American Home Mortgage Investment Corporation (NYSE:AHM) shares fell $9.32, or 89.02%, to $1.15 after its shares resumed trading after a day and a half of being halted. The company announced that it was facing serious liquidity issues amid a flood of margin calls from lenders and has hired advisors to evaluate its options, which could include a liquidation of its assets.

The mortgage lender confirmed that it had already received and paid "very significant" margin calls during the past three weeks and has "substantial" unpaid margin calls pending. To compound the problems, AHM also said it was unable to borrow on its credit facilities at present and is unable to fund its lending obligations. Investors pushed the stock down today on concerns that the company will be unable to meet its obligations and be forced to liquidate. In fact, the company revealed just today that it has hired Milestone Advisors and Lazard to help it in evaluating its strategic options and to obtain additional funds.

The news comes after widespread troubles in the mortgage sector lasting upwards of six months. Subprime lenders that lend to people with poor credit were the first to suffer a rise in delinquencies and defaults with more than a dozen brokers declaring bankruptcy. Many are hoping that this three year problem will be resolved eventually as lending requirements are tightened and subprime lenders undergo some consolidation and recapitalization.

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Stamps.com Inc. (NDAQ:STMP) shares hit a two year low recently prompting at least one investor to speak out against the company. LaGrange Capital disclosed a 6 percent stake in the company and demanded that the company immediately institute a share buyback program and work on improving its financial condition or put the company in the hands of someone who can!

La Grange said that it feels Stamps.com offers a highly competitive product and below market prices while maintaining key barriers to entry. The company also has a subscriber-based model capable of generating substantial recurring cash flows. In fact, management has stated that the lifetime value of each customer is 2x the subscriber acquisition cost - a great ROI for any industry! However, the hedge fund is disappointed with the disconnect between potential and actual performance.

Stamps.com needs to revive its earnings and subscriber growth rates in order to regain the confidence of shareholders. Backing out interest income and fully taxing earnings, the company generated a mere $0.07 in non-GAAP EPS - a decline from last year. Moreover, the new direct marketing campaign generated only 2,000 net paying subscriber adds with the total number of subscribers below the prior year's quarter and only marginally higher than the last quarter.

One of the key suggestions made by LaGrange was a share buyback program that would repurchase 1/3 of the company's outstanding shares. The hedge fund insists that such a program would involve minimal financial risk given the fact that the company has no debt and a substantial pile of cash. LaGrange also recommended that the company pursue strategic partnerships and alliances to drive subscriber growth, which is key to profitability. If the company isn't capable of delivering on results, it should consider a sale of the company to a more capable group.

In the end, Stamps.com is an extremely undervalued business with poor management that is unable to deliver results. And with the company trading at a two year low, many shareholders are ready for change. Obviously, any share buyback or sale of the company should dramatically help unlock shareholder value, which makes STMP a stock worth watching!

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Cache Inc. (NDAQ:CACH) shares rose $1.94, or 12.62%, to $17.31 today after the company announced a 6 percent rise in same-store sales along with a one million share buyback. The news comes just one day after Vardon Capital Management noted that the company was trading at 2/3 its private market value with $4 per share in cash and therefore should implement a share buyback program. Shareholders are extremely satisfied with the jump in same-store sales and clearly applauded the buyback announcement.

Cache is a specialty retailer of social occasion sportswear and dresses targeting style-conscious women. This month, the company acquired Adrienne Victoria Designs in a move that many applauded. There is some speculation that it was this acquisition that has provided the boost to sales and may help boost the company's operating margins and net profit going forward.

Meanwhile, Vardon Capital, which owns 9.1 percent of the company, said that the share buyback should help close the gap between the current market pries and its intrinsic value. The move will also help boost the company's earnings per share and ROA/ROE ratios. Finally, the company's mid-single digit operating margin has the potential to reach double digit levels through such initiatives as well.

So, why are shares up today? Well, the company's acquisition of Adrienne Victoria turned out to be a great decision while the company's share buyback announcement helps ensure that the company has confidence in itself going forward and is dedicated to closing the discount gap in its valuation. Combined, these factors make CACH a stock worth watching!

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Packeteer Inc. (NDAQ:PKTR) shares moved up marginally today after Chapman Capital disclosed a 9.9 percent stake in the company and demanded that the company immediately hire an investment bank to maximize shareholder value. The wireless application provider has been facing widespread criticism since posting a wide loss during the second quarter of this year. Shareholders are hoping that Chapman can help unlock value through a sale of the company.

Activist investor Robert Chapman is well known for actively seeking to turn around or force the sale of the companies in which he is involved. He is also known for not being especially patient - and Packeteer's board may have pushed the envelope. In his letter to the company, Chapman noted that both the CEO and CFO failed to return his calls or respond to his inquiries and demanded that both be immediately fired. After all, Chapman is one of the largest owners of the company with a 9.9% stake!

Any investment bank will likely recommend one of several actions. The most anticipated action is a sale of the company to a strategic or financial buyer. Another possibility would be a leveraged recapitalization of the company that would enable shareholders to seek immediate returns in the form of one-time dividends or share buybacks. Either way, these actions would result in a windfall for shareholders. And given Chapman's reputation and large stake in this company, we think there is a decent chance that the company will eventually take action and hire and investment banker to explore its options. This makes PKTR a stock worth watching!

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Activist investor Robert Chapman is betting big on Nabi Biopharmaceuticals (NDAQ:NABI) while pressuring the company to implement a three step plan aimed at maximizing shareholder value. Chapman's hedge fund revealed a 9.4 percent stake in the company with several large purchases made throughout the month of July. Investors are carefully watching this situation as any successful initiative to maximize shareholder value could pay some large dividends!

Chapman's proposed plan would involve three steps: (1) Pursuing an FDA approval of Nabi's BLA for Nabi-HB Intravenous, (2) distributing the proceeds from a sale of Nabi Biologistics to shareholders, and (3) partnering/licensing Nabi's vaccine pipeline. Recently, the company announced that it the second of two planned strategic business units while eliminating 5 percent of its workforce (resulting in a $3.3 million annual savings). Widespread shareholder support and pressure ensure that the restructuring will continue on schedule.

"These and other actions recently taken by the company are designed to facilitate our strategic alternatives and partnership process that maximize the value of Nabi and our pipeline," said CEO Leslie Hudson.

Robert Chapman was also satisfied, commenting, "Unlike many of our activist targets, Nabi is not yet worthy of our disdain or disgust. The company has taken the necessary steps to prepare for its restructuring and recapitalization. Nabi has bifurcated itself into two strategic business units that facilitate the successful completion of its strategic alternatives process being overseen by Bank of America Securities, and has committed to reduce further its cost structure and cash burn. These developments give Chapman Capital confidence that Nabi CEO Leslie Hudson is a man of his word, with that word being "execution" and not the formerly insuperable one of "vision" (talk)."

In the end, shareholders will have to wait to see whether or not this turnaround is successful. However, given the involvement of such large and successful activist investors along with support of the company itself, NABI is certainly a stock to watch during the next few months!

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Ampex Corporation (NDAQ:AMPX) rejected a partial buyout offer from its largest shareholder late last week. The move comes after the company expressed interest in utilizing a special purpose acquisition company (SPAC) to better utilize its intellectual property. Shareholder are obviously looking for this proposal to materialize as it would mean a decent buyout premium.

ValueVest, who owns a 13 percent stake in the company, proposed the creation of a new company that would purchase all existing intellectual property rights, including the franchise, non-competing product manufacturing, and private-label rights to use the name Athena and all of the company's patents, copyrights, trade secrets and other intangible assets.

The new company would also enter into an agreement that would effectively transfer all management and economic rights of all existing licenses of the intellectual property to which no payments are currently being made. ValueVest agreed to provide $14 million in cash to fund the new company, with $7 million being used to acquire intellectual property. In return, the hedge fund required the right to 50 percent of the new company's net income.

While ValueVest's original proposal was rejected, they did leave the door open for suggestions to the company. Meanwhile, the company said it has to hear back about MCAM's valuation of its intellectual property in order to get an idea of just how much everything is worth. In the end, we could still see a deal materialize but it may take a little longer than expected. However, AMPX is still a stock worth watching!

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Many hedge funds are experiencing problems in today's environment with over-leveraged capital and overly zealous managers. Sowood Capital Management became yet another example today after a stunning 50% loss in one month led to it's announcement that it would begin winding down its firm. The Boston hedge fund is one of the largest to fall as its assets were cut in half from $3 billion to $1.5 billion in record time.

Sowood said in a letter to its investors that it "made a painful and difficult decision" to sell nearly all of the fund's portfolio to Citadel following "severe declines in the value of [their] credit positions and non-performance of offsetting hedges". That statement caused some to recall the LTCM fiasco that led to a similar downfall of one of the largest hedge funds at the time. And why? Because they were over-leveraged and over-exposed to certain markets.

Meanwhile, the deal could be sweet for Citadel who is known for making purchases in downward markets at bargain prices. Last year, the hedge fund assumed a number of energy positions held be Amaranth after that hedge fund experienced substantial losses - eventually they profited on the deal. Whether or not this particular deal turns out to be a good buy, however, remains to be seen. Regardless, this is definitely a situation to keep a close eye on in the near future!

Subprime concerns continued to weigh on the market today after Citigroup analysts estimated that Fannie Mae and Freddie Mac would suffer a loss of $4.7 billion loss in value as a result of declining subprime mortgage valuations. Soon after, a Freddie Mac spokeswoman countered, saying the analysts were "mistaken" and that the groups haven't seen "any material markdown of value". Clearly there are some major reasons for concern here, but investors remain uncertain as to whether or not the groups will be able to ride out the storm.

The Citigroup report indicated that Fannie Mae's subprime holdings have dropped $1.5 billion - or 2.5% of the company's value. Meanwhile, Freddie's holdings dropped $3.2 billion - or 8% of the company's value. However, since these are bonds that are not going to be forced into liquidation, the actual impact on the company's values are lessened. And in the end, these billions hardly make a huge dent on the $1.4 trillion in loans that they have outstanding.

The two government companies, which buy and package home loans, have thus far avoided substantial damages from subprime loan defaults. The two companies have a combined $182 billion in backed subprime loans, however, the vast majority of these loans remain AAA rated. While Freddie and Fannie do not guarantee these loans, the companies will certainly be damaged if defaults continue as they have in recent weeks.

In the end, this is definitely a situation that is worth watching. These two companies carry a lot of weight in the mortgage market as they are backed by the government. The subprime problem is far from over and may take until 2009 to resolve according to some industry executives. In the meantime, it is important to keep an eye on default rates in order to make sure the problem doesn't spread significantly and cause further selloffs in other sectors.

Kraft Foods (NYSE:KFT) is now home to yet another famous investor as Warren Buffet joins the ranks of famed activist investors Carl Icahn and Nelson Peltz who have already built up sizable stakes in the company. Shareholders are hoping that the involvement of all these famed investors will result in extraordinary gains.

It is unclear whether Buffet, who owns less than 5 percent of the company, will side with the two activists in their plans for the company. Icahn and Peltz proposed a divesture of key brands in an effort to provide quicker returns for shareholders. There is speculation that they could face some problems with Buffet, however, given his track record of investing in companies undergoing a restructuring brands internally - he might be siding with management.

Many others insist that Buffet may simply be interested in the prospects of the spin-off combined with a strong brand. Historically, spin-offs have tended to outperform the larger market in their first few years as an independent company, especially when the company possessed a leading brand. Clearly, Kraft is a great fit for this type of strategy and so far the company's shares are up over 11% since the spin-off was completed last March.

In the end, this is definitely a unique situation given the involvement of so many famous investors that may even be on opposing ends of the spectrum when it comes to plans for the company's brands generating poor operating results. Combined, these factors make KFT a stock that is definitely worth watching!

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Washington Group International's (NYSE:WNG) merger plans have been drawing some criticism from shareholders. Today one the company's largest shareholders, David Einhorn, said in a regulatory filing today that he would vote against the plans. The 10 percent shareholder believes that the proposed $2.3 billion transaction is a bad deal for shareholders and insists that few other large shareholders support the idea.

David Einhorn's lengthy letter to the board of directors opposed not only the undervalued bid but also the sale process itself. During the sale process, the company relied on the fairness opinion of Goldman Sachs instead of conducting an auction process despite the fact that the company received several unsolicited bids earlier. More, based on the proxy statements, it is clear that the board relied on an overly conservative forecast the failed to properly value the company's future growth prospects. Various contracts and income opportunities that were not fully appreciated could add substantial value to a buyout price that Einhorn estimates as high as $117 per share!

David Einhorn also argued that the company may be better off as a standalone enterprise. Washington Group is over-capitalized at the moment and URS, the acquirer, plans to take advantage of the fact to get a relatively cheap transaction. Einhorn argues that this cash could be returned to shareholders in the form of a special dividend or share buyback if the company decided against the proposed transaction. If the company were recapitalized at the same proportions as the buyout, shareholders could obtain $27.50 per share in cash and keep the company instead of selling out for $43.80!

In the end, the proposed transaction is clearly bad news for shareholders. Given that a 10 percent shareholder now publicly opposed the merger while insisting that others feel the same way, there is a possibility that the merger could be rejected. If this happens, we could see higher bids in an auction process or significant actions taken to unlock shareholder value through a recapitalization. Either way, this is great news for investors and definitely makes WNG a stock worth watching!

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Building Materials Holding Corporation (NYSE:BLG) shares dropped $1.09, or 8.52%, to $11.70 today after Moody's cut the company's ratings amid continued troubles in the residential housing market. Meanwhile, the company is expected to report earnings tomorrow, which has many investors guessing. There is light at the end of the tunnel, however, as famed activist hedge fund Chap-Cap is involved with the company and pushing for change!

Chapman's hedge fund is primarily seeking to make changes to the company's executive compensation structure. While nobody should punish management for the steep correction in the housing market, the board's granting of generous financial rewards during its 2002-2006 boom years should not be ignored. Through stipulating the the homebuilding cycles are beyond BMH control, corporate and divisional overhead can be restricted by a realistic, practical management team.

Chapman also suggested that the company hire an investment banker to explore the complete or divisional sale of the company. The hedge fund insists that there would be high private equity and public interest in the company through conversations with the company's peers and leveraged consolidators of the home building industry. In the end, BLG is definitely a stock to keep an eye on as this situation unfolds!

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Radyne Corporation (NDAQ:RADN) shares moved up $0.31, or 2.99%, to $11.03 after Discover Group disclosed an 8.8% stake in the company and suggested that the company put itself up for sale. The activist hedge fund is convinced that the company could obtain a 50%+ premium by obtaining a sale price of between $14 and $16.

Discovery Group indicated that discussions with industry participants have suggested that there are multiple parties interested in acquiring the company at a significant premium to today's market price. The combination of Radyne's attractiveness, the robust M&A market, and the high level of interest from strategic buyers could lead to a very attractive valuation for the company.

As a result, Discovery Group demanded in a letter to the board today that the company engage a qualified investment banker to explore strategic alternatives including a possible sale of the company. Moreover, given the hedge fund's M&A experience and intelligence they have gathered from buyers, they believe it likely that the acquirers are readily known, familiar and interested in Radyne, and can put forth proposals in short order. Combined, these factors make RADN a stock that is definitely worth watching!

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Applebees (NDAQ:APPB) shares rose $0.08, or 0.33%, to $24.63 today after The Lion Fund announced that it intends to vote against the proposed merger citing the fact that the $25.50 cash offer substantially undervalues the company. The activist hedge fund, led by Sardar Biglari, aims to block the merger and encouraged the company to consider IHOP's proposed franchising plans to increase value for its own shareholders.

Sardar Biglari expressed his disappointment in the offer through a letter addressed to the company's board of directors. In the letter, the activist investor pointed out the fact that it was IHOP's stock that jumped 16 percent after the merger was announced while Applebees shareholders only enjoyed a one percent increase. This supports their thesis that the proposed transaction is simply transferring value from Applebees shareholders to IHOP's shareholders.

The activist investors also elaborated on how franchising could prove to be a substantial boon to the company's long-term value. The franchise business would enable the company to achieve higher profit margins, assume less risk, and would require very little in terms of capital expenditures. Combined, these strategic moves would lead to healthy cash flows and a higher return on capital. Unfortunately, it would be IHOP's shareholders that realize this value rather than Applebees shareholders if this transaction is approved.

In the end, there is a good argument for Applebees to either remain independent or seek a higher buyout premium. More, The Lion Fund has a successful track record in activist scenarios with its most recent sale of Friendly's Ice Cream at a substantial premium. Combined, many shareholders and investors are hoping to get more bang for their investment buck in Applebees. This makes APPB a stock worth watching!

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Acuity Brands (NYSE:AYI) announced that it would be spinning off Acuity Specialty Products Group Inc. into an independent publicly traded company. The tax-free distribution to shareholders is expected to take place this fall with one share of spinco being received for every two shares of AYI. Shareholders and investors should carefully watch this situation as it presents a great opportunity to profit!

The spin-off is expected to generate annual revenues of $600 million with brands including Zep, Zep Commercial, Enforcer and Selig. The new company also expects to take on about $70 million in debt and pay out a 16 cent dividend. Meanwhile, Acuity Brands expects to save approximately $6 million a year through a simplified corporate structure but anticipates spending around $7 million to make the deal happen.

"We believe this transaction will meaningfully enhance shareholder value because it will enable our lighting business and our specialty products business to pursue their own distinct strategic initiatives and significant growth opportunities with a sharpened focus," said Chairman, President and CEO Nagel. "For example, each company will be able to attract and allocate its own capital and to design equity-based compensation programs targeted to its own performance. We are excited about the opportunities for each company to expand its market presence both through organic growth and through acquisitions."

In the end, there are many reasons why investors and shareholders should watch this spin-off. First of all, it is well known that spin-offs tend to outperform the overall market during their first two years as an independent company. Secondly, there is clearly a good reason for these two companies to separate and the terms on which the spin-off is taking place are more reasonable than most situations. And finally, the parent company is expecting to save $6 million a year while making itself more nimble which should help boost its valuation. Overall, AYI is definitely a stock worth watching as this fall spin-off approaches!

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NTN Buzztime (AMEX:NTN) shares moved up $0.08, or 9.28%, to $0.94 today after Trinad Capital disclosed a 6.6% stake and expressed its concern about the company's future. The activist hedge fund demanded that the chairman of the board be removed, new members be installed and strategic alternatives be explored. Shareholders clearly applauded this move with the stock rising nearly ten percent.

NTN Buzztime provides both entertainment and hospitality services to bars and restaurants. The company's main products include the interactive video games that allow competition between bars and restaurants throughout the United States. Buzztime also develops guest and server paging systems to enhance customer service at bars and restaurants. The company's stock has declined over 30 percent so far this year amid weaker than expected earnings and profitability forecasts.

Trinad is extremely concerned about several recent changes that the board made to the company's bylaws that appear to entrench current management and board members while impairing shareholder value. Among other things, the bylaws now prohibit shareholders from calling a special meeting and imposed advance notice requirements for shareholders wishing to nominate new members to the board! Obviously, these provisions would need to be removed in order to open the doors to any potential strategic transaction to unlock shareholder value.

Fundamentally, the company has been struggling with worsening margins yet has managed to increase its cash substantially. This leaves the door open to an internal move like a share buyback or special dividend or external acquisition where the buyer could utilize the cash to collateralize a loan in a leveraged buyout. Clearly, the company is concerned about this cash as it could be the reason for the new borderline poison pill requirements imposed on shareholders wishing to take action. Regardless, this is certainly a great company to watch!

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Lancaster Colony's (NYSE:LANC) largest shareholder, Barington Capital, stepped up pressure on the company yesterday, demanding that they turn over their books and records for analysis. The move comes amid depressed earnings and increasingly poor corporate governance practices that has many guessing. Shareholders are hoping that these efforts could push the board to take action.

Lancaster Colony is a diversified manufacturer and marketer of consumer products, including specialty foods for the retail and foodservice markets, glassware and candles for the retail, floral, industrial and foodservices markets, and automotive accessories for original equipment manufacturers and aftermarket - although the company recently sold the assets of this last division. Financially, the company has been struggling with profitability. Despite decent revenue growth last quarter, their earnings fell on lower margins.

Barington had contacted the company in the past expressing disappointment with these profitability and share price performance concerns. Moreover, the activist hedge fund complained that the company is controlled too heavily by its founding Gerlach family after several anti-takeover defenses were installed to protect incumbent management and board members.

In the end, shareholders are hoping that Barington can help transform the company from a family-controlled operation to one that is more accountable to shareholders. Barington has a long successful track record in this arena, but it may take some time for them to break through several poison pills and a suborn family that owns the majority of the company's stock. Regardless, this is definitely a stock to watch!

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Transocean (NYSE:RIG) shares moved up $6.45, or 5.87%, to $116.42 today after the company announced the acquisition of GlobalSantaFe for nearly $18 billion. The combined company will have a global fleet of 146 rigs worth an estimated $53 billion. Shareholders in both companies applauded the deal that will greatly expand their offshore drilling services.

Transocean stands to gain substantially from the transaction in terms of both increased scale and cost savings. The company expects to realize cost savings of $100 to $150 million a year by 2010 - that's a million dollars per rig per year! The additional rigs should also help the company with its extensive backlog while a proposed recapitalization will fund a buyback and other measures to increase shareholder value.

Interestingly, the deal took place at no premium and resulted in the stocks of both companies rising - a rare occurrence in M&A deals. This happened because the deal was structured to give shareholders in both companies a total of $15 billion in cash dividends collateralized by a combined $33 billion in backlogs. Essentially, the company underwent a leveraged recapitalization that enabled it to buy GlobalSantaFe at a substantial discount while also improving the company's capital structure.

Overall, this deal is exactly what shareholders were hoping for - a cheap acquisition with a way for them to cash in on Transocean's massive backlog. The transaction should also help improve the company's financial position and improve their future outlook. This makes RIG a stock worth watching!

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American Standard Companies Inc. (NYSE:ASD) announced last week that its spin-off of WABCO Holdings Inc. (NYSE:WBC) is set to take place on July 31st. Under the terms of the deal, shareholders are American Standard on record July 12th will receive one share of WBC for every three shares of ASD that they own. Investors and shareholders should watch this spin-off as it presents several opportunities to profit that we will explore in this article.

WABCO is a leading provider of technologically advanced breaking, stability, suspension and transmission control systems that has been around since 1869. Their products include a range of control systems that improve vehicle safety and reduce overall vehicle operating costs for the world's leading truck, trailer and bus manufacturers as well as select passenger car manufacturers. The company's strong competitive and financial condition make it a great stock to own.

Investors may find it worth noting that spin-offs in general tend to outperform the overall market during their first couple of years as an independent public company (just check out this article by the Journal of Investment Management). The reasoning behind this is simply that many people who receive the shares do not want them so they immediately turn around and sell - creating a discount.

The company is also much more nimble, being independent from its parent, and therefore may be able to increase its revenues and cut costs. It is also worth nothing that insiders are often given a high stake in the new spin-off, which provides them incentive to jump the stock price. We already know that WABCO is an excellent candidate with management's sizable stake in the company with a leading market position.

In the end, investors should carefully watch this stock after its July 31st spin-off while existing shareholders should consider holding onto their shares for awhile. Evidence has shown that spin-offs do tend to outperform the market in certain instances - and WABCO appears to be a poster child for these cases. This makes WBC a stock worth watching over the next year!

UBS AG (NYSE:UBS) has been facing a sort of midlife crisis lately just after new chief executive Marcel Rohner took the reins and promised to keep the current strategic direction of the company intact. The company has been experiencing problems with its investment bankers that some are speculating could result in a spin-off or sale of the division, which would transform the company into an asset management pure play.

The financial services company's problems with its investment bankers stem from a blowup of a hedge fund within the company that eventually led to ex-CEO Peter Wuffli and several high profile bankers leaving the company. Putting the ex-head of the wealth management and private banking segment in charge after didn't help much either. In the end, the whole ordeal is casting serious doubt as to whether or not UBS can retain its best investment bankers with what has become a second-rate program.

Meanwhile, any spin-off or sale would be welcome news for shareholders and investors who are well aware that an asset management pure play UBS could fetch a multiple of 20x while investment banking typically only trades at 10x. It is also worth noting that UBS's asset management business produces a full 25 percent more each year in profit than its investment banking business.

Specifically, many shareholders and investors are hoping for a sale of the investment banking division (with the proceeds returned to shareholders via a buyback or special dividend) which would result in the 20x multiple pure play. This would solve both the company's internal problems with their investment bankers along with valuation issues they face by providing two services that trade at such varied multiples. Whether or not this materializes remains to be seen; however, UBS is definitely a stock to keep an eye on!

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Reddy Ice Holdings (NYSE:FRZ) shares moved up $0.07, or 0.23%, to $31.01 today after the Shamrock Activist Value Fund disclosed another letter challenging the board to reconsider a planned buyout by GSO Capital Partners. The activist hedge fund continues to oppose the transaction, calling it grossly inadequate, and has finally garnered some support.

The packaged ice distributor announced the $1.1 billion - or $31.25 per share - buyout deal with GSO Capital in early July and immediately drew shareholder criticism. Regardless, the company quickly moved to approve the transaction which is set to close in the fourth quarter. Many shareholders are concerned that management buyout bonuses and other incentives may be clouding the board's judgment at the expense of shareholders.

The Shamrock Activist Value Fund announced today another interesting piece to the story. The hedge fund uncovered the fact that the company appears to be abandoning its duty to maximize shareholder value by minimizing opposition to the buyout bid. This is being done by encouraging certain large shareholders to speak directly with GSO Capital about rolling their FRZ shares into the GSO leveraged buyout transaction instead of tendering them for cash. Clearly, this is unfair to smaller shareholders that represent the majority ownership in the company!

Shamrock insists that the company should immediate abandon the proposed buyout transaction and instead institute a share buyback at $33 per share to allow apathetic shareholders to exit the stock while allowing existing shareholders to retain their stake. The current game management is playing of "buying off" support for the transaction is simply unfair and unethical - a clear breach of the board's duty to serve shareholders as a whole. While Shamrock still faces an uphill battle, this is definitely a story worth following!

The second times a charm for Dice Holdings (NYSE:DHX) who went public again yesterday after emerging from its 2004 bankruptcy. The website operator raised $217 million after it priced at $13/share - the top of its expected range. The IPO was especially rewarding for the company's two private equity backers, General Atlantic and Quatrangle Group, who stand to make roughly 2.7x their money in two years. Meanwhile, some investors remain skeptical as to the long-term viability of the company.

Dice Holdings initially went public back in 1998 at the peak of the dot-com boom only to end up in bankruptcy courts five years later. Since then the company has improved substantially with $83.7 million in revenues in 2006 compared to $32.2 million in 2004. The company plans to use the proceeds from its second more successful IPO to pay off more than $190 million in debt and fund general business expenses.

The real story, however, is in the private equity funds that successfully executed a bankruptcy play. The two funds formed Dice Holdings in August of 2005 and bought the company for pennies on the dollar - $138.6 million. Amazingly, they recouped most of this cost in a $107.9 million dividend payout in March. This means they are still holding shares at an adjusted purchase price of just over $18 million, putting their cost per share at around 40 cents! Perhaps this is something to consider the next time a private equity fund makes a bid for one of your stocks that seems to be underperforming in the short-term...

In the end, the long-term viability of Dice remains uncertain as their primary business is in their employment portal, Dice.com. Ideally, the company will be able to use these proceeds to pay off its debts and build itself into a cash cow that may be attractive to other larger employment portals like Monster.com (NDAQ:MNST) or even some technology-related newspapers. Combined, these factors make DHX a stock worth watching!

It's not often that an activist hedge fund pressures a company not to sell, but Gemstar TV Guide International (NDAQ:GMST) appears to be the exception to the rule! Citadel Equity Fund, the company's largest shareholder, noted in a letter to the board that they fully support the company's board and management but caution that their recent decision to explore strategic alternatives may be  in error given the company's unique market position and strong prospects for the future.

Citadel believes that Gemstar is uniquely positioned at the nexus of exciting changes taking place in video entertainment consumption, including the transition from analog to digital distribution, new platform developments (IPTV, broadband and mobile), and significant opportunity to monetize hundreds of billions of impressions garnered each year on IPG (interactive program guide) through both advertising (display and search) and transaction based services.

Despite the company's strong position in this arena, the hedge fund insists that the company's stock fails to reflect (1) the current improved state of Gemstar's operations or (2) the opportunity for independent value creation over the next several years as an increasing number of platforms take advantage of Gemstar's unique intellectual property. While the hedge fund commends the board's decision to explore options, it does not believe any bids will be made that reflect the billions of dollars of incremental equity value that could be realized over the next few years.

Citadel is one of the world's largest hedge funds with its flagship funds returning nearly 30 percent per year. It was also the first hedge fund to go public to raise funds and allow owners to cash in on their stake. Given their strong equity performance and extreme confidence in management (so much so that they would forgo an immediate premium), we have good reason to add GMST to our stocks worth watching!

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Angelica Corporation (NYSE:AGL) shares rose $0.24, or 1.08%, to $22.44 today after the company responded to Pirate Capital's request for the company to explore strategic alternatives. The news comes after the activist hedge fund pushed for the company to put itself up for sale in order to unlock shareholder value.

The textile rental company announced that it has already hired Morgan, Joseph & Co. to explore strategic options including a sale. As a result, the company requested that Pirate Capital immediately remove its proposal from the company's next proxy statement or it would request that the SEC allow it be removed due to redundancy.

Pirate Capital responded today, however, by saying that it had requested a nationally recognized investment bank to explore options - not a small firm that  has pre-existing connections with the company. The activist hedge fund noted that Joseph Morgan has been involved with the company for more than 17 months now and nothing has been accomplished. Shareholders are not simply looking for more analysis; rather, they are looking for an investment bank that is willing to search for strategic alternatives to help unlock shareholder value.

In the end, Pirate Capital and many other investors remain unsatisfied with the company. In fact, the hedge fund threatened to take action by nominating its own candidates to the company's board of directors. Investors must now wait and see how the company will respond to see what the odds look like for a possible sale of the company. This makes AGL a stock worth watching!

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Alfa Corporation (NDAQ:ALFA) shares rose $3.19, or 20.99%, to $18.39 today after it made an offer to take the company private at $17.60 per share in cash. The company subsequently announced that it has formed a special committee of the board to evaluate the offer and make an official recommendation. Shareholders are clearly banking on an increased buyout offer as shares are trading well above the buyout premium.

Alfa Corporation proposed this going private transaction in order to better compete in the personal lines insurance industry over the long-term by increasing their investment in technology and accelerating the development of their distribution channels. These objectives are best accomplished through a private, more nimble corporate structure. Finally, they believe that their current offer represents an attractive price in an increasingly uncertain environment.

Alfa Corporation has been struggling recently after its credit rating was downgraded to "A+" and earnings failed to impress. As a result, Alfa stock was trading near its 52-week low of $14.99 - and well off its 52-week high of $19.95 - before today's buyout offer. This put many current shareholders underwater in their investment, even at $17.60, which could explain why they appear to be looking for more.

It is uncertain as to whether or not the company will consider raising the buyout offer. Unfortunately, the board is likely to approve the transaction despite the somewhat low price which will make it difficult to seek a higher offer. More, the buyout entity disclosed a 43% stake in the company and indicated that they would not sell their shares to any other entity. This makes the possibility of other bidders making offers highly unlikely. In the end, unless the board finds that they offer is too low or unless a shareholder rights group gets involved, it is unlikely that a higher offer will be realized. However, this is definitely a situation worth watching.

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Sonesta International Hotels Corporation (NDAQ:SNSTA) shares rose $3.51, to 8.67%, to $44.00 today after Mercury Real Estate Partners disclosed a 9.8 percent stake in the company and expressed its belief that the company's shares are worth $110 to $125 per share. Shareholders are hoping that the company's willingness to explore strategic alternatives combined with the involvement of this activist hedge fund will lead to a substantial buyout in the near future.

Mercury Real Estate Partners supported their $110 to $125 per share valuation with an in-depth analysis presented in their Schedule 13D/A filing with the SEC. The company's largest asset is its partnership in Key Biscayne which is worth approximately $73.35 to $80.45 per share based on expected cash flows priced out at industry multiples. This value alone surpasses the current market price substantially.

The company also owns Royal Sonesta Boston, which is worth $23.24 to $28.65 per share based on the same type of analysis. Finally, the company also has other hotel interests amounting to $4 to $7 per share along with cash amounting to $5.77 per share. Subtract the combined value of these entities with the companies few liabilities and you can see how a value of $110 to $125 per share is realized.

Clearly, there is substantial value present in Sonesta that well surpasses the price the market has put on its shares. Now that the company has decided to explore its strategic alternatives, it it quite possible that it will be able to unlock this value in the near term. This makes SNSTA a stock worth watching!

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PDL BioPharma (NDAQ:PDLI) shares rose $0.49, or 1.92%, to $26.06 today after Daniel Loeb's Third Point disclosed a letter to the company's board once again calling for Mark McDade's termination and its support for a recent directive given to an investment bank to explore strategic alternatives. Many shareholders are hoping that the activist hedge fund will be able to clean up management and force the company to put itself up for sale to unlock value.

Third Point has been pushing for the termination of Chairman and CEO Mark McDade for several months now. The hedge fund contends that Mr. McDade (1) sabotaged a previous buyout offer, (2) moved the company's headquarters against the advice of his advisors at a cost of $100 million, (3) oversaw the loss of countless senior employees due to his incompetence, (4) consistently disappointed investors with poor earnings and delayed product launches, (5) failed to communicate with the analyst community to garner interest in the stock, and (6) committed several ethical violations according to former employees. All the evidence to back these claims are clearly laid out in their letter to the board.

Third Point made three recommendations to the company after meeting with them in June to discuss both Mr. McDade and the future of the company. First, the hedge fund demanded three of their own nominees be placed on the company's board. Secondly, they suggested that the company slow the progression of Ularitide and Nuvion Partnerships until all alternatives are considered. And finally, replace CEO McDade with a more competent executive that can help unlock shareholder value.

In the end, if the company heeds the hedge funds advice and decides to take action it could mean significant share appreciation for shareholders. Not only would McDade's removal pave the way towards a much more efficient company, but the strategic alternatives being explored could lead to a significant sale in the near term. This makes PDLI a stock worth watching!

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Ford Motors Company (NYSE:F) announced today that it is willing to consider offers for its Volvo car unit as it looks to raise more cash to fund its restructuring. The news comes shortly after the automaker completed the sale of its other luxury international brands that included Aston Martin, Jaguar and Land Rover. Shareholders are hoping that this additional cash will be enough to fund the automakers broad restructuring efforts aimed at returning it to profitability.

Management is banking on the proceeds from these sales to fund a broad restructuring effort aimed at reversing a $12 billion annual loss in 2006 by revitalizing its North American operations. The automaker already received a $26 billion financing package in 2006 which brought its total available liquidity up to $46 billion; however, many analysts have suggested that the company may need more to complete its restructuring efforts - hence the sale of its luxury brands.

Notably, the Volvo unit was pledged as part of the $26 billion financing package, so any offer would have to come at a substantial premium in order to justify surrendering such a large portion of its line of credit. This, however, did not stop the company from selling its previous luxury brands - so anything is a possibility.

In the end, Ford still faces many obstacles before it will be able to return to profitability. Clearly, any premium prices paid for its brands will help fund its restructuring and offers a great opportunity to consolidate its offerings. Combined, these factors make Ford a stock worth watching!

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Target Corporation (NYSE:TGT) appears to be a big hit with Bill Ackman after his Pershing Square Capital Management disclosed a 9.6 percent stake in the company, confirming rumors that surfaced late last week. Investors are hoping that the famed activist investor can help unlock value in the retail giant that has been experiencing a lower valuation than many feel deserved the company.

Bill Ackman noted in his filing with the SEC that he believes the leading domestic retailer has significant growth opportunities and strong operational management but remains significantly undervalued. While not going into any specific details, he noted that his fund intends to hold discussions with management aimed at correcting this undervaluation. Interestingly, he also noted that he would donate a third of his net aftertax profits from his Target investment to his charitable foundation - a bit of Karma for the activist!

So, what is Ackman planning for the company? Well, many analysts are speculating that the activist investor will try and push the company to sell its lucrative credit card portfolio, which has around $6.5 billion in receivables. While the company wasn't interested in selling the division earlier, many are speculating that it may be open to a sale once the credit cycle has peaked. Any move to sell this division would, however, provide a windfall of cash for shareholders that could be distributed through a special dividend or massive share buyback program.

In the end, the rumors that Ackman built up a stake in the retailer are true but we still have no idea what his plans are for the company. We just know that he believes the company's shares are undervalued and he intends to take some actions to unlock that value. This makes TGT a stock worth watching!

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Pomeroy IT Solutions (NDAQ:PMRY) is quickly turning into an interesting restructuring play for opportunistic investors. The national IT solutions provider has faced several issues over the last few years stemming from poor governance practices by key executives and management personnel. Many investors are hoping that several recent changes to the company's governance w