its current levels around $25 per share. Although undervalued as an asset play, the company is strugging with declining margins and a weak backlog. If Icahn can help the company successfully execute its restructuring, it could add a lot of value to this stock. It is definitely one worth watching.

Related Companies
Visteon Corporation (VC)
Johnson Controls, Inc. (JCI)
Alcoa, Inc. (AA)

Stock exchanges moved higher today on news that Chicago Merchantile Exchange Holdings (NYSE:CME) was buying CBOT Holdings, Inc. (NYSE:BOT) in a bid to create a combined $25 billion global derivatives exchange. This acquisition follows the bidding war between NASDAQ and the NYSE for the London Stock Exchange, which eventually failed after the LSE rejected the bids in favor of a buyout by Ameriprise Financial. With the possibility of more consolidation in the air, many stock exchange stocks rose today:

InterContinental Exchange, Inc. (NYSE:ICE)
International Securities Exchange Holdings Inc. (NYSE:ISE)
NYSE Group, Inc. (NYSE:NYX)
NASDAQ Stock Market, Inc. (NDAQ:NDAQ)

Health Net, Inc. (NYSE:HNT)
8-K Filing by the Company
Health Net announced today that it would resume its share buyback program, which authorizes it to repurchase approximately $450 million worth of stock. The stock is currently trading down, however, after the company revised its quarterly estimates $0.03 below consensus and announced that its VP and CFO would resign effective November 10th.

Napster, Inc. (NDAQ:NAPS)
SEC Filing Watch
Napster moved higher today on renewed takeover rumors following comments made by ThinkEquity analyst Darren Aftahi, who commented that he didn't think there would be any slowdown in M&A activity in the digital media sector. He also commented that he believed NAPS was worth $5 - $7 in the event of a buyout. Napster is currently trading at $4.41, trading up 2.56% on the news today.

Nabi Biopharmaceuticals (NDAQ:NABI) may find itself in trouble after Third Point has apparently become fed up with management, stating in a 13D/A filing: "We have repeatedly warned this Board that we (and, we are confident, other shareholders) will not tolerate a "burning the furniture to heat the house" policy with respect to asset sales and spending, which is precisely the policy your October 12 conference call and this morning's letter appear to adopt ... We have now determined to pursue a consent solicitation to remove not only McLain but, as well, a majority of the Company's directors from the Board".

In the letter, Third Point makes several arguments supporting its elevated valuation of the company and plan to maximize shareholder value:

"As you are probably aware, on October 12th Nabi Biopharmaceuticals (the "Company") held a conference call following the announcement of the sale of PhosLo to Fresenius. In that call, Tom McLain articulated a plan which, when stripped down to its essence, would use the sale proceeds to fund $30 million per annum of cash burn in 2007 and 2008. Thus, the Company has proven our thesis that it contains valuable and coveted assets. The net present value of the PhosLo sale, which was exactly in line with our estimates, confirms our view that Nabi's assets are worth roughly twice as much as where the stock currently trades.

We have repeatedly warned this Board that we (and, we are confident, other shareholders) will not tolerate a "burning the furniture to heat the house" policy with respect to asset sales and spending, which is precisely the policy your October 12 conference call and this morning's letter appear to adopt. Indeed, there is no conceivable reason why Nabi should be in a cash burn position once the PhosLo disposition has been consummated and the major development projects sold or partnered. In fact, if the Company were to become an efficiently-run ongoing entity after such a restructuring, it should be earnings and cash-flow positive by mid-2007."

With many investors furious at management for bringing the company down from over $15 per share in 2004 down to around $5 per share now. Meanwhile the company's margins continue to decline while cash burn only increases. Third Point offers a way out for investors, and it appears that they are interested, as shares have moved up over 2% today on the news.

Related Companies
Genzyme Corporation (GENZ)
Inhibitex, Inc. (INHX)
Gilead Sciences, Inc. (GILD)

InFocus Corporation (NDAQ:INFS) found itself in hot water on Friday when activist hedge fund Caxton Associates revealed their displeasure with management in a 13D filing made after market close on Friday. The stock has trended down from over $10 in 2004 to its current level around $2.60 per share.

In the filing, they noted:

"The Reporting Persons believe that the intrinsic value of the Company, and the amount a strategic or financial buyer would pay to acquire the Company, is significantly greater than the current market value of the Common Stock.  The Reporting Persons believe that this gap in value has resulted from the implementation by the Company's Board of Directors (the "Board") of a flawed business plan that has been detrimental to shareholder value. The Reporting Persons accordingly believe that the following steps should be taken promptly in order to preserve and maximize shareholder value:

1. The Reporting Persons believe that the Company's poor performance is the result of mistakes made by management and the Board's failure to grasp the strategic realities of the environment in which the Company operates.  At this time, we believe that the Company's operating management is capable of effectively executing the Board's strategic vision should it be given adequate guidance and oversight.  We do not, however, believe that the Board, as currently constituted, is providing the necessary strategic thinking.  Therefore, we believe that, unless significant changes are made promptly, changes in the Board are in the best interests of all shareholders.

2. The Board should include individuals with strong ties to large shareholders, as well as industry, legal and/or financial markets expertise, which have a firm grasp of the realities of the markets in which the Company operates.  Unless significant changes are made, the Board should be restructured to consist of Mr. Ranson, at least two individuals drawn from among the Company's largest shareholders, and other independent directors with relevant industry backgrounds.

3. As part of the Company's announced exploration of strategic alternatives, the Board should develop an operating strategy that not only protects and enhances the hard asset value of the Company, but also will allow the Company to be cash flow positive under any foreseeable circumstances.  The Board should immediately work with management to develop a business plan that, among other things, permits revenue growth only at a reasonable cost, fixes or exits money-losing operations, and leverages the Company's valuable brand name franchise and considerable intellectual property assets.  This new business plan should be assessed against other available alternatives, including the possibilities of a sale or restructuring of the Company.

The Reporting Persons continue to examine all of their options with respect to the possibility of taking actions that they believe will enhance shareholder value, including the option of actively seeking to replace members of the Board."

Caxton Associates is well known for enforcing their will upon incompotent management, going so far as to use proxy battles to overtake the Board. And with a 9% stake in the company, Caxton has good reason to make sure these changes happen quickly! Fundamentally, the company has terrible margins as a result of poor management but a substancial amount of cash ($1.70 per share). While the actual course of action pursued by Caxton and the company remains to be seen, this is definitely a stock to keep an eye on! The stock is trading up nearly 2% today on the news.

Related Companies
Dell, Inc. (DELL)
Xerox Corporation (XRX)
Sony Corporation (SNE)

eHealth, Inc. (NDAQ:EHTH)
Follow-up to Prior Post
Shares of eHealth rose on its first day traded as a public company, rising to $22 after being priced at an already increased $14 range.

Penn National Gaming Inc. (NDAQ:PENN)
SEC Filing Watchlist
PENN moved higher today on speculation that the company may be the target of a takeover. Ever since Harrah's was targetted in one of the largest LBOs ever, the entire gaming sector has been on edge. After call option volume increased greatly early in the day, many sources began to speculate that Boyd Gaming may have an interest in the company.

PRB Energy, Inc. (AMEX:PRB)
Press Release
PRB announced today that its Board of Directors had agreed to repurchase approximately 10% of their outstanding shares, which amounts to 750,000 through 2006. The transactions are said to take place on the open market or in negotiated transactions.

SAIC, Inc. (NYSE:SAI)
Follow-up to Prior Post
Shares of the newly public SAIC rose today to $17.25 and being priced at $15 (top end of their range). The offering for the company was made through a large syndicate that included Morgan Stanley, Bear Stearns, Citigroup, Wachovia, Banc of America, Cowen, Jefferies, Stifel Nicolaus, William Blair, KeyBanc, Mellon Financial and Stephens.

UnumProvident Corp. (NYSE:UNM) is higher by around 9% in today's trading on takeover rumors. Sun West of Canada has been quoted as one of the potential suitors, although no information has been confirmed. The speculation came as a result of unusual options activity earlier today (large buying of call options), which typically occurs when there is a takeover story, LBO, or other similar event that would spike the price. The company would not make a bad acquisition for the right company, as it is trading below enterprise value with a forward PE of just over 12x. Moreover, the company has a decent cash position with very little debt. This is definitely a company worth keeping an eye on incase these rumors materialize.

Related Companies
KMG America Corporation (KMA)
CIGNA Corporation (CI)
Aon Corporation (AOC)

Barnwell Industries, Inc. (AMEX:BRN) is under pressure from 16.3% holder Mercury Real Estate Advisors to sell off its Energy Division and institute a share buyback program. In the 13D filing with the SEC, Mercury attached a letter outlining their demands:

"As a significant shareholder of the Company for approximately the past two years, we have witnessed the Company’s preliminary success in unlocking the significant value in its desirable real estate holdings on the western coast of the main island of Hawaii and the improvement in profitability of its oil and natural gas business in Canada. Although there remains substantial unrealized value in these assets, we believe the Company’s current corporate structure, egregious executive compensation and disparate business divisions are fundamentally flawed. We further believe that strategic alternatives, including the sale of its energy division, must be evaluated to fully maximize the value of the Company for all shareholders. Finally, a substantial share buyback program should be put into effect immediately.

Based on our analysis, we believe the value of Barnwell’s real estate interests alone translates into a per share value in excess of $11 ... Looking at recent energy transactions in Alberta, we currently believe that the value of Barnwell’s proven BoEs (barrels of oil equivalent) translates on a standalone basis into a per share value of approximately $18 ... With the combined value of its real estate and energy divisions implying a $29 per share price at a minimum, Barnwell is a dramatically undervalued company.

However, its unnecessarily complex corporate structure, which includes independent businesses with no synergies, obfuscates its intrinsic value. Further, an executive management team at Barnwell characterized by nepotism in the Chief Executive Officer and President positions continues to reap million dollar-plus salaries, in part driving general and administrative expenses to an astronomical 21% of total revenues for the nine months ended June 30, 2006.

As the largest shareholder of the Company, we demand that the Board hire an investment bank to evaluate strategic alternatives, including a sale of the energy division and a share buyback program using proceeds received from lot sales in Increment I and II ... We believe that the Board should be committed to maximizing value for all shareholders, not paying excessive compensation to a complacent management team lacking in transparency." (Read the rest of the letter)

The stock is currently trading at around $21 per share. According to Mercury, if the company were to be valued at purely asset/breakup value, it would entail a 38% premium to the current market price. If the company is able to restructure and reduce expenses, this number could go substancially higher. The stock is undervalued with a catalyst - and therefore, definitely one worth keeping an eye on!

Related Companies
Unit Corporation (UNT)
Anadarko Petroleum Corporation (APC)
Pogo Producing Company (PPP)

Acme Packet, Inc. (NDAQ:APKT)
S-1/A Filing by the Company
The company revealed today its IPO range of $8 to $9 per share with 11.47 million shares outstanding. Acme Packet is the leading provider of session border controllers, or SBCs, that enable service providers to deliver secure and high quality interactive communications—voice, video and other real-time multimedia sessions—across Internet Protocol, or IP, network borders.

James River Coal Company (NDAQ:JRCC)
13D/A Filing by Pirate Capital
Pirate Capital announced today in an amended 13D filing with the SEC that Matthew Goldfarb - an employee of Pirate Capital and a member of the company's Board - has voluntarily resigned from his position with Pirate Capital. The fund did not sell any of its 14% stake in the company. This could indicate continued confidence in the company as the coal industry slowly turns itself around.

New York Times Co. (NYSE:NYT)
13D/A Filing by Morgan Stanley
Morgan Stanley disclosed in an amended 13D filing with the SEC that they had increased their stake in NYT to 7.62%. The company had nothing further to say about their accumulation; however, in their original 13D filing with the SEC back in April, Morgan Stanley said that they would like the company to reorganize their capital structure to combine Class A and B shares while also commenting on the fact that management was underperforming while their salaries have been on the rise.

Tarragon Corp. (NDAQ:TARR)
8K Filing Watch
Tarragon is higher today on talks that the company may be the target of a LBO (leveraged buyout) in the $15 range. The company is a specialized homebuilder that is trading well below enterprise value, but trading down 44% so far this year. The company moved up over 11% today on these rumors.

Bairnco Corporation (NYSE:BZ) said today in a press release that it has completed its evaluation of strategic alternatives. The company insisted that it would be in the best interest of shareholders to allow the company to continue implementing its own plans rather than put itself up for sale or take Steel Partners' $12/share buyout offer. BZs CEO commented:

"Our Board conducted an extensive, thorough review and concluded that the current strategic alternatives available - including Steel Partners' tender offer - would not deliver the same value potential as operating Bairnco as a standalone company," said Bairnco Chairman and Chief Executive Officer Luke E. Fichthorn III. "Bairnco's discussions with Steel Partners were impeded by Steel Partners' refusal to execute a confidentiality agreement that would have allowed it to examine materials that the Company believes demonstrate the superiority of our strategic plan over the Steel Partners offer. Were Steel Partners to enter into such an agreement, the Company would be willing to enter into discussions. We participated in discussions with a broad range of other potential strategic and financial partners. These discussions served to reinforce our view that our strategic plan provides superior growth and value creation opportunities for Bairnco and our stockholders. We are optimistic about our future as an independent company and will pursue our strategy aggressively."

The company also said that had purchased Southern Saw Holdings, Inc. for $14 million through its subsidiary Kasco Corporation. The CEO commented:

"The combination of Atlanta SharpTech and Kasco will permit us to build on the strengths of both organizations resulting in a more cost effective overall organization while providing improved product and services to our customers. The addition of Atlanta SharpTech is expected to be accretive to Kasco and Bairnco's earnings in 2007 and beyond."

After this move, the stock is likely to move down from $12 in the near term, since the buyout premium no longer applies. Steel Partner's initial offer of $12 came when the stock was trading at $10 in a downward trend. Longer-term future valuation will depend on investors' confidence in managements ability to execute their plans. However, if Steel Partners takes further action in the form of a raised bid or hostile action, it could drive up the price from this point.

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Wellman, Inc. (WLM)
Ferro Corporation (FOE)

Harley-Davidson, Inc. (NYSE:HOG) revealed in an 8K filing with the SEC today its operating results and plan to institute share buyback program. Shares moved up 1% today on the news.

The associated press release contained the specifics:

"[The company announced] record revenue and earnings per share for its third quarter ended September 24, 2006. Revenue for the quarter was $1.64 billion compared to $1.43 billion in the year-ago quarter, a 14.3 percent increase. Net income for the quarter was $312.7 million compared to $265.0 million, an increase of 18.0 percent over the third quarter of 2005. Third quarter diluted earnings per share (EPS) were $1.20, a 25.0 percent increase compared to last year's $0.96.

During the first nine months of 2006, the Company repurchased 17.2 million shares of its common stock at a cost of $911.0 million. On October 11, 2006, the board of directors of Harley-Davidson, Inc. authorized a new share repurchase program for up to 20 million additional shares.

'As we look to the future, the Company believes it will continue to deliver EPS growth in the range of 11 - 17 % annually through 2009. We expect earnings growth to be driven by solid revenue growth, margin improvement and the benefits of strong free cash flow,' said Ziemer."

Harley Davidson remains a strong company with excellent cash flow and shareholder return (through a dividend and share buyback programs). This stock remains and excellent one for anyone looking for a solid company to invest in with relatively little risk.

Related Companies
Polaris Industries, Inc. (PII)
Fairchild Corporation (FA)
Honda Motors Co., Ltd. (HMC)

Chaparral Steel Company (NDAQ:CHAP)
8K Filing by the Company
Chaparral Steel announced today in an 8K filing with the SEC that it would begin a $0.10/share dividend and institute a $100 million share buyback program. In the associated press release, the company attributed this to strong cash flows and a confidence in the company's future prospects. Share buyback programs often times indicate a strong confidence in the company, while dividends are a great way to return some profits to the shareholders if it can't be better spent on internal projects.

Large Jacuzzi Brands, Inc. (NYSE:JJZ)
13D/A Filing by Southeastern Asset Management
Southeastern Asset Management revealed in an amended 13D filing with the SEC today that they strongly oppose the buyout deal recently put on the table by JJZ. According to the filing: "Our initial reaction to today's announcement is that we vehemently oppose this transaction, because the $12.50 price is completely insufficient. The Board began a process of exploring options at an inopportune time, when the results of the Bath division were far below what it's capable of producing." If higher terms are sought, it could lead to either a greater buyout premium or a breakup of the negotiations.

Phelps Dodge Corp (NYSE:PD)
13D/A Filing by Atticus Capital
Atticus Capital disclosed today, in an amended 13D filing with the SEC, a 9.97% stake in the company. The fund also revealed that it may have located a suitor for the company, stating: "The Reporting Persons and an investment bank have recently met with several potential investors, including private equity firms and strategic buyers, to discuss each firm’s possible interest in pursuing an acquisition of the Company." If the company accepts the funds proposals, it could mean significant upside in the event of a buyout offer.

Google, Inc. (NDAQ:GOOG) announced a few days ago that they acquired YouTube - a popular online video sharing website - for $1.6 billion. The acquisition is Google's largest by a wide margin, with their total acquisition costs in 2005 at just $130 million for 15 companies. The market became interested in the company after YouTube signed a licensing deal with Warner Music, which directly addressed the copyright issues that kept so many parties away. But why the large purchase price? Some speculate the Google may have made the purchase in anticipation of a bidding war between Yahoo, Microsoft, and other media companies that may be interested in a leading segment of the online video market. Moreover, the two companies are also both funded by Sequoia Capital - one of the world's largest venture capital funds - which may have also contributed to the smooth deal. The transaction is expected to be completed by the end of the year.

Many people have criticized the purchase, reasoning that the company is only 18 months old, founded ago by 29 year old Hurley and 27 year old Chen, with no profitability and a high cash burn rate relative to its valuation. However, others argue that the company is a brilliant acquisition that Google will be able to creatively monetize; but, with such an elastic market, any advertising that would affect video playback in any way might cause a mass migration to competing services. Google itself remains confident in its purchase; during a conference call, Brin even went so far as to say that "this really reminds me of Google just a few short years ago." Investors applauded the move as the stock rose over $8 in trading the day the deal was announced. Whether or not YouTube turns out to be a good purchase largely depends on what methods Google uses to monetize the website. This entails finding an effective advertising technique that won't disrupt the highly elastic traffic that uses the site.

Related Companies & Competition
Yahoo! Inc. (NDAQ:YHOO)
Microsoft Corporation (NDAQ:MSFT)
Baidu.com, Inc ADR (BIDU)

ImClone Systems Incorporated (NDAQ:IMCL) announced yesterday in an 8K filing with the SEC that its director, David Kies, was resigning effective October 9, 2006. The company also announced the resignation of William Crouse - another Board member. These resignations greatly enhance the odds of a successful takeover by Carl Icahn and company. For more information about what Icahn has planned for the company, please see our previous post.

Related Companies
Medarex, Inc. (MEDX)
Amgen, Inc. (AMGN)
OSI Pharmaceuticals, Inc. (OSIP)

Hedge fund Barington Capital revealed their disappointment with A. Schulman, Inc. (NDAQ:SHLM) today in an amended 13D filing with the SEC. In the filing, Barington enclosed a letter to the Chairman of the Board expressing his disappointment at the lack of progress that the company has made since the two parties met last year.

The filing noted that:

"On October 9, 2006, James A. Mitarotonda, the Chairman and Chief Executive Officer of Barington and a member of the Company’s Board of Directors, sent a letter to Terry L. Haines, the Company’s Chairman, President and Chief Executive Officer. The letter notes that as a result of the past performance of the Board, including with respect to the matters detailed in the letter, the Reporting Entities lack confidence in the ability of the incumbent directors to improve shareholder value for the Company’s stockholders. Therefore, in order to ensure that stockholder interests are preserved, Barington intends to nominate four (4) individuals for election to the Board at the Company’s 2006 Annual Meeting of Stockholders."

According to the terms of the October 21, 2005 settlement agreement entered into between the Company and the Barington Group (the “Settlement Agreement”), the Business Plan is required to include measures to:

• return the Company’s North American operations to pre-tax profitability;
• reduce the Company’s effective income tax rates;
• reduce the Company’s working capital;
• reduce the Company’s selling, general and administrative expenses; and
• improve the Company’s gross margins.

If Barington Capital is able to replace the Board with its own members and successfully execute its plan, then this stock may be one worth keeping an eye on for the long-term picture as it is trading below enterprise value with a forward PE of 17x.

Related Companies
PolyOne Corporation (POL)
Wellman, Inc. (WLM)
Ferro Corporation (FOE)

Friendly Ice Cream Corp. (AMEX:FRN)
13D Filing by The Lion Fund
The Lion Fund has been targeting Friendly Ice Cream Corp for several weeks now after having acquired a 12.7% stake in the company and re-requesting a seat on the company's Board. The fund is well known for modeling its investment habits after Warren Buffet. FRN still trades under enterprise value with a strong cash flow.

Google, Inc. (NDAQ:GOOG)
8K Filing Watch
The journal reported that Google has entered talks to acquire YouTube in a deal valued at $1.6 billion. The article also noted that the talks are sensitive, in the early stages, and could fall apart.

Pogo Producing Co. (NYSE:PPP)
13G Filing by Robert Rowling
Texas billionaire Robert Rowling disclosed a 9.21% stake in the company today. Robert is an oil tycoon that made his money several years ago after selling his family's company to Texaco.

Factory Card & Party Outlet Corp. (NDAQ:FCPO)
13D/A Filing by Midwood Capital
Midwood Capital is an activist hedge fund that was first involved with FCPO back in August, when it said the company was trading at a substancial discount to its intrinsic value and encouraged the company to explore a possible sale of the company. The company has not publicly responded to this request, which is likely why the fund continues to purchase shares. Midwood now holds a 9.7% stake in the company, giving it substancial power to enforce their plans if they desired to do so. The company is currently trading 25% below its enterprise value with a book value of $9.38 per share.

Magnetek, Inc. (NYSE:MAG)
Form 4 Filing by the Director
Magnetek Director Yon Jorden disclosed in a Form 4 filing with the SEC today that he had purchased 10,000 shares of the company in a transaction worth approximately $37,800. This comes shortly after 10% holder Bryant Riley purchased over $320K worth of stock just two days earlier.

Patient Safety Technologies, Inc. (AMEX:PST) revealed today in an 8K filing a number of changes that the company plans to enact as it undergoes a restructuring. These changes included spinning off its SurgiCount Medical unit and the resignation of its interim CEO. In its press release, the company cited five key changes that it was going to make in its efforts:

• Spin-off to PST shareholders of a majority interest in SurgiCount Medical, Inc., which will become a publicly traded company
• New private placement of common stock by SurgiCount to fund future growth
• Possible acquisition of another operating company by the Company
• Resignation from the Company by CEO and Director Milton "Todd" Ault III, in order to assist the Company in implementing reorganization plan
• Financial restructuring, including debt conversion

Now, there are two key opportunities here. The first is the turnaround of this company, which is down from a 2005 high of around $6 per share to its current levels of $1.55 (after moving up 22% in today's trading). If this company can turn itself around it could mean significant share appreciation for investors. The second major opportunity here is in the spin-off opportunity, which is worth noting because spin-offs tend to outperform the larger market in their first year. Let's take a look at the company's plans and how they related to these two opportunities...

The Spin-off
The company's press release had the following to say about the proposed spin-off:

"The Board has approved a spin-off by the Company of a majority interest in its wholly-owned subsidiary, SurgiCount Medical, Inc. The Company also intends to raise new equity capital on behalf of SurgiCount, and has already engaged an investment banking firm to assist SurgiCount in conducting a private placement of its stock. SurgiCount intends to file a registration statement with the Securities and Exchange Commission in connection with the spin-off and become a public reporting company, as well as seek a listing on a national securities exchange. The Company is currently exploring the structure of the proposed spin-off transaction in order to minimize the tax impact of the spin-off on the Company and its shareholders."

The registration statement will be filed as a S-1 filing with the SEC under the new company's name with a notice likely as an 8K under PST's company name. The press release also clues us into the fact that the spin-off will likely be share for share transaction, since the company noted it would structure it in a way to minimize the tax impact. This is good news for outsiders, because existing shareholders may not want the shares and sell for non-valuation-related reasons, making the shares available for cheap.

The Turnaround
The company's press release also noted many things about the proposed restructuring:

" The Board has also approved management’s exploration of opportunities to complete an acquisition of another suitable operating company. In this regard, the Company is in discussions with a possible acquisition target and is authorized to enter into a letter of intent with the company to explore a possible transaction. The Company also intends to sell, liquidate or monetize its other assets and extinguish certain of its debts in preparation for a possible acquisition. The Company does not intend to publicly disclose further developments with respect to a possible acquisition transaction unless and until a definitive agreement is reached.

Further, as part of this restructuring, Ault Glazer Capital Partners LLC, one of the Company’s major creditors, has agreed in principle to convert its outstanding loans to the Company into equity, and convert two loans on properties owned by Automotive Services Group, PST’s wholly owned subsidiary, into PST common stock. This conversion, when completed, will eliminate approximately $3.3 Million of the Company’s existing debt, thereby significantly enhancing the Company’s Balance Sheet.

Separately, the Company has reached a settlement agreement with Winstar Global Media, Inc., relating to the Company’s $1 Million Note with Winstar, and is currently awaiting a New York Court to approve the terms of the settlement agreement, which is currently set for November 7. The settlement, whereby the existing liability was reduced to $750,000, provides that the Company abide by a payment schedule set forth in the agreement, and eliminates another $250,000 of debt, plus interest, of the Company."

This news is significant for several reasons. First, the company is eliminating almost $4 million of company debt while also trimming down its operations. If their proposed acquisition turns out as expected, it would also enhance their offerings and strengthen their cashflow. Although this process will take significantly longer, it could mean an eventual return to the company's previous highs.

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ConAgra Foods Inc. (NYSE:CAG) revealed today in a Form 4 filing with the SEC that President & CEO Gary Rodkin purchased 75,000 shares on the open market in a transaction valued at over $1.8 million. The company also revealed that their Executive Vice President of Legal & External Affairs purchased a total of 11,000 shares in a transaction valued at almost $270,000. These transactions are worth noting because two key executives purchased a significant amount of shares on the same day, which could indicate that a favorable event is in the company's future.

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ImClone Systems Incorporated (NDAQ:IMCL) has been embroiled in a battle with activist investor Carl Ichan for some time now, and things just keep heating up. The drama reached a new high today after the company released an interesting bit of information about Mr. Icahn:

"Mr. Icahn fails to tell you that only a few weeks ago he asked the Board to waive Section 203 of the Delaware General Corporation Law, which would have facilitated him buying more than 15% of the Company’s common stock without first making a tender offer to all stockholders.  He fails to tell you that the directors he now seeks to remove refused to grant him this waiver.

Mr. Icahn also fails to tell you that when a proposed acquirer told the Company a few weeks ago that it would be prepared to make an offer to acquire the Company for $36 per share in stock if Mr. Icahn would support it, he refused.

Mr. Icahn says he wants the Board to find a permanent Chief Executive Officer, but fails to tell you that he, one of his employees and one of the directors he proposes remain on the Board already constitute three of the six members of the committee tasked to find the new Chief Executive Officer.

By a majority vote, your Board determined that, although control of the Board may be in the best interests of Mr. Icahn and his affiliates, it would not be in the best interests of all stockholders.

We urge you to reject this maneuver by Mr. Icahn, who owns less than 15% of the outstanding stock, to remove six members of your Board and take over effective control of your Company and its future.  The directors Mr. Icahn seeks to remove have extensive experience and knowledge of the Company and the biotechnology industry—knowledge that would be lost if Mr. Icahn is successful.  Your Board is committed to acting in your best interests and believes that a balanced Board is better positioned than one dominated by Mr. Icahn to maximize long-term value for all stockholders." (Read Entire Letter)

Carl Icahn responded nine hours later with a convincing message to shareholders:

"1. ImClone filed a statement  today with the Securities and Exchange  Commission intimating that it turned down a bid of $35.50 for the Company as a result of my opposing it. This is in contradiction  to the Company's  statement of August 10, 2006,  indicating  that it turned  down the bid  because it was  inadequate.  It should be noted that the bid was a conditional  non-cash offer and made with the bidder's stock, which I believed was overpriced. Either the ImClone Board is now attempting to totally  mislead you or they are admitting  that they did not even have the strength of  conviction  to support a sale they believed in when an 11% stockholder  was  against  it. Are they now saying  that they wanted to sell the Company  (whose stock price had peaked at $86 per share in July 2004) for $35.50 in a non-cash transaction?  While I admit I was opposed to the bid, if the Board really  wanted to sell the  Company  at  $35.50,  it  should  have done what any self-respecting  board would have done.  They should have  accepted  the bid and then tried to convince the  stockholders  that the transaction was in their best interest and not let an 11% stockholder stand in their way.

This whole episode  points out that the Board is either unable to make decisions even if they believe  them to be in the best  interests  of  stockholders  or is currently misstating the facts solely to entrench themselves and keep themselves from being removed.

2. I  believe  that  ImClone  is  worth  more  than  $36 a share if it is run by competent people,  including  competent  high-level  management  supervised by a competent Board of Directors.  I believe in its product and its pipeline,  and I believe its other  stockholders  share that belief.  On September 14, 2006,  the Company's  investment banker called and said that the same bidder was interested in making the same  all-stock  bid at $36 with the same  conditions,  if I would favor it. I felt then that I was being  asked to comment on a non-bid but stated that if the all-stock bid were made, I still thought that the  consideration was inadequate and would vote my shares against it. In fact, no one from the Company even  contacted me to tell me that they changed their mind on the basis that the new suggested price was 50 cents higher,  nor did anyone from ImClone urge me to support the $36 possible  bid.  Had the Board really  favored a sale at $36, the Board  could  have  pursued  the  matter  and asked the  bidder to make the bid. However, I must admit I am very glad they did not." (Read Entire Letter)

Some investors are convinced that the Board is attempting a last ditch effort to save their jobs, while others contend that Carl Icahn is simply a smooth talker with a vendetta against the company. But we won't have to wait too long to find out, as the consent cards are already en-route to shareholders.

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Apple Computer, Inc. (NDAQ:AAPL)
8K Filing by the Company
Apple announced today in an 8K filing with the SEC that they had concluded their options probe. The company found that there was no misconduct by any member of Apple's current management team; however, serious concerns were raised about two former officers. The company is reporting these results to the SEC, while issuing a formal apology to shareholders.

Joy Global Inc. (NDAQ:JOYG)
Form 4 Filing by CFO
Joy Global CFO, Donald Roof, revealed today that he had recently purchased 10,000 shares of the company's stock, valued at around $330,000. This news comes shortly after the company's CEO said that commodity prices could fall significantly (10-30%) without their customers slowing down their mining (JOGY creates and sells mining equipment). The stock was up 1% today on the news.

WorldGate Communications, Inc. (NDAQ:WGAT)
13D/A Filing by Antonio Tomasello
Antonio Tomasello revealed today in a 13D/A filing with the SEC that he now owns 7.02% of the company, up from his 6% stake disclosed earlier this year. In his original 13D filing, he stated that these transactions were for "investment purposes" only. He began acquiring share in June at around $1.40 per share through July and August for prices as low as $1.18 per share and still now at $1.70 per share.

Pier 1 Imports, Inc. (NYSE:PIR) moved lower today after the company issued a clarification to comments made by Chairman & CEO Marvin J. Girouard to the press. According to the press release:

"Mr. Girouard was quoted as saying that he predicted the chances are '50-50' that the Company's Board will reach an agreement with a buyer on a sale price. Mr. Girouard was also reported as saying that a deal would likely happen quickly. He was quoted as saying that, 'It would be in weeks, not in months.'"

The press release goes on to clarify the company's situation:

"Since May, Pier 1 has agreed to provide confidential financial data to several entities for the purpose of permitting those entities to consider a possible transaction with Pier 1, one of which was the investor to which reference was made in the articles [Jakup a Dul Jacobsen, a Danish investor who owns 9.8% of the company. See our previous article on this topic.].

To date, Pier 1 has received one preliminary indication of interest, but the entity submitting that indication of interest subsequently advised Pier 1 it would not continue further discussions with Pier 1 regarding a possible transaction. Pier 1 has had no other substantive discussions, to date, with any of the other entities regarding a possible transaction ... Pier 1 makes no prediction whatsoever as to when, if ever, Pier 1's Board will reach an agreement with respect to a proposed transaction."

Despite its large cash position, a declining free cash flow and negative margins may spell trouble for the company if it cannot find a buyer, especially after the company recently cut its dividend. Shares are currently trading down nearly 3%.

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Titanium Metals Corporation (NYSE:TIE) revealed today in a Form 4 filing with the SEC that it's Chairman & CEO, Harold Simmons, purchased another 200,000 shares on the open market today in a deal worth over $4.7 million. He had previously bought 155,400 in September and 125,000 shares on July 14th. This transaction brings his stake to over 61 million shares. TIE has been slowly trending down to $23.82 after peaking at a split-adjusted $44.81 per share in May. The company is a producer of titanium products used in the aerospace industry among others, and has benefited from the spike in the aerospace industry (by companies like Boeing) for titanium used in their landing gear and other parts. The company's stock has dropped recently as commodity prices have slid to lows and inflation pressure has mounted. This insider buying activity could indicate that the CEO believes the company is ready for a turnaround.

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Alliance Data Systems Corp (NDAQ:ADS)
8K Filing by the Company
Alliance announced today that it would be instituting a buyback program to repurchase up to $600 million of its common stock through 2006. This is significant because Alliance's market cap is only $4.52 billion, which makes this transaction cover around 14% of the company's outstanding stock.

Hastings Entertainment, Inc. (NDAQ:HAST)
8K Filing by the Company
Hastings announced today that it would buyback $2.5 million worth of shares because it believes its stock is current undervalued. This follows the company's previous arrangement to buy back $12.5 million, of which it still has $3.6 million remaining. The company is trading well below its enterprise value ($117 million EV with an $81 million market cap!).

SAIC (NYSE:SAI)
S1/A Filing by the Company
SAIC said today that it would be pricing its shares between $13 and $15 with 75 million shares being issued. The company also revealed that it would be issuing a special dividend of between $1.6 billion and $2.4 billion paid to investors holding prior to the public offering. This is likely occurring because the company is currently employee-owned - so, this would be a bonus before they go public. The company also revealed it was growing at an annualized rate of 15.5% with revenues of $7.8 billion during their latest fiscal year.

Northfolk Southern Corp (NYSE:NSC) announced today in an 8K filing with the SEC that it would buyback an additional 50 million shares after already purchasing 17 million last quarter. The transaction is valued at over $900 million, while the previous transaction was valued at $730 million. The stock is off its high of $56 in May to it's current level around $44. The company is currently trading below enterprise value with a PEG of only 0.84 - making it significantly undervalued. This buying could indicate that the company believes it is at a bottom.

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Banta Corporation (NYSE:BN) announced today in a press release that it has rejected Cenveo's increased bid to buyout the company. We covered Cenveo's bid in a previous article in September, when they offered $47/share for the company and called the company's actions "110% un-American". Cenveo also threatened to take other actions, which were not detailed. The only way for them to acquire the company without shareholder approval of a bid is through a hostile takeover, where Cenveo would begin acquiring Banta share on the open market until they achieve a majority position (which would be reported in 13D filings with the SEC). Then, they could nominate their own directors to the Board and attempt to take over the company in a proxy battle. However, this is a very expensive process, making it an unlikely scenario. The alternative is for them to raise their bid even higher, in hopes that the Board will approve.

In the press release, Banta also said it would seek other ways to increase shareholder value:

"The Board has authorized management, in consultation with its financial advisor, UBS Investment Bank, to explore all potential strategies for further maximizing shareholder value, including, but not limited to, remaining independent, joint ventures, mergers, acquisitions, further return of capital, or the sale of the Company ... The Company also advised that it does not intend to disclose developments regarding its evaluation unless, and until, a final decision is made."

The Board is most likely hesitant to sell the company at $47 because the stock has already traded as high as $52 this year - the only reason Cenveo was able to place an offer at such a premium is because the company's stock dropped to $34 after they lowered their FY 2006 guidance. As a result, the Board may see this offer as not having the premium that most people expect when buyout offers come. Moreover, Cenveo may have problems convincing other shareholders to sell out at this price for the same reason - many shareholders may have been buyers in the $50's, so the $47 offer does not represent a premium.

What happens with the evaluation of strategic alternatives remains to be seen. Cenveo has called this process a joke, stating that management never had any intention of doing anything to help the company's shareholders. However, if the company does follow though with its review process, it could result in a special dividend, share buyback program, or even a sale, which could open up the company to a bidding war. The results of this can be found in the company's future 8K filings, while any hostile action by Cenveo will be first seen in future 13D filings. This stock is definitely one to keep an eye on!

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FPIC Insurance Group, Inc. (NDAQ:FPIC)
8K Filing by the Company
FPIC said today that it had completed the sale of its insurance management operations in a deal valued at $40 million. The company said that it expects to realize an after-tax gain of approximately $12.5 million from the transaction, pending some closing arrangements. The stock was up 2% on the news in today's trading.

GigaBeam Corporation (NDAQ:GGBM)
8K Filing by the Company
GigaBeam announced its plans today to reduce its cash burn and improve its operating margins. According to the filing, the company is looking to cut pay and reduce its workforce as it transitions from product development to product marketing and sales.

Walter Industries (NYSE:WLT)
13D/A Filing by Pirate Capital
Pirate Capital revealed today in a 13D/A filing that it had sold some of its stake in Walter Industries. This news comes after the fund experienced problems last month when it failed to disclose its sale of OSI in a timely manner. This resulted in several key investors taking out their money, and several managers being fired.

Western Union (NYSE:WU)
General Information
Western Union shares began trading on the NYSE today under the symbol "WU". Shares were roughly even today after an unusually small amount of activity for a spin-off. See our previous story for more information about the spin-off, its valuation, and its prospects.

PW Eagle Incorporated (NDAQ:PWEI) revealed today that Caxton Associates again raised their stake in the company to 8.5%, which comes after Pirate Capital LLC raised their stake on Friday to over 22%. We first noted the Caxton and Pirate's interest in the company back in August, in which we speculated that the company may eventually be forced to "explore strategic alternatives" that could include a sale of the company, although only a share buyback plan has been instituted to date. The company also announced that they would support Pirate's move to install some of its own Board members and appoint a special committee to explore these strategic alternatives. As of now, there is no actual indication of their plans; however, when two activist hedge funds acquire shares at this rate (especially after Pirate's troubles), there is probably more to the story than we know at this point. This is definitely a stock to keep a close eye on as these events unfold.

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The Western Union Company (NYSE:WU) began trading as a seperate entity for the first time today after being spun-off from First Data Corporation (NYSE:FDC). FDC shareholders had received on share of WU for each share of FDC that they owned, in a 765 million share tax-free distribution. Western Union also announced a $1 billion share buyback program to be completed by the end of 2008, after having issued $3.5 billion in debt to finance the spin-off.

Spin-offs and their parent companies typically outperform the overall market within their first year, according to several published studies. There are two factors that contribute to this: (1) corporate/capital structure improvements, and (2) baseless selling by uninterested shareholders. Most analysts agree that both Western Union and First Data Corp will benefit on a structural basis from the two companies being seperated; however, since Western Union is so well known (and even being accepted into the S&P 500) there will probably be no baseless initial sell-off that would create great buying opportunities. Despite this, Western Union appears to be a strong company with a great ability to generate cash, while FDC still has a higher breakup value than its market price. Many analysts suggest the company could trade anywhere between $22 and $27 based on an analysis of their peers.

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Online gaming is big industry in the United States and other western countries, accounting for over $6.5 billion annually. These profits are now coming under fire after the U.S. Congress passed a bill late last night that would prohibit online gambling in the United States - the world's largest consumer of online gambling. This caused shares of several online gambling related stocks in the UK to fall sharply in today's trading, including 888 Plc (down 45%), Neteller Plc (down 62%), PartyGaming (down 60%), World Gaming (down 70%), and SportingBet (down 60%). Some companies such as 888 Plc stated that they would exit the U.S. market, while others like SportingBet said they would continue to advertise to U.S. consumers despite the law.

At least one U.S. holding company that provide payment processing solutions were also affected by the ruling. Optimal Group Inc. (NDAQ:OPMR) filed an 8K press release today stating:

"Optimal Group holds approximately 76% of the issued and outstanding shares of FireOne Group plc (London Stock Exchange (AIM): FPA). FireOne Group is a provider of payment processing services for the online gaming industry. The enactment of the Unlawful Internet Gambling Enforcement Act of 2006 will have a significant negative impact on the business and results of operations of FireOne Group, and therefore the Company."

*Note: FireOne Group is a publicly traded company in the UK that is currently trading down 65%.

Although the law would not specifically target these online payment solutions, they will still suffer as a result of lost business. Whether or not the United States will be able to effectively enforce the law remains to be seen. If they cannot find a way to effectively do so, or the law ends up being repealed, international investors may be able to pay pennies on the dollar for shares of these online gaming companies.