General Motors (NYSE:GM) may see increased downward pressure today as Tracinda revealed in a 13D/A filing that it sold another 14 million shares in a private transaction at $28.75 per share - a few points below the current market price. This move brings the hedge funds stake down to 4.95% from 7.4% just a few days ago on November 22nd and 9.9% earlier this year. Tracinda began selling its stake in GM after Jerome York - the funds representative on GM's board - resigned after partnership talks between GM and Nissan-Renault broke down in October. GM shares are down almost 1% in mid-day trading today.

Related Companies
Ford Motor Company (F)
Toyota Motor Corporation (TM)
Honda Motor Co., Ltd. (HMC)

Brocade Communications (NDAQ:BRCD) revealed in a form 4 filing with the SEC after the close yesterday that the company's CEO exercised 1,079,943 options at between $4.55 and $6.00, and then sold 1,679,943 shares at $8.97.

Carriage Services Inc. (NYSE:CSV) revealed in a form 4 filing with the SEC yesterday that the company's chairman purchased 27,100 shares between 11/27 and 11/28 at prices between $4.93 and $5.00, bringing his stake to 952,965 shares.

Home Solutions of America Inc. (NDAQ:HSOA) revealed in a form 4 filing with the SEC yesterday that the company's president purchased 20,000 shares on the open market at $5.48, bringing his stake up to 218,930 shares.

TD Ameritrade Holding Corporation (NDAQ:AMTD) revealed in a form 4 filing with the SEC yesterday that the company's director purchased 10,000 shares on the open market on November 27th at $17.10, bringing his stake to 25,200 shares.

Apple Computers, Inc. (NDAQ:AAPL)
SEC Filing Watchlist
The company applied for a patent for a cellphone/iPod combination. The patent application indicates it invented the phone/iPod combination and filed for it in August, but didn't announce it publicly until today.

Cal Dive International, Inc. (NYSE:CAL)
S-1/A Filing with the SEC
The company indicated in an S-1/A filing with the SEC that it sees an IPO price of $14 to $16 per share on 22.2 million shares. The company is a subsidiary of Helix Energy Solutions Group, Inc. (NYSE:HLX), an energy services company. In early March 2006, the parent company changed its name from Cal Dive International, Inc. to Helix Energy Solutions Group, Inc. The new company is to become the heir to all of Helix’s shallow water marine contracting business. After the offer is made, Helix will own nearly 62 million of the company's outstanding shares of common stock.

Pfizer Inc. (NYSE:PFE)
8-K Filing with the SEC
The company announced a favorable trend in revenues in the fourth quarter and expects 2006 revenues to be slightly higher with lower costs. The company predicts that the adjusted EPS for 2006 will be at least $2.05 per share compared to its previous estimate of about $2.00 per share; meanwhile, analyst consensus stands at $2.02. Pfizer held a meeting today in which it reviewed the largest pipeline in the company's history, running a total of 242 programs that span eleven therapeutic areas.

Pirate Capital LLC recently released a 13F filing showing its holdings, which have been significantly decreased since the hedge fund's shakeup back in October when it failed to disclose its sale of OSI Restaurants in a timely matter. More recently, the fund announced that it sold its 4.8 million share stake in Mirant Corporation (NYSE:MIR). A list of Pirate Capital's holdings as of September 30, 2006 can be viewed in their latest 13F filing with the SEC.

Here are some of their largest holdings:

1. Intrawest Corp - This is a company in which Pirate has over $300 million invested, and it is finally paying off. Intrawest's board agreed to sell the company to Fortress Investment Group for $35 per share in cash. Mr. Hudson said, "We commend the Board of Directors and the Executive Management for conducting the broad and thorough strategic review that resulted in the sale of Intrawest. We would like to congratulate the Board and Management for delivering value to their shareholders." Pirate was a buyer between $26 and $30 per share, making them a significant winner on this play.
2. The Brink's Company (NYSE:BCO) - This is a company in which Pirate has over $209 million invested. Recently, on November 11th, Pirate encouraged the company to explore a sale, start a large Dutch tender offer for its shares, and immediately appoint Pirate founder Thomas Hudson to its board; however, the company still appears to be ingoring their requests and pursuing an acquisition instead. It was after this that the hedge fund angrily noted, "We are concerned that shareholder propositions are falling upon deaf ears" and submitted proxy materials in a recent 13D/A filing in a move to bring the issue to shareholder attention.
3. Walter Industries (NYSE:WLT) - This is a company in which Pirate has over $135 million invested. The company moved up today after it resolved a lawsuit involving CC Arbitrage Ltd. and CNH CA Master Account L.P., who agreed to dismiss all claims, and immediately convert their convertible senior subordinated notes to the company's common stock. In this case, Pirate successfully convinced the company to spin-off its whole-owned Mueller subsidiary back in May of 2006. Meanwhile, the hedge fund recently cut its stake and remained silent. Other objectives it had on the table since its last filing in October of 2005, included the sale of its other Finance and Homebuilding subsidiaries. However, the multiples for these sectors are not high enough at this time to justify a sale.

As you can see, the process of unlocking shareholder value can take a lot of time and has no certain outcome. However, when it does work - as in the case of Intrawest - handsome profits can be made. And with over $1.4 billion invested, Pirate Capital is one of the best activist hedge funds to keep an eye on!

Home Depot (NYSE:HD) may be seeing some private equity interest according to reports on CNBC. There is speculation that the company could go for as much as $100 billion, although many analysts remain skeptical. Charlie Gasparino reported that KKR has already crunched the numbers for a potential bid to take the company private, while there is also talk of other potential HD bidders on the floor. The interest comes after the stock has fallen from a high of nearly $45 in early 2006 to its current levels around $35 per share, down over 8% on the year.

Many attribute this drop to poor performance by the company's CEO Nardelli along with declining market conditions. Meanwhile, their main competitor - Lowes - has beat the company on almost every metric. Lowe's revenues grew 130% compared to HD's 78%; Lowe's ROA increased 52% while HD's hardly increased at all; and finally, Lowe's customer service rating rose to 78 from 75, while HD's decreased to 67 from 75 during the same time period. Combined, market conditions and poor management may have made this stock cheap enough for private equity to seriously consider. This makes Home Depot a stock to keep an eye on over the next few months.

Related Companies
Lowes Companies, Inc. (LOW)
Conn's Inc. (CONN)
Building Materials Holding Corporation (BMHC)

Tribune Company (NYSE:TRB) announced yesterday that it would be extending its strategic review process, saying the committee would be prepared to make a final recommendation to the board in the first quarter of 2007. Reuters is reporting that three private equity groups have made a bid for the company, including a group consisting of Texas Pacific Group and Thomas H. Lee Partners and another that includes Madison Dearborn Partners, Providence Equity Partners and Apollo Management, and Bain Capital. Other interested parties include: the Carlyle Group, billionaires Eli Broad and Ron Burkle, Maurice Greenberg of AIG, and several others.

The company said that it is seeking a single buyer for its television and newspaper units. With all of this interest, the company is in a great position to sell off its company at a substantial premium to the current prices. To date, the company has sold approximately $450 million of non-core assets. This is definitely a company to watch closely as this situation unfolds.

Related Companies
Washington Post Co. (WPO)
Gannett Co., Inc. (GCI)
CBS Corporation (CBS)

Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NDAQ:OMAB)
S-1 Filing with the SEC
Mexican airport operator Grupo Aeroportuario del Centro Norte, commonly known by its trade name OMA, began trading today. The stock opened higher than predicted, at $22.08 after pricing at $18.00, above the expected $14.50 to $16.50 range. Grupo Aeroportuario del Centro Norte operates thirteen international airports in nine states of central and northern Mexico. OMA's airports also serve Monterrey, Mexico's third largest metropolitan area, a few tourist destinations, and nine other regional centers and border cities.

The New York Times Company (NYSE:NYT)
SEC Filing Watchlist
The New York Post reported today that Greenberg has made an effort to buy a controlling stake in the New York Times, in order to break the Sulzberger family's control of the company. Later, Greenberg's spokesman said he has no intentions of increasing his stake beyond his 100k shares; nevertheless, CNBC's Charlie Gasparino's follow-up reports on the story moved NYT up 7.5% in today's trading.

Wireless Ronin Technologies, Inc. (NDAQ:RNIN)
SB2-A Filing with the SEC
Shares of Wireless Ronin Technologies, a digital signage company, soared 57% today on its second day of trading with a volume of 5.5 million shares. Strangely, this move comes after the stock IPO'd yesterday at $4 per share, where it closed at $4.58 on volume of 1.6 million shares.

Cyberonics, Inc. (NDAQ:CYBX) holder Metropolitan Capital Advisors demanded today that director Kevin Moore immediately be removed from the company's board, calling his position a "glaring violation of law and appropriate corporate governance practices". The move was backed by the Coalition of Concerned Cyberonics Shareholders, who collectively own 7.33% of the company. According to a letter filed with the SEC:

"'Given Mr. Moore’s longstanding close friendship with Robert Cummins — dating back to their days at Dartmouth together in the 1970’s —we are particularly disturbed that Mr. Moore, who we believe was not lawfully a Member of the Board, served on the Board’s Compensation and Nominating and Governance committees and participated in the decision to not only approve the new compensation package for Mr. Cummins in 2005, despite the existing contract having nearly three more years left to run, but his severance package as well,' Karen Finerman and Jeffrey Schwarz of MCA said.

According to the Company’s public filings, Cyberonics entered into a March 28, 1997 letter agreement (the "Letter Agreement") with the Clark Estates that, upon closing of its pending investment in the common stock of Cyberonics, entitled the Clark Estates to designate one member to the Cyberonics Board to serve for as long as the Clark Estates retained at least 600,000 of the 901,408 shares of the Company that it purchased on that date. Purportedly pursuant to this provision, approximately seven years later Mr. Moore was appointed to the Company’s Board on January 13, 2004 and has remained on the Board since then, despite not standing for election at the Company’s 2004 or 2005 annual meetings of shareholders. Mr. Moore’s purported status as a perpetual director of the Company, however, violates the Letter Agreement, the Company’s bylaws and the Delaware General Corporation Law.

Given that the Company is not, and could not be, contractually bound to allow Mr. Moore to serve as a director despite not being elected by the Company’s shareholders, MCA demands that the Company immediately relieve Mr. Moore of his position as director and that he return the fees and stock options he was awarded during the period when he was improperly serving as a director. If the Company fails to take such action within 10 business days, Metropolitan Capital Advisors, Inc. and The Committee for Concerned Cyberonics Inc. Shareholders will bring an action in the Delaware Court of Chancery to compel it to do so." (Read More)

Just recently, the coalition succeeded in ousting ex-CEO Robert Cummins; however, he was awarded a generous severance package due to Moore and others close to him that serve on the compensation committee. After the removal of the director, the coalition plans to locate a new CEO which it hopes will help turn the company around. This stock is definitely one worth watching as corporate governance is improved and changes are made to help the company turn itself around.

Related Companies
Medtronics, Inc. (MDT)
Biomet, Inc. (BMET)
Steris Corporation (STE)

The Pep Boys - Manny, Moe & Jack (NYSE:PBY) is seeing increasing interest from activist hedge funds Pirate Capital and Barington Capital, who both disclosed transactions as recently as November 21 in 13D/A filings with the SEC. Pirate disclosed that it now owns 11.7% of the company and has succeeded in installing Mr. Hudson on the company's board of directors. Meanwhile, Barington has amassed a 9% stake in the company, but gave no further details. Although their most recent 13D/A filings do not disclose any specific plans, both of these hedge funds are well known for unlocking shareholder value in the short-term through changes made to capital structure, special dividends, and outright sale of the companies they take over. This makes Pep Boys a stock to keep a close eye on in the coming months.

Related Companies
Advance Auto Parts, Inc. (AAP)
AutoZone, Inc. (AZO)
CSK Auto Corporation (CAO)

Dollar General Corp. (NYSE:DG)
SEC Filings Watchlist
Merger Market analyst Josh Kosman told CNBC that the private equity firms Cerberus Capital and Bain Capital are both pursuing Dollar General Corp. However, it is unclear whether the Fortune 500 discount retailer is interested in selling to either of the two firms. Dollar General has over 8,000 stores nationwide.    
   
Harrah's Entertainment Inc. (NYSE:HET)
SEC Filings Watchlist
David Faber of CNBC stated that there is an additional bid out for Harrah's Entertainment Inc. by the Penn National Gaming Inc. (NDAQ:PENN) group, including DE Shaw, Lehman Brothers, and Wachovia. Harrah's is already mulling over a bid from Apollo Management Group and the Texas Pacific Group, which stands at $83-$84 per share. It is uncertain whether or not this additional bid is being considered.

Artes Medical (NDAQ:ARTE)
S-1 Filing by the Company
In a S-1/A filing with the SEC, Artes Medical said it is predicting an IPO price of $12-$14 per share on 4.6 million shares. The medical technology company plans to list on the Nasdaq under the symbol "ARTE".  Artes Medical develops, manufactures, and commercializes a new category of injectable aesthetic products for the dermatology and plastic surgery markets.

Interactive Brokers Group, Inc. (NDAQ:IBKR) will be the next major financial IPO to watch, as it filed its S-1 registration statement with the SEC today. This latest IPO comes amid heavy M&A activity, a great IPO market, and strong performance by many players in the financial sector - particularly exchanges and investment banks.

Their S-1 filing with the SEC gives more details about the company:

"We are an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures and foreign exchange instruments as a member of more than 60 electronic exchanges and trading venues around the world. Since our inception in 1977, we have focused on developing proprietary software to automate broker-dealer functions. The advent of electronic exchanges in the last 16 years has provided us with the opportunity to integrate our software with an increasing number of exchanges and trading venues into one automatically functioning, computerized platform that requires minimal human intervention.

Our high degree of automation enables us to process approximately 500,000 trades per day with approximately 500 employees. During 2005 and for the nine months ended September 30, 2006, we generated pretax income in each period at a rate of more than $1 million per employee. Publicly available data regarding other companies in the securities and commodities industry indicate that this level of productivity is unparalleled for our industry. Automation has allowed us to become one of the lowest cost providers of broker-dealer services and to increase significantly the volume of trades we handle. According to data compiled by the Futures Industry Association (FIA) based on data received from exchanges worldwide, during the nine months ended September 30, 2006, we accounted for approximately 16.0% of exchange-listed equity options volume traded worldwide and approximately 18.8% of exchange-listed equity options volume traded on those markets in which we actively trade. We were the number one or number two liquidity provider on each of the three largest U.S. options exchanges (the Chicago Board Options Exchange, the International Securities Exchange and the Philadelphia Stock Exchange) during the nine months ended September 30, 2006, according to rankings provided by these exchanges. We serve sophisticated and active customers worldwide, including institutional investors, financial advisors, brokers and individuals." (Read More)

Given the M&A activity in the overall market (and especially the financial sector), this IPO may see significant interest and upside. Moreover, as such a prominent player in providing liquidity, it may be a takeover target for either another broker or even an exchange interested in diversifying its revenues. The high degree of automation in this company also makes it extremely capital efficient and profitable on its own. Combined, this company is definitely worth watching as a takeover target as well as a strong independent company.

The recent wave of M&A activity by private equity has caused a lot of speculation on the street as to who's next. A Barrons article over the weekend listed several LBO targets that analysts are currently watching. Here's a list of the companies mentioned:

Oil/Energy Companies

• Apache Corporation (NYSE:APA)
• Valero Energy (NYSE:VLO)
• Hess Corporation (NYSE:HES)
• Transocean, Inc. (NYSE:RIG)

Consumer Product Companies

• Kimberly Clark Corporation (NYSE:KMB)
• Estee Lauder Companies Inc. (NYSE:EL)

Homebuilder Companies

• KB Home (NYSE:KBH)
• DR Horton, Inc. (NYSE:DHI)
• Lennar Corporation (NYSE:LEN)
• Toll Brothers, Inc. (NYSE:TOL)
• MDC Holdings, Inc. (NYSE:MDC)
• Hovnanian Enterprises, Inc. (NYSE:HOV)

Technology Companies

• Linear Technology Corporation (NDAQ:LLTC)
• Maxim Integrated Products, Inc. (NDAQ:MXIM)
• Analog Devices, Inc. (NYSE:ADI)
  
• Altera Corporation (NDAQ:ALTR)
• Xilinx, Inc. (NDAQ:XLNX)

With a record $350 billion in deals this year alone by private equityy, many more acquisitions may lie ahead. These are some stocks to watch in the event of future leveraged buyouts; any such acquisitions would likely come at significant premiums to the current market price.

Here are some of the takeover targets mentioned in the media today:

• Allstate (NYSE:ALL) was mentioned by the Chicago Tribune - quoting a Morgan Stanley report - as a potential financial-services consolidation play.
• Armor Holdings (NYSE:AH) was mentioned in BusinessWeek's Inside Wall Street column as a potential takeover target for Lockheed Martin (NYSE:LMT).
• Boyd Gaming (NYSE:BYD) was also mentioned in BusinessWeek's Inside Wall Street column as a possible gaming consolidation play after Harrah's and Aztar recently closed such transactions.
• Sangamo (NDAQ:SGMO) was also mentioned in BusinessWeek's Inside Wall Street column as the next biotech takeover, with partnerships already in place with Pfizer and Dow Chemical.
• Technip (NYSE:TKP) was mentioned in La Tribune (a French newspaper), which stated Italian oil company Eni SpA may make a bid for the company.

Strong corporate performance and favorable economic conditions have spurred record M&A numbers this year. Until conditions change this trend is likely to continue, particularly in financial services and gaming. As a result, these stocks are definitely ones worth watching as any buyout would come at a significant premium to the current market price.

Northwest Airlines (OTC:NWACQ) moved up over 30% today after Owl Creek Asset Management - a 5% holder in the company - said that the company could be worth as much as $19.75-$33.50 per share in the event of a merger with Continental Airline (NYSE:CAL). How do they come up with this valuation?

Let's take a look at their 13D/A filing with the SEC that details their analysis:

"Though it is early to value Northwest for recovery purposes, Owl Creek submits that, based on Wall Street analyst reports, the trading markets value Northwest's legacy carrier peers (American, Continental, United, and US Airways) at 5-1/2 to 6 times "EBITDAR."(3) Carriers like Northwest with a higher likelihood of being a merger candidate trade for more than 6x EBITDAR and carriers with a lower likelihood of being a merger candidate trade closer to 5.5x EBITDAR. Based on similar 2007 fuel price assumptions to those underlying the comparable company valuations, Owl Creek forecasts Northwest's 2007 EBITDAR to be $2,700,000,000. Given a valuation of 6.0x 2007 EBITDAR, Northwest should have a total enterprise value of over $16,200,000,000 at the time of its expected emergence from bankruptcy protection in September of 2007. With a cash build up of over $1,000,000,000 during the remaining pendency of the bankruptcy cases, this would result in an equity value of $19.75 per share AFTER covering all claims with interest and the preferred stock.

Furthermore, US Airways' hostile offer for Delta Airlines last week -- aside from signaling directly the consolidation trend in the legacy carrier market from which Northwest's value undoubtedly will increase -- demonstrates the inherent value, recoverable by Northwest's equity holders, that a merger of Northwest with a strategic partner will create. US Airways announced that it expects the combination to generate $1,650,000,000 of annual synergies, which is 6.2% of the combined Delta/US Airways passenger sales. Assuming comparable proportional synergies to a Northwest merger with Continental (Continental Airlines is the most logical partner, but this analysis would be equally applicable to another carrier), then the synergies generated by a combination of Continental Airlines with Northwest would be approximately $1,250,000,000 annually. Valuing the company at a post-merger multiple of 5.25x EBITDAR including one half of the synergies accruing to Northwest (the other half to the merger partner) results in an implied stock price of $33.50 per share.

This is not a "what if" analysis. Experts have been calling for consolidation for some time, and US Airway's offer for Delta Airlines suggests the starting point. SEE, E.G., Benjamin Silverman and Susan M. Donofrio, TWO EVENTS MAY TRIGGER AIRLINE CONSOLIDATION THIS FALL, Cathy Financial Industry Report, September 22, 2006; Jeff Bailey, A REVITALIZED US AIRWAYS IS CREATING A MERGER BUZZ, N.Y. Times, July 31, 2006, at C2 ("The surprising early success of US Airways Group, the result of a merger last year, has led to some behind-the-scenes talks among investors and airline executives that could lead to more industry consolidation in the months ahead"); Susan Carey and Melanie Trottman, MERGER TALKS BRING OUT FEAR OF FLYING, Wall Street Journal, April 21, 2006, at C1 ("Most airline investors agree that consolidation would be great for an industry with too many airlines chasing too few dollars"). The value of the mergers becomes immediately apparent in the change in trading prices of Delta Airlines unsecured bonds following the November 15, 2006 announcement of US Airways' offer. The trading price of Delta Airlines bonds increased by fifty percent in the week after the announcement, and Delta's board has neither accepted nor closed that transaction yet." (Read More)

NWACQ is currently trading at just $3.49 per share, making the above valuations seem somewhat outrageous. In reality, the assumptions above are correct; however, everything depends on the airline's ability to pull itself out of bankruptcy and successfully orchestrate a merger. It is this risk premium that is keeping the stock at its low levels. This is definitely a stock to watch; however, prudent investors may want to wait until the bankruptcy picture clears up before investing a significant amount of capital.

Related Companies
AMR Corporation (AMR)
UAL Corporation (UAUA)
Continental Airlines (CAL)

Blockbuster Inc. (NYSE:BBI) moved up 12% in mid-day today after Chairman/CEO John F. Antioco disclosed a 220,000 share purchase at $4.66 after the bell yesterday in a form 4 filing with the SEC. This move marks a continuation of BBI's bullish run from $3.74 in mid-October to its current level of $5.10. The $1 million transaction also came just before today's news that Papa John's and Blockbuster would be teaming up to promote their online properties - an area in which Blockbuster is struggling. The new agreement allows Papa John's customers to sign up for a free trial of Blockbuster's online DVD rental service by going to Papa John's website - in exchange, the pizza maker is offering a $10 gift card.

Also worth noting, Fitch also boosted the company's outlook from "stable" from "negative" earlier this week citing improved financial flexibility, a stronger liquidity position and cost-cutting efforts. The ratings firm also warned, however, that Blockbuster's revenue growth continues to be hurt by structural changes in the industry, competitive factors and its 2005 decision to eliminate late fees. Clearly, there are still a lot of problems left for this company to address; however, improvements to their online renting program and strong insider buying may prove to be the forumla to success. This stock is definitely one worth watching in the coming months.

Related Companies
Netflix, Inc. (NFLX)
Movie Gallery, Inc. (MOVI)
Hastings Entertainment (HAST)

MGM Mirage (NYSE:MGM) moved up almost 10% today after receiving a $825 million tender offer for 15,000,000 shares at $55/share from billionaire investor Kirk Kerkorian's Tracinda Corporation. The move would up Tracinda's stake from 56.3% to 61.7% with over 173 million shares. MGM Mirage owns the MGM Grand, Luxor, Bellagio and other casinos in Las Vegas along with gaming properties in other Nevada cities and Atlantic City. The moves comes as the entertainment industry has been witnessing increased M&A activity after Harrah's private equity takeover. According to the SC TO-C filing by Tracinda: "This tender offer demonstrates our confidence in MGM MIRAGE and its management and our commitment to the company’s future." While the transaction has yet to be completed, this move does strengthen confidence in the company's future given the billionaire investor was willing to tender these shares at a 12% premium to the going market price. Moreover, in an industry where there has been so much M&A activity lately, we can't rule out the possibility of a buyout or transaction that reward shareholders. Combined, these facts make MGM a stock to keep a close eye on.

Related Companies
Harrah's Entertainment, Inc. (HET)
Las Vegas Sands Corp. (LVS)
Aztar Corporation (AZR)

Parlux Fragrances Inc. (NDAQ:PARL) may soon find itself in trouble as 12.2% holder Glenn H. Nussdorf steps up his efforts to turn around the company. Many may remember our coverage of this story in October, after Nussdorf said he is interested in potentially acquiring the company. His most recent filing today is aimed at speeding up this process by removing the Board of Directors and reinstating his own members in an effort to unlock shareholder value through a potential sale of the company.

According to the 13D/A filing:

"As the beneficial owner of a substantial percentage of the outstanding shares of Parlux, I believe that much can be done to increase shareholder value and that it is time for immediate change at both the Board and management levels. The decline in the Company's share price from a high closing price of $18.96 earlier this year (after adjusting for a 2-for-1 split in June 2006) to the current $6.26 level (a decrease in shareholder value of 67%), the Company's recent disclosure of decreased sales and earnings for the quarter ended September 30, 2006, and the allegations in the recently amended class action lawsuit that the Company improperly recognized revenues on sales to related parties, have led me to conclude that the Board of Directors is failing to act in the best interests of the Company's shareholders and is not exercising appropriate oversight of management. I am convinced that a continuation of the status quo risks a further destruction of shareholder value and, accordingly, I intend to protect the value of my significant investment in the Company through a consent solicitation to replace members of the Board of Directors.

As I have publicly disclosed in my Schedule 13D filing, I am exploring the possibility of making an acquisition proposal to acquire the Company in a business combination transaction. While I have not made a decision at this time whether to pursue such a proposal, I strongly urge the Board not to take any action (such as the previously announced and subsequently abandoned sale of the Perry Ellis brand) which would materially modify or impact the Company's business, products or assets and could adversely effect the Company's value. In addition, the consent solicitation will present Parlux shareholders with a unique opportunity to express their views on the future direction of the Company." (Read More)

A lot of people have incurred substantial losses on PARL and Mr. Nussdorf contends that the only way to bring the company back is through replacing the Board of Directors. Although proxy battles can be long an arduous, shareholders will finally be able to take action against the Board of Directors that has watched this company decline for so many months. This is definitely a stock to watch; however, it is important to remember that the turnaround process takes a long time to complete, so it may be best to stay on the sidelines until the picture clears up.

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

Pogo Producing Co. (NYSE:PPP) moved up over 6% in today's trading after Daniel Loeb's activist hedge fund Third Point LLC disclosed a 7.2% stake in the company. The hedge fund most recently succeeded in its attempt to gain a seat on the board of Nabi Biopharmaceuticals (NDAQ:NABI) after it threatened management with a proxy battle.

Pogo also saw interest from Texas billionaire Robert Rowling who disclosed a 9.21% stake in the company on October 6th of this year. Although Third Point's 13D filing does not mention any particular plans as of yet, the hedge fund is very well known for taking an active role in unlocking shareholder value. Typically activist hedge funds focus on selling the company, selling off specific assets, returning excess cash to shareholders, and/or working with management to improve the company's bottom line. This makes PPP a stock worth watching closely over the next few months.

Related Companies
Apache Corporation (APA)
EOG Resources, Inc. (EOG)
Forest Oil Corporation (FST)

Brinks Co. (NYSE:BCO) may find itself in hot water soon as Pirate Capital suddenly took a more active role in its investment. In a 13D/A filing with the SEC today, the 8.5% holder demanded that the company (i) take immediate steps to unlock long-term shareholder value by retaining an investment bank to explore the sale of the company and initiate a large Dutch tender offer for the shares, and (ii) immediately appoint Thomas R. Hudson Jr. to the board. This move comes after Brinks failed to listen to Pirate's past requests to retain an investment bank and instead announced plans for its own acquisitions.

According to a letter attached to the filing:

"The purpose of this demand is to enable the Fund and its affiliates to communicate with the Company's shareholders on matters relating to their interests as shareholders or beneficial owners with respect to a shareholder proposal set forth in the Fund's notice to the Company of even date herewith and, possibly, to facilitate and support a proxy solicitation of the Company's shareholders to elect one or more members of the board of directors of the Company, including the undersigned, which the Fund is contemplating but has not decided upon." (Read More)

Nobody wants a proxy battle, as they are a long and expensive process (and Pirate has a lot of experience!). Therefore, it is likely the company will take this as a hint and start a dialog between the two parties. In the end, it is likely that hedge fund will receive a spot on the Board and head a committee to explore strategic alternatives. If the company is indeed undervalued and this idea has merit, then this proposal will be put to a shareholder vote at an annual meeting. Although this is all a very long process, it definitely makes BCO a stock worth watching, since any buyout comes at a premium to market prices.

Related Companies
EGL, Inc. (EAGL)
Kitty Hawk, Inc. (KHK)
Protection One, Inc. (PONN)

Carmike Cinemas Inc. (NDAQ:CKEC) revealed today in a Form 4 filing with the SEC that Chairman/CEO Michael Patrick purchased 48,100 shares in a transaction valued at over $900,000. This transaction brought his stake in the company to 360,313 shares. We first started covering this company back in September, when we noticed Watershed's interest in the company. Since then, the stock has moved up over 15% as the company recently announced plans to raise refreshment and ticket prices at its theaters in an effort to increase revenues. The company also said that its pre-showing advertising revenues rose, while they are implementing new technologies to help the ease of switching show times and movies. Investors were also pleased to hear that there would be no more fees from restatements, which plagued the company's earnings for several quarters in the past. News of the insider's purchase helped the stock move up over 4% today in intraday trading.

Related Companies
Regal Entertainment Group (RGC)
The Marcus Corporation (MCS)

The exchanges continued their move higher today as Nasdaq Stock Market Inc. (NDAQ:NDAQ) made yet another bid to acquire the London Stock Exchange (LON:LSE), revealed in an 8K filing with the SEC. The world's second largest stock exchange upped its bid by 25% to $1.5 billion in an attempt to create the world's largest trans-Atlantic exchange, however the LSE again rejected its bid as inadequate. But the Many are saying that the LSE is holding out for a white knight that will acquire the company; however, the Nasdaq recently upped its LSE holdings by an additional seven million shares, which makes rival bids even more unlikely. At this point, it is likely that the LSE will solicit other bids for the company from other potential candidates and/or demand a higher premium from Nasdaq. The company refused to comment, but said it would issue a press release later today on the matter.

This move comes as many of the exchanges have been making moves to consolidate, driving up prices to new record highs and helping the Nymex Holdings Inc. (NYSE:NMX) set a new record on its IPO. Stock exchanges in particular have been looking to expand overseas as an increasing volume of new issues are taking place outside of U.S. borders. While Nasdaq has been targeting the LSE, NYSE is in the process of acquiring Euronext (based in Paris), which it struck a deal with earlier this year, pending shareholder approval. It is likely that this consolidation will continue, driving up the exchanges even more going into 2007. These are all definitely stock to keep a close eye on!

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Triad Hospitals Inc. (NYSE:TRI) received yet another letter from TPG-Axon Capital Management encouraging the board to implement changes to help increase shareholder value. This new letter expands on what the fund previously stated ahead of its talks with management to take place later this year.

In the letter, the fund states:

"We are focused on the company's strategy and execution, which RELATIVE to industry peers has delivered sub-par returns. We believe Triad's hospital assets are high quality, and generally well-positioned. As such, the company should trade at favorable valuations to industry comparables. HOWEVER, INSTEAD, TRIAD HAS REGULARLY TRADED AT A SIGNIFICANT DISCOUNT TO INDUSTRY PEERS, AND CURRENTLY TRADES AT THE LOWEST VALUATION IN THE INDUSTRY. Why? In stark contrast to its peers, Triad has achieved poor return on investment and diluted its shareholders. Unfortunately for shareholders, capital spending and management compensation have been high relative to the industry, but growth (per share) and returns have been low. We believe that it is time to put an end to this dilutive strategy, and that the Directors and management must finally begin to show discipline, and focus on creating value for shareholders." (Read More)

To accomplish these goals, the fund created a more indepth outline of what needs to be done:

• Significantly amending the composition of the board, in order to improve the depth of financial sophistication, and also to include representation from shareholders. The current board is simply not credible as a guardian of our capital.
• The company should focus on improving and optimizing existing assets. It is critical that focus be placed on improving the company's analytical tools and controls. Margins must be improved, capital expenditures must be rationalized, and issues like bad debt must be analyzed carefully. Ultimately, until the current assets have been optimized and management control has been enhanced, it does not appear sensible to continually expand, and increase complexity.
• Capital usage strategy should be dramatically altered. Instead of aggressive spending on capital expenditures and acquisitions, the company should reduce expenditures to levels needed to optimize existing assets. Excess cash flow should be returned to shareholders, via dividends or share buyback.
• The company has the flexibility to increase leverage significantly without impairing operating flexibility, or increasing risk to imprudent levels. Rather than keeping this capacity as a 'war chest', the company should instead use it to optimize the capital structure, and generate return for shareholders. With these steps, the company could comfortably implement a capital reduction of $1.0 to $1.25 billion, and still have leverage ratios and coverage metrics that would be prudent and manageable.

If the company listens to Axon and successfully executes these strategies, it could mean significant share appreciation in the long-term. Again, the company is trading below enterprise value with strong cash flow and a PEG of right around 1 - well below the industry average. This is definitely a stock to keep an eye on.

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Ampex Corporation (NDAQ:AMPX) shareholders applauded management's move to retain the company's assets after a buyout offer from ValueVest High Concentration Master Fund. We covered this unofficial buyout offer in a previous article on November 14th, where we stated that ValueVest intended to discuss this matter with management at the next annual meeting. The company responded sooner, however, stating that they are not interested in a buyout but are willing to discuss other possible ways to increase shareholder value.

In a 13D/A filing yesterday, ValueVest said:

"On November 14, 2006, the Investment Manager received by facsimile a letter dated November 6, 2006 from the chairman and chief executive officer of the Issuer. The letter confirmed that the Investment Manager's letters of September 13 and 21, 2006 had been discussed by the Issuer's board of directors at their meeting in early November and that the Issuer's board of directors had concluded after that discussion that it would not be in the best interest of the Issuer or its shareholders to offer the Issuer's Data Systems business for sale at this time.

On November 15, 2006 the Investment Manager contacted the Issuer's chief financial officer by telephone and once again offered to meet with representatives of the Issuer to discuss the ways in which the Investment Manager might be able to help increase shareholder value and the commercial utilization of the Issuer's intellectual property assets. The chief financial officer agreed to meet with Messrs. Bakar and Cariani at the Issuer's offices in New York in the next week." (Read More)

The stock is trading up over 2% today on the news. Certainly, any licensing deals involving the company's intellectual property rights could entail further improvement in the company's bottom line. This remains a good stock to watch as the the fund meets with managment in New York next week to discuss possible ways to unlock shareholder value.

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U.S. Steel Corp. (NYSE:X) moved higher today by over 9% after a Bloomberg report said that Russia's biggest steel maker, OAO Severstal, is in talks with investment bankers to merge with local iron miners to create a $20 billion company, all in an effort to bid for the $8 billion U.S. Steel. The two potential local acquisitions are said to include ZAO Gazmetall and ZAO Metalloinves, which are controlled by billionaire Alisher Usmanov. The rumors stemmed from the Russian newspaper Kommersant, which quoted anonymous analysts at investment banks reporting that Severstal owner Alexei Mordashov is interested in buying U.S. Steel. This rumor is also supported by strong existing consolidation within the steel industry - particularly, the Mittal takeover of Arcelor which formed the world's largest steel company earlier this year. Finally, a spokesman for U.S. Steel didn't dismiss the rumor, saying: "We favor consolidation if it builds value for our shareholders, but we don't discuss any actions we may or may not be taking until the appropriate time." The rumor also helped other steel stocks climb sharply in morning trading. Combined, these factors make such an acquisition a possibility; however, there is still a lot of obstacles in the way. Regardless, this is definitely a stock to keep an eye on as the picture clears up in coming months.

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NYMEX Holdings, Inc. (NYSE:NMX) skyrocketed at open today as one of the hottest IPOs this year began trading. The company priced above its already-raised expected range last night at $59 per share, but this proved to be far less than investors were willing to pay as the stock rocketed over 100% in morning trading to over $140 a share. Many investors are driven to buy Nymex after seeing red hot performance and M&A activity amongst other exchanges: The NYSE IPO'd not long ago and performed extremely well; the LSE was the subject of a bidding war; the CME and CBOT were involved in a merger/buyout; and the NASDAQ has been red hot since it went public. Here's a chart showing three of the largest exchanges that have clearly outperformed the market during the past few years:



Investors appear confident that the Nymex will perform similarly, and some are even speculating the Nymex could be the subject of a buyout as consolidation within the industry continues. This stock is definitely one to watch as exchanges continue to outperform the rest of the market.

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Clear Channel Communications, Inc. (NYSE:CCU) announced its acceptance today of a definitive merger agreement with Thomas H. Lee Partners and Bain Capital Partners. The $18.7 billion buyout is to take place at $36.70 per share pending shareholder approval - the company expects the transaction to be completed by the end of 2007. This news comes after the company announced that it had retained advisors to assist it in a possible sale of the company back on October 27th. In another announcement, the company revealed that it intends to sell 448 radio stations outside the top 100 markets, as well as its television division. However, it noted that the merger is not conditioned on the sale of these assets. Why are they doing this? According to the company:

"Our TV division and departing radio stations have consistently turned in industry-leading performance. However, these assets account for less than 10% of the Company’s revenues and earnings. Change is a necessary part of success. We are adapting our business model to accommodate the rapid and substantial changes in the markets in which we operate. These are difficult decisions, but we believe they are the right ones, and necessary for our future success." (Read More)

It also makes the buyout signficantly cheaper for the acquiring private equity firms; in fact, some investors are angered that the company waited until after the merger agreement to reveal this information in detail. If it had been the other way around, any upside from these sales could have benefited shareholders instead of private equity.

The company also addressed rumors regarding layoffs, stating:

"We do not expect this privatization to result in any significant reductions to our core workforce. While future employment is never guaranteed, reductions in force are typically associated with so-called strategic mergers in which two companies and their employees are combined, rather than with transactions that are more properly characterized as financial investments such as this one. The private equity group is making a very large investment in our company, and it is in their best interest for the company to continue having the right people with the right tools to grow and prosper." (Read More)

This buyout is the latest in a series of massive LBO transactions this year by private equity, including that of casino giant Harrahs Entertainment. The deal also affects investment banks, who stand to make more than $130 million on the deal in advising and legal fees. These institutions include Morgan Stanley, Goldman Sachs, and others who have benefited from the near-record $3 trillion in deals this year alone. Clear Channel stock is currently trading at $35.36 per share, roughly 6% below the buyout premium.

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Two of the largest IPOs of the year, KBR (NYSE:KBR) and Hertz (NYSE:HTZ), both opened higher today in an IPO market that has performed extremely well during the past few months. KBR is trading up 23% in afternoon trading, while HTZ is trading up marginally at $15.06 after pricing its IPO at the top of its range. It is worth noting that KBR was a subsidiary of Halliburton, who will retain an 81 - 83% stake in the company, depending on the the underwriters' over-allotment actions. These IPOs come ahead of the much-anticipated Nymex IPO tomorrow, which remains heavily oversubscribed despite a 20% price hike and half million additional shares.

FTD Group (NYSE:FTD) has hired Goldman Sachs (NYSE:GS) to help it explore a possible sale of the company, according to a report by Reuters. Although rumors of such a sale have surrounded the company for several months, sources are now saying that bids could be received as early as December. The stock is majority owned by Leonard Green & Partners, who took the company public roughly 19 months ago. Although the company has a significant amount of debt, they are trading below enterprise value with a low PE for its industry and have performed very well in the past eight months. This is definitely a stock to watch, as buyouts typically come at significant premiums to the current market prices. The stock moved up 5% in morning trading on the news.

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ServiceMaster (NYSE:SVM) may be attracting some private equity firms, according to an article in the Wall Street Journal. There is talk on the street that the $3.2 billion company's healthy cash flows combined with shareholder unrest may prompt private equity firms to take action or perhaps even lead to a management buyout. The only argument against the notion is the company's strong religious culture; however, that did not stop other bids for the company in the past that were rejected. Shareholders may be more likely to support a buyout now, however, as the company's performance has stalled while its brands and image remain intact. The company's policy is to not comment on rumors; however, the company's stock moved up over 6% in morning trading on the news. This is definitely a stock to keep an eye on in the coming weeks in case any further evidence comes out supporting such actions.

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Delta Air Lines (OTC:DARLQ) said today in a press release that it plans to emerge from bankruptcy as a standalone carrier. This announcement comes after U.S. Airways proposed $8 billion merger, which would create the world's largest carrier. Under the merger, Delta creditors would get $4 billion in cash and $4 billion in US Airways stock. US Airways believe the such a merger would provide approximately $1.65 billion in annual cost savings. Many are saying that although the merger might make sense, it would involve a lot of work to successfully integrate the two carriers. The complexity of the deal alone may cause it to fail - similar to the way AOL/Timewarner failed. Regardless, this is definitely a situation to watch as management reviews the proposal despite its bias to remain a standalone carrier. The stock moved up 14% on the news so far in today's trading.

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Pier 1 Imports (NYSE:PIR) confused investors today as the stock rose almost 23% on no news. The rise prompted the NYSE to notify the company of "unusual trading activity" and encourage them to issue a press release. The company subsequently said that its policy is to not comment on rumors or unusual trading activity. However, Reuters recently shed some light on the situation, reporting today that Jakup Jacobsen is preparing to make a bid for the entire company, citing sources close to the situation. On September 21st, we noted in an article on SECInvestor that Jacobsen had signed a confidentiality agreement and speculated that the two parties might pursue a buyout agreement. With a 9.8% stake in the company and detailed financials, this buyout remains a very distinct possibility. Combined, these factors make this stock definitely one worth keeping an eye on.

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ICOS Corp. (NDAQ:ICOS) is finding itself under increasing pressure after it struck a buyout agreement with Eli Lilly. HealthCor, the fund leading the fight against the takeover, sent yet another letter to management criticising their bidding process and imploring them to break off the agreement. There are several other holders that are also displeased with the agreement and have vowed to vote against the takeover.

According to this latest 13D/A communication:

"The proposed purchase of ICOS by Eli Lilly is not an arm’s length transaction. The acquisition has not occurred in a market-based, competitive bid process. Therefore, in making its determination of fair value, we believe the Board of Directors must rely upon market-based comparables of similar transactions. We have clearly shown, in our initial communication to you, the flaws and distortions that are contained within the 'Fairness Opinion' provided by Merrill Lynch. Without a competitive bid and without a 'Fairness Opinion' that can be relied upon, the Board of Directors of ICOS is 'flying blind' while trying to assess appropriate value.

Our analysis is based upon objective data sourced from independent investment analysts’ projections as well as from the information provided by the Company in its November 1, 2006 Proxy Statement. As set forth in the following table, since the announcement of the proposed merger with Eli Lilly, three additional transactions have been announced in the relevant healthcare universe. These transactions are all at premiums significantly higher than the premium in the Eli Lilly/ICOS transaction, as currently proposed. The Genentech, Inc. purchase of Tanox, Inc. is particularly important as there is an ongoing partnership on the target’s lead commercial product, Xolair. While ICOS’ management might believe that ICOS is a 'captive target' for Eli Lilly and therefore unable to generate a fair price, the existence of a partnership did not prohibit Tanox, Inc. or Genentech, Inc. from agreeing on a fair price." (Read More)

Table
Merck (NYSE: MRK) - Sirna Therapeutics Inc. (Nasdaq: RNAI) 101.6%
Abbott Laboratories (NYSE: ABT) - KOS Pharmaceuticals Inc. (Nasdaq: KOSP) 55.7%
Genentech Inc. (NYSE: DNA) - Tanox Inc. (Nasdaq: TNOX) 46.6%

Finding comparable transactions is a very common way of valuing a business and HealthCor has compiled this data along with a fundamental analysis of the company to come up with a value of "well in excess of" $40 per share. Meanwhile, the current buyout stands at just $32 per share. This stock is definitely one to keep an eye on as the voting date of December 19, 2006 draws closer.

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Ampex Corporation (NDAQ:AMPX) revealed in a 13D filing with the SEC yesterday that ValueVest High Concentration Master Fund had accumulated a 8.3% stake in the company. This transaction took place after several communications between management and the fund involving a possible buyout or sale of the company's intellectual property.

According to the filing, the fund is interested in:

"In a letter to the chief executive officer of the Issuer dated September 13, 2006, the Investment Manager once again confirmed the Master Fund's interest in acquiring or making a further equity investment in the Issuer. In that letter, the Investment Manager also indicated that it would like to discuss an alternative transaction in which the Master Fund would acquire the Issuer's Data Systems business and all of its intangible assets other than those patents which the Issuer was currently licensing or litigating and their related patent families. The Investment Manager indicated that it believed that this alternate asset transaction, which would not be subject to any financing contingency or condition, could be implemented relatively quickly and would give the Issuer the opportunity to realize immediate value for its shareholders and to generate further shareholder value through its ongoing patent licensing and litigation efforts." (Read More)

The company said they would discuss this matter with ValueVest after the next annual shareholders meeting; however, there is no indication that such a meeting took place yet. Obviously, any transaction involving a purchase of the company's intellectual property or company would come at a significant premium to the current market price. The company is trading below enterprise value, down over 40% on the year, as it recently swung to a profit in Q3. This is definitely a stock worth watching as the company prepares for an official proposal.

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James River Coal Company (NDAQ:JRCC) may see some volatility in its future and Pirate Capital continues to unload shares of the company, moving its stake from 14.1% to 8.8% according to their 13D/A filing with the SEC. This news comes after Pirate announced that its board member, Matthew Goldfarb, had resigned after the fund's shakeup and that the company's strategic alternatives review process had ended unsuccessfully. This series of blows could spell bad news for investors as hopes of a turnaround become more and more dim while even more shares are suddenly being dumped on the market. The stock has already moved down from $40 in 2006 to under $10 today, which means large losses already suffered by Pirate Capital and other shareholders who have been along for the ride. But is a turnaround still possible? Well, the company's latest financials indicated wider losses for Q3 reporting an operating loss that more than doubled year over year to $10.46 million, so any improvements in their bottom line remains to be seen.

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Nabi Biopharmaceuticals (NDAQ:NABI) announced today in a press release that it had reached an agreement with activist hedge fund Third Point to settle their indifferences. The hedge fund finally received word from the company after threatening a proxy battle to takeover the company's Board of Directors.

According to the press release:

"Under the terms of the Settlement Agreement, Nabi Biopharmaceuticals has appointed two Third Point nominees, Jason Aryeh, founder and general partner of JALAA Equities, LP and Tim Lynch, president and CEO of NeuroStat Pharmaceuticals, Inc., to the company's board of directors. In addition, Nabi Biopharmaceuticals will establish a strategic action committee (SAC) to continue the company's previously announced process of exploring strategic alternatives.

The SAC will work with the company's financial advisor, Banc of America Securities LLC, and management to evaluate a range of strategic transactions and initiatives and will have responsibility for recommending specific actions to the Nabi Biopharmaceuticals' board. As part of the settlement, Nabi Biopharmaceuticals has agreed to pay up to $250,000 of Third Point's expenses and Third Point has agreed that it will not commence a consent solicitation or a proxy contest prior to the company's 2007 annual meeting of shareholders."

The company's president and CEO Tom McLain added, "Through this agreement Nabi Biopharmaceuticals and Third Point will avoid a costly and disruptive consent solicitation at a time when the company is exploring a full range of strategic alternatives to enhance shareholder value. Our board and management team can also remain focused on serving our customers and executing our business plan as we continue to pursue the exciting opportunities that lie ahead for our company."

This is good news for NABI shareholders, who are now more likely to find themselves in a buyout situation in the future. NABI is definitely a stock to watch as this situation continues to progress.

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KeyCorp (NYSE:KEY) could be a possible acquisition target for Bank of America (NYSE:BAC) according to a report by analyst Richard Bove. The analyst cites the fact that the Bank of America currently has a market share of about 9.2% (according to Federal Deposit Insurance Corp). This leaves it 0.8% below the 10% level that might prevent it from making further U.S. acquisitions. However, the bank is still able to acquire $54 billion in deposits before reaching this level, which would help it boost its competitive position. Bove goes on to say that KeyCorp would be an aquisition that would make the most sense, as it is in the midwest (where BAC has less branches) and is available for relatively cheap. The company is trading well under its enterprise value with a strong cash position of $11 per share; however, it does have a PEG of 1.68, which makes it slightly overpriced given its growth rate. Both companies have not commented on the speculation, however this is definitely a stock worth keeping an eye on!

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NYMEX (NYSE:NMX)
S-1/A Filing by the Company
NYMEX set its pricing range between $48 and $52 today as it prepares for its debut on the NYSE. The IPO is likely to be very hot after the recent CBOT/CME merger and speculation surrounding the NYSE and NASDAQ. Pricing is expected to be announced later this week.

Tribune Company (NYSE:TRB)
8K Watch
Tribune saw increased attention today as the WSJ reported that the company could see a number of deep-pocketed bidders eager to acquire the company. The WSJ reported that GCI could make a bid for the company, while the NY Times reported Maurice Greenburg (from AIG) is interested in submitting a bid. Meanwhile, the options volatility has increased substancially as the speculation continues.

LightReading is reporting that several bidders are interested in 3Com Corporation (NDAQ:COMS), driving the stock up over 3% in today's trading. According to the article, interested parties may include Nortel Networks (NYSE:NT), Juniper Networks (NDAQ:JNPR), and a range of private equity players. The Wall Street Journal reported awhile back that these private equity players were interested in 3Com's assets - players including Texas Pacific Group, Bain Capital, and Silver Lake Partners. These parties are not only interested in 3Com itself, but also their majority ownership of Huawei - a strong player in Asia. With all of these parties interested in a piece of 3Com, there is potential for a bidding war, which typically results in high buyout premiums. This makes COMS a stock worth watching closely as this situation unfolds!

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Genesis Microchip Inc. (NDAQ:GNSS)
Genesis CEO Elias Antoun revealed his recent purchases amounting to 10,000 shares transacted on 11/08/2006, bringing his stake to 17,582.

iCAD Inc. (NDAQ:ICAD)
iCAD CEO Kenneth Ferry disclosed a purchase of 60,000 shares of the company on 11/07/2006; this amount represents his entire stake in the company.

Susquehanna Bancshares Inc. (NDAQ:SUSQ)
Susquehanna Bancshares director Wayne Alter Jr. disclosed a 15,000 share purchase on 11/03/2006, bringing his stake to 50,000 shares.

The Boeing Company (NYSE:BA)
Press Release
The company announced that it won a contract with the U.S. Airforce through its Combat Search and Rescue (CSAR) program competition to produce 141 HH-47 helicopters and four test aircraft in a deal valued at $10 billion. The stock moved up marginally in today's trading on the news.

Capella Education Company (NDAQ:CPLA)
S-1/A Filing by the Company
The online post-secondary education services company's IPO moved 21% higher today after it priced above its range on its first day of trading on the NASDAQ. The companies follows a series of other highly successful online education companies include ITT Educational Services (ESI) and Career Education (CECO).

JB Hunt Transport Services Inc. (NDAQ:JBHT)
8K Watch
JB Hunt moved higher by over 3% today on speculation that the company could be the target of a takeover. The company is currently trading slightly below enterprise value with a PEG ratio of about 0.98. Meanwhile, the stock has traded roughly even on the year.

Friendly Ice Cream Corp. (AMEX:FRN) may find itself in hot water soon after The Lion Fund stepped up its efforts to obtain some seats on the company's board. The fund had requested seats on the board twice now, but has failed to receive any response from the company. As a result, The Lion Fund announced today in a 13D filing with the SEC that they would actively seek spots on the board by soliciting proxies. According to the filing:

"The Reporting Persons prefer to obtain the requested board seats through action by the Issuer's board of directors, but absent such action, the Reporting Persons intend to nominate Mr. Biglari and Dr. Cooley for election at the Issuer's annual meeting of stockholders to be held in 2007, in accordance with the Issuer's by-laws providing for such nominations. In such case, the Reporting Persons intend to solicit proxies to be voted in favor of the nominees.

The Reporting Persons are concerned with the current status of the board of directors as all but one of the Issuer's current directors, including the chairman of the board, are defendants in a pending shareholder derivative lawsuit in which one of the founders of the Issuer's business and a substantial stockholder, S. Prestley Blake, is the plaintiff. Copies of two court decisions in this litigation, dated May 24, 2006, and August 25, 2006, are attached hereto as Exhibits B and C." (Read More)

Clearly there are problems at Friendly Ice Cream Corp., and The Lion Fund may be the answer. After all, the fund's large ownership stake in the company gives them a very high vested interest in seeing the company turn around. The company's stock is currently trading at $10.24, down almost 2.5% on the news.

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Borders Group Inc. (NYSE:BGP) moved up over 8% today after famed activist Bill Ackman said he thought the company was extremely cheap at an investors conference today. He predicted that the company could be worth $36 per share in 18 months and planned to disclose an 11% stake. The head of Perishing Square Capital - an activist hedge fund - also added that he is happy with the company's aggressive repurchasing plan along with its new CEO George Jones. Notably, Ackman also holds an 8% stake in rival Barns and Noble (NYSE:BKS) - a stock on which he made similar comments. Both of these stocks are definitely  worth watching as Ackman accumulates shares.

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Gyrodyne Company of America, Inc. (NDAQ:GYRO) may soon find itself in hot water after activist hedge fund Opportunity Partners LP disclosed a 17.58% in the company and announced that it would be nominating three of its own directors to the Board and eliminating the poison pill at the upcoming annual meeting. In a 13D/A filing, Opportunity Partners furnished a letter stating:

"As you know, Full Value Partners L.P. is a major shareholder of Gyrodyne Company of America, Inc. and is a member of a group that is Gyrodyne's largest shareholder. Please be advised that Full Value Partners intends to (1) nominate three persons for election as directors at the annual shareholder meeting to be held on December 7, 2006 [Phillip Goldstein, Timothy Brog, and Andrew Dakos] and (2) present a proposal to terminate Gyrodyne's poison pill.

The purpose of this letter is to respond to the material developments set forth in Gyrodyne's recent press release, specifically that Gyrodyne (1) has expanded the size of the board and (2) intends to acquire ten buildings in the Port Jefferson Professional Park in Port Jefferson Station, New York. We believe these actions are  nconsistent with Mr. Maroney's public statement of April 21, 2006:

'Our goal is to put the maximum amount of cash or marketable securities in the hands of our shareholders in a tax-efficient manner.  Any offer will be measured against our corporate strategy as outlined at the December 2005 shareholders meeting.  That strategy includes the repositioning of the Company through conversion to a REIT, and the disposition and redeployment of assets to achieve one or more shareholder liquidity events in a reasonable period of time.'" (Read More)

To date, there have been no significant shareholder liquidity events, which was probably one of the reasons Opportunity Partners was involved in the company (given their history). With the company expanding the size of the Board and acquiring ten new buildings, they are increasing their cash burn and obviously not "redeploying their assets" to acheive a shareholder liquidity event. If the hedge fund is successful in taking over the Board and eliminating the poison pill, it could mean that this goal to "put the maximum amount of cash or marketable securities in the hands of shareholders" may actually get implemented. This makes GYRO a stock definitely worth watching.

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Dow Jones News and Reuters are reporting today that Carl Icahn received a go-ahead from antitrust officials to go ahead with his purchase an additional $200 million worth of shares of Lear Corporation (NYSE:LEA), bringing his stake to 16% from 5%. 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 and help it return to its prior highs. This is definitely one worth watching.

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Double-Take Software, Inc. (NDAQ:DBTK)
S-1/A Filing by the Company
Double-Take Software announced today that it plans to price its IPO at $9 to $11 per share with 7.5 million shares being sold. These shares are to be listed on the NASDAQ under the symbol DBTK. The software company represents yet another much awaited IPO in this year's frenzy.

Scottish Power plc (NYSE:SPI)
6K Filing by the Company
Today, the Board of Scottish Power confirmed that it has received an approach, which may or may not lead to an offer being made for the company. The bid is assumed to be from Spanish rival Iberdrola. Industry sources are speculating that Iberdrola would make an offer at 800p a share, valuing Scottish Power at £12 billion. There are also other parties that may be interested in the company, but have yet to make firm bids. The company's stock rose 14% on the news to close at $58.37.

Station Casinos (NYSE:STN)
Watch List
Station Casinos moved higher by almost 8% today as rumors of a possible buyout flooded the market. The entire sector has been seeing upside lately after the LBO of Harrah's Entertainment not long ago by private equity groups.

Brink's Company (NYSE:BCO)
13D/A Filing by Steel Partners
Steel Partners revealed today that they increased their stake in Brinks by 110,000 shares, bringing their total position from 5.7% to 8%. There was no change to the fund's "Purpose of Transaction", which remains for investment purposes.

FX Energy, Inc (NDAQ:FXEN)
13D Filing by James Chalmers
James Chalmers expressed his interest in executing plans brought up by another majority investor Barton J. Cohen. Choen insisted that the Board of Directors be replaced in order to institute his ideas to cut administrative expenses, revise its compensation policies, strengthen financial management and improve investor relations. He said he "was not seeking an overall change in leadership of the Company, but sought to encourage management to lead the Company in making the changes necessary to maximize all stakeholders' value in a timely fashion."

NetManage, Inc. (NDAQ:NETM)
13D/A Filing by Riley Investments
Riley Investments announced today that it would raise its previous cash offer for NetManage to $5.50 per share from its previously rejected offer of $5.25. The fund also announced that it would extend the response date to November 20, 2006. The stock moved up 8% on the news to $5.25.

Midas, Inc. (NYSE:MDS)
13D Filing by RGM Capital, LLC
RGM revealed today that it had accumulated a 5.11% stake in the company. Although the disclosure is fairly standard, it is worth noting that the fund focuses on value investments in small cap companies. MDS is currently trading below enterprise value with margins that beat their industry and earnings that are continuing to recover.

Moscow CableCom Corp. (NDAQ:MOCC)
13D/A Filing by Renova Media Enterprises Ltd.
Renova revealed today that it is interested in acquiring MOCC at $10.80 in an all-cash offer. The Board is currently reviewing the offer with independent financial advisors; however, it is worth noting that Renova already holds a 43% stake in the company with a 61% share of its capital on a diluted basis. The stock is currently trading at $11 as some may be speculating a higher offer in the future.

Nautilus, Inc. (NYSE:NLS)
13D Filing by Sun Capital Securities
Sun Capital Securities revealed today that it has accumulated a 5.2% stake in Nautilus, Inc. Although the fund did not disclose any unusual plans, there was a bit of speculation today since Sun is fresh off its dealings with TALK, after it withdrew its $9/share bid for the company. Nautilus is up 5% today after it announced its quarterly results where it dropped underperforming units to boost the company's earnings.

Swift Transportation Co., Inc. (NDAQ:SWFT) confirmed today that it received a bid for the company at $29 per share in cash by Jerry Moyes, the company's largest shareholder and former CEO. Now usually we wouldn't pay attention to a stock that has already moved; however, the stock jumped over 23% on the news in early morning trading today to $29.60 - a premium which usually indicates the anticipation of a raised bid. This possibility makes the stock worth watching a little more closely!

According to a letter attached to the 13D/A filing:

"I am pleased to submit this proposal to acquire Swift Transportation Co., Inc. ('Swift') at a substantial premium to the market value of Swift's shares. I propose to acquire Swift through a corporation to be formed by me in an all-cash transaction at a price of $29.00 per Swift common stock share. To finance the transaction, I will roll over substantially all of my current investment in Swift and have received a written commitment from Morgan Stanley for the entire amount of the debt financing necessary to consummate the transaction. Given Swift's recent performance, $29.00 per share is a full and fair price for Swift’s common stock, providing an attractive opportunity for its stockholders to maximize the value of their investment in Swift. The $29.00 offer price represents a significant, more than 21%, premium over yesterday's closing price for Swift's shares. I believe such a transaction would be in the best interests of Swift and its stockholders, and that Swift’s stockholders will find such a transaction compelling." (Read More)

The offer is still well off of Swift's highs of the year of just over $33 per share. Swift is also trading below its enterprise value with a PE of 14x earnings even after this move. While this buyout price erases nearly all of the stock's losses on the year, it would not be unfeasible for the buyout price to rise higher. Currently, the Board of Directors is reviewing the offer, with Goldman, Sachs & Co. as its financial advisor. This stock is definitely worth watching as this offer is evaluated.

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ElkCorp (NYSE:ELK) became a merger target today after Samuel J. Heyman/Building Materials Corporation of America disclosed a 10.36% stake in the company and indicated that it was interested in pursuing a business combination with the company, in a 13D filing with the SEC. In response to the interest, ElkCorp announced that they would review their strategic alertnatives, which may include a possible merger or sale of the company. Moreover, the company noted that there were several third parties that had interest in the company.

According to the attached letter:

“As we advised you last week and again on our Sunday conference call, we have a strong interest in pursuing a business combination with Elk at an all cash price to be negotiated.  We believe that a combination of our two companies provides Elk shareholders with the opportunity to realize full value for their shares because of the unique synergies that exist between our two businesses which are an excellent fit for each other.  For this same reason, the combination will provide significant benefits to Elk customers and employees.

As you know, in addition to the extremely difficult operating environment we in the roofing industry now confront - resulting from unprecedented asphalt costs, margin erosion, and excess inventories - the industry faces significant long-term challenges as well.  It is now readily apparent that, in the last few years, aberrational demand from weather-related events temporarily obscured the impact of higher costs and slowing industry growth, especially in the maturing market for laminated shingles.  In our view, consolidation is the only logical response to these conditions.

We have always held Elk and its employees in the highest regard, having known each other as competitors, suppliers, and friends.  In recent months, we have carefully studied this combination and believe that Elk and BMCA are uniquely complementary.  The limited overlap among customers and distribution channels, as well as the geographic fit of our companies’ respective facilities, offer an opportunity to enhance the combined company’s competitive position by achieving economies of scale and improving our ability to respond to customer needs to a degree that would not be available to either company on a stand-alone basis or with any other partner.

As a combined company, we would lead the industry as the lowest-cost roofing manufacturer in the country, able to deliver product quickly and efficiently to customers in every section of the country.  Our customers would also benefit from access to the most comprehensive product offering in roofing, the industry’s oldest and most developed contractor programs, and two of the industry’s most trusted and respected brand names.  Finally, bringing together our companies’ world-class employees, who have driven exceptional innovation and strong historical.

We have invested a significant amount of time and money in the evaluation of a transaction between our companies.  Since our companies have known each other for many years, we are quite familiar with your business, as we know that you are with ours.  With your cooperation, after conducting reasonable confirmatory due diligence, we expect to be in a position to promptly provide an appropriate offer to you and your shareholders.  As discussed on our conference call, we are willing, of course, to execute a customary confidentiality agreement.  In addition, you should know that as a result of our discussions with lenders, we are confident that satisfactory financing for the transaction is readily available and our offer will not be subject to a financing contingency.” (Read More)

Clearly there is a good case for the merger between these two companies, as evidenced in this letter. With several other possible bidders at the table, this could turn into a bidding war, which could mean significant share appreciation even after the stock’s 25% move in morning trading today. Even after the large move, the stock still trades below enterprise value with a forward PE of just 12x earnings. Moreover, the company is still trading down 24% on the year, meaning most investors are likely still underwater on their investment and may require a higher premium to be bought out. Either way, this company is a great one to keep an eye on as this situation unfolds.

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Travelzoo Inc. (NDAQ:TZOO) owners and brothers Ralph and Holger Bartel revealed continued dumping on TZOO stock in a series of Form 4 filings with the SEC. The two sold 1,560,000 shares - or almost 10% of the company - in open market transactions. Meanwhile, the company increased its float by 52%, from 3 million to 8 million shares. This selling and dilution erased the 20% gains that TZOO saw after it released an earnings report last week that beat street EPS estimates, showing strong growth in net profit margins. However, the increased float and 1.5 million share sale should have had a greater impact on the stock price with everything else constant; this indicates that there are buyers accumulating shares and holding the stock up. Some are even going so far as to speculate that the Bartels sold their shares in order to increase the float (which is currently only 2.94 million shares) to enable institutional buyers to participate in the action.

While these events are unusual, they are not uncharacteristic of Travelzoo. The stock has been a roller coaster ride for investors, having dropped from its 2004 highs of $95 to $17 before recovering to its current levels in the $30s. If this isn't evidence enough, all it takes is one look at the stock's beta of 6.77 to see that it is highly volatile! With 30% of the float shorted and 83% institutional ownership, more volatility is certainly on the horizon as this company continues to move forward.

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ICOS Corp. (NDAQ:ICOS) has at least one party that is now opposed to its merger plans with Eli Lilly and Company (NYSE:LLY). Five percent holder HealthCor Management said in a 13D filing with the SEC yesterday that it would oppose the merger, stating that they thought the buyout price significantly undervalued ICOS shares. In a letter to the company, they make several valid points regarding the company's relationship to LLY and why the merger is bad news for investors:

"On October 17, 2006, the Company announced that it had entered into a merger agreement whereby it would be acquired by Eli Lilly and Company ('Eli Lilly') and on November 1, 2006, the Company filed a preliminary proxy statement with the Securities and Exchange Commission whereby the Company’s management recommended that the Company’s shareholders vote to approve the merger with a consideration of $32 per share of Common Stock. After reviewing the terms of the merger and the financial condition of the Company, the HealthCor Group, as of the date hereof, has determined that it intends to vote against the merger as it does not believe the consideration offered adequately compensates the Company’s shareholders for their interest in the Company. On November 2, 2006, HealthCor Management mailed via overnight delivery service (and by facsimile transmission) a letter to the Board of Directors of the Company explaining its reasoning for not supporting the merger with Eli Lilly (the 'November 2, 2006 Letter').

The proposal by Eli Lilly to acquire the outstanding shares of ICOS for $32 per share does not fully compensate the shareholders of ICOS for its 50% share of Lilly ICOS LLC, future clinical opportunities for Cialis and other Company assets of value. Specifically, the current proposed transaction price of $32 per share values ICOS at approximately $2.0B . By applying any number of industry accepted valuation methodologies, we calculate a value of ICOS that is well in excess of $40 per share. Clearly, Eli Lilly is attempting to purchase the ICOS assets at bargain prices. Twice in the last two years, the ICOS share price has suffered short-term downward price movements. Both times, Eli Lilly has approached ICOS in an attempt to purchase the assets of Lilly ICOS LLC as well as the whole of ICOS.

We are also very troubled by the 'Amended and Restated Change in Control Severance Agreement' (the 'Amendment') as well as the 'ICOS Corporation Retention, Sale and Special Recognition Bonus Plan' (the 'Special Bonus Plan') filed with the SEC on October 20, 2006. This 'Amendment' and 'Special Bonus Plan' effectively provides greater financial gains for senior management as a result of the anticipated sale of the Company, to which management was not previously entitled.

These changes result in ADDITIONAL COMPENSATION  for senior executives in excess of $13.6 million simply for completing the transaction. Specifically, Paul N. Clark, Chief Executive Officer, will receive a minimum of $4.3 million of additional new benefits bringing the already handsome sum he will receive to more than $30 million. Similarly, other senior executives will receive substantial financial benefits on top of the amounts they are scheduled to receive. We cannot imagine how the Compensation Committee could have possibly justified this audacious hand-out or how the Board of Directors failed to stop it. We remain confused as to how the Board of Directors of ICOS can so generously calculate the value of management performance yet simultaneously so conservatively undervalue the assets of the Company that is being managed by this same group." (Read More)

Clearly there is a lot going on here. Eli Lilly controls 50% of the company, which to date has been a joint venture. LLY has also attempted to buy the company several times in the past when share prices were depressed. Now, they are offering management more than $30 million to go through with the transaction while again failing to solicit other bids for the company or consider whether the buyout price is sufficient for investors (some of which are sitting on a 30% loss). If HealthCor is successful in raising awareness of these issues and is able to derail this merger, ICOS may be a stock worth watching.

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Biomet Inc. (NDAQ:BMET) moved up 3% today after Smith & Nephew (NYSE:SNN) addressed rumors that it was contemplating a merger/buyout of the company. According to a 6K filing made with the SEC:

"Smith & Nephew plc (LSE: SN, NYSE: SNN) is constantly looking at opportunities to maximise shareholder value, including looking at potential strategic acquisitions. In response to recent press speculation, the Company can confirm that it has held very preliminary talks with the US medical devices company, Biomet Inc. No agreement has been reached, and there can be no assurance that any transaction will be proposed or completed.  Smith & Nephew does not intend to make any further comment, or respond to any enquiries, unless or until there is further information to report." (Read More)

Meanwhile, Biomet said that it remains divided on any third party deals, after hiring Morgan Stanley & Co. to explore strategic alternatives last April. If the company does decide to go through with a merger, it would likely be at a premium to today's prices. This makes Biomet a stock worth watching over the next few weeks as the companies mull over the details of a possible merger.

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Triad Hospitals Inc. (NYSE:TRI) found itself under pressure yesterday by TPG-Axon Capital Management, who disclosed a 6.5% stake in the company and made several demands yesterday in a 13D/A filing with the SEC.

In the filing, Axon said:

"The Reporting Persons believe that the Common Stock is significantly undervalued and represents an attractive investment opportunity. The Reporting Persons believe that the Issuer has valuable and well-positioned assets, whose value is  significantly greater than the current market capitalization  of the company. However, the valuation of the company, and of those assets, is being depressed and diluted by poor capital discipline. The Reporting Persons believe that in order to avoid further  dilution of shareholder value, the Issuer must substantially improve its capital discipline and focus on maximizing return on capital.

Since the merger with Quorum Health Group in 2001, the Issuer has spent all available funds on expansion,  resulting in negative free cash flow and dilution to shareholders. The Issuer has been unable to analytically demonstrate that this acquisition strategy is in the interest of shareholders, and does not appear to have sufficient focus on calculating  return on investment, and ensuring its adequacy. As a result, growth of cash flow, EBITDA and net income, MEASURED ON A PER SHARE BASIS, have significantly lagged behind comparable companies.

The Reporting Persons believe the Issuer should take actions to increase shareholder value, including, but not limited to, the following:

1. significantly reduce capital expenditures and acquisitions;
2. implement rigorous analytical standards for capital expenditures;
3. increase its focus on margins and efficiency of existing assets; and
4. significantly increase stock buybacks, in place of risky and unproven
   gambles on acquisitions and new facility construction." (Read More)
   

The company is trading below enterprise value with strong cash flow and a PEG of right around 1 - well below the industry average. Investors applauded these moves as the stock rose today almost 2% in morning trading. This is definitely a stock to keep an eye on as management decides whether or not to implement these changes.

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Lone Star Steakhouse & Saloon Inc. (NDAQ:STAR) is facing pressure again from Barington and other shareholders who are demanding that the company take the time to revalue the company before any definitive transaction is announced. These shareholders have stated on multiple occasions that they believe the buyout premium put forth by a Dallas private equity group seeking to buy the company is simply not enough. The Board, however, has remained silent on the issue prompting Barington to send yet another letter (in a 13D/A filing today) in which they stated:

"We question the judgment of the Board in approving the transaction without having first obtained an appraisal of the real estate holdings of the Company. We estimate that the value of the Company’s extensive real estate assets (including land and buildings) exceeds $400 million and believe that it is misleading for the Company to disclose on page 28 of the Proxy Statement that the actual market value of the Company’s owned real estate holdings could be 'higher or lower' than such assets’ net book value of approximately $245 million. We also note that neither of the two financial advisors that opined as to the fairness of the proposed transaction made an independent appraisal or valuation of the Company’s real estate holdings or were furnished with an appraisal of such assets (as disclosed on pages 30 and 36 of the Proxy Statement), causing us to question the ultimate utility of the fairness opinions that have been rendered.

Furthermore, we question the thoroughness of the sale process, including the decision of the executive committee of the Board to only conduct a 'targeted' market check of six potential purchasers, as opposed to a more thorough assessment of interest from a broad range of potential financial and strategic buyers. We also question the effectiveness of this 'targeted' marketing process when the six potential purchasers were given less than a month’s time to review non-public information concerning the Company. It is our belief that it is unreasonable to expect a potential purchaser to complete its due diligence review of the Company in such a short time period ... It is therefore no surprise to us that once these potential purchasers had the sale process abruptly shut down on them in March 2006, none of them had an interest in further pursuing a transaction with the Company when contacted again in August 2006.

In light of the sale process that was conducted by the Board and the modest merger consideration being offered, please be advised that it is our intention to vote against the merger and that we may seek appraisal rights in connection with the transaction." (Read More)

This comes about a month after the hedge fund sent its first demands to the company back in September. So far, both Barington and Deutsche Bank have expressed their dissatisfaction with the company's sale process. Combined these two hold about 20% of the company's outstanding shares and they both plan to vote against the transaction unless their demands are met. If the two are able to convince other shareholders to vote similarly, it could put a significant road block in the way of STAR's planned merger.

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Evergreen Energy, Inc. (NYSE:EEE) reported wider than expected losses today in their 10Q filing with the SEC due to plant startup costs and higher operating expenses. The losses totaled $17.4 million (or $0.22 per share) compared to last years loss of only $4.9 million (or $0.07 per share). The company said it spent $17.2 million in plant startup costs (bringing the total spent to over $166 million of the years) and $31.3 million in capital expenditures in the nine months ended September 30, 2006. After all of this, its new fuel only generated $192,000 in income for the company. The company also announced that its deal with Arch Coal Inc. (NYSE:ACI) had expired. The stock is trading down 22% today after the company held its conference call.

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Banta Corporation (NYSE:BN) was facing its deadline to either accept or reject Cenveo's bid for the company last night when a new bidder suddenly jumped on the scene and purchased the company for $1.3 billion. RR Donnelley & Sons Co. and Banta announced the Board-approved merger at around midnight last night, not long after Cenveo had withdrawn its bid for the company. The buyout is valued at $52.50 per share, a 17% premium to Tuesday's closing price, and is expected to close in the first quarter of 2007.

All of this news comes after Banta had so adamently insisted that it was not for sale after rejecting several bids from Cenveo, including the latest one for $50 per share. For more history about the battle between Cenveo and Banta, see our prior articles. When Cenveo withdrew their offer last night, they included a letter to management:

"I am disappointed (but not surprised) that Banta has not accepted or even entered into discussions with us regarding our proposal to acquire Banta for $50 per share (or $34 per share if the acquisition is completed after the record date for your "special" dividend). Since you have had plenty of time to review our proposal and have not responded at all, Cenveo has no other choice but to withdraw its current and all prior proposals to acquire Banta... After you pay a dividend that no one wants and your stock price drops down to the twenties, you will understand what I have been trying to tell you all along -- Banta's senior leadership is not experienced and does not fully understand what is happening in the printing industry today. Your people just don't get it. Our management team's skill set of reducing expenses and delivering results over many years is the perfect solution for Banta's future success and your obligations to Banta's shareholders. Under its current leadership Banta is a ship floating on borrowed time that is about to sink."

The follow-on bid by RR Donnelley was almost a slap in the face for Cenveo, who could not understand why the company would not sell itself. Ofcourse now we know that it was because they had another buyer all along. But why was this deal kept so secret and inked overnight? Well, many believe that the company likely kept the bid secret to discourage Cenveo from making any possible counter-offers, which may have been difficult for RR Donnelley to match. While this may work out for management and employees, it is simply not in the best interest of shareholders who could have received a higher buyout price in the event of a bidding war. Regardless, it appears as if Banta's life as a seperate company is coming to an end.

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