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 will help unlock value for shareholders and jump the company's share price.

Flagg Street Capital, who owns approximately 9.8 percent of the company's outstanding shares, took notice of these inefficiencies and has been pressuring the company towards several governance reforms. The activist hedge fund believes that such reforms could help the company increase its focus and cut down on its expenses. Earlier this year, Flagg Street Capital announced a proxy contest aimed at installing its own nominees to the company's board and enforcing change.

This move quickly caught the Pomeroy's attention. Earlier this month, the company fired its President and CEO Stephen Pomeroy after an independent committee found that certain, non-illegal conduct and actions were adversely affecting shareholder value. Even better, the company agreed on July 12th to give two Flagg Street Capital representatives seats on the company's board of directors. Combined, these events are great news for shareholders as they could lead to a much more efficient company. This makes PMRY a stock to watch!

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Target Corporation (NYSE:TGT) shares soared more than 5 percent yesterday after reports surfaced that Bill Ackman's Pershing Square has been accumulating shares in the company. The Bloomberg report cited "a person with direct knowledge of his plans" but the hedge fund refused to comment on the situation. Investors are hoping that the activist hedge fund will be able to unlock value and help the retailer improve its long-term outlook.

Bill Ackman is a well known activist investor who has managed above average returns for several years for his limited partners. While most of his investments are passive, he is well known for his activist approaches to unlocking value in large companies like McDonalds and Wendy's. Many are speculating that his involvement with Target will involve similar strategies aimed at unlocking value through the exploration of strategic alternatives. These could include a recapitalization, special dividend, spin-off of particular brands, restructuring or even an outright sale of the company.

Investors will have to wait until Mr. Ackman files a Schedule 13D with the Securities and Exchange Commission in order to figure out his plans. If the rumors of him acquiring a 5 percent stake in the company is true, then he will be forced to file with the SEC within the next 10 days. This filing should outline whether or not he is considering strategic alternatives for the retailer. Alternatively, if he ends up filing a Schedule 13G, we will know if he is in it passively for the time being. Regardless, Target is definitely a stock to watch as this situation unfolds.

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Ceridian Corp. (NYSE:CEN) shares rose marginally this morning after Bill Ackman's Pershing Square disclosed a 14.9% stake in the company and updated shareholders on its plans in a Schedule 13D/A filing with the SEC. The Minneapolis, MN-based company announced a $36/share management-led buyout earlier this year that Ackman finds grossly inadequate. The activist investor proposed a range of alternatives that it believes would likely result in greater value for shareholders. Investors are watching the situation closely, but the hedge fund still faces an uphill battle against the board and management.

Bill Ackman's heated battle with Ceridian has been taking place for several months now and he shows no signs of letting up. The activist investor initially proposed that the company spin-off its Comdata division as it is undervalued and shares few synergies with the rest of the company's business segments. Ackman also proposed a recapitalization of the company that would enable it to issue a special dividend or institute a share buyback. Finally, he also believes that the company could attract a greater premium if it continued to shop itself. In fact, his firm reportedly knows of several interested parties!

Many investors share Ackman's belief that these transactions could provide substantial returns; however, the Ceridian board has remained resistant. As a result, Ackman was forced to nominate a slate of directors to replace the incumbents and enforce change. A recent shareholder lawsuit also led to a lower threshold for a "superior proposal" and the elimination of a buyer's walkaway rights in the event that the incumbent board loses in the next proxy season. In the end, if Ackman is successful in nominating his own candidates to the board or directors there is a good possibility that we could see a higher share price.

So, what are the changes that these proposals will be adopted? Well, a lot rides on Ackman's ability to win the upcoming proxy contest. With nearly 15 percent of the company's shares in his hands along with call options that he disclosed in the past, there is a distinct possibility if he can garner other institutional support. The activist investor asked the company yesterday for additional information to make its case, even if it would require a confidentiality agreement. Consequently, the next thing investors should watch for is an 8-K filing by the company disclosing that they have entered into such an agreement. Combined, these factors make CEN a stock worth watching!

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Authentidate Holding Corporation (NDAQ:ADAT) shares rose $0.04, or 2.68%, to $1.46 today after Coghill Capital disclosed a 9.9% stake and made several recommendations to the company's board of directors. The Chicago-based investment firm is seeking to restructure the board of directors while also working to improve the company's capital structure.

Authentidate, which provides secure enterprise workflow management solutions, is trading well off its 52-week high of $2.61 but appears to be working to turn itself around. The company recently sold off its Document Management and Systems Integration businesses in order to focus more on their core competencies. Meanwhile, the company reported broad success with its new initiatives in domestic healthcare and foreign partnerships.

Coghill Capital Management is an activist investment company that employs a bottom-up fundamental analysis approach to identify companies in the highly inefficient small cap universe. They target small cap companies with specific, time-bound catalysts for stock price movement. The firm has a strong track record in this area and is a great fund to follow - especially in strong positions like these.

Authentidate's new business initiatives combined with a potential change in capital structure makes it a stock with great potential. The involvement of Coghill only solidifies the potential as they will likely provide the company with the advice and financing that they need to succeed. Combined, these factors make ADAT a stock worth watching!

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Brinks Co. (NYSE:BCO) shares rose $0.68, or 1.09%, to $63.34 today after MMI Investments disclosed an 8.3% stake and suggested that the company explore a spin-off certain business segments. The news comes shortly after Pirate Capital's bout with the company in which they recommended similar spin-offs or a breakup of the company as a whole. Investors are hoping that the involvement of two activist hedge funds may help boost the company's stock price.

MMI Investments suggested in their Schedule 13D filing with the SEC today that BCO shares could be worth as much as $88/share in the event of a spin-off. They based this price off of multiples attained by competitors Tyco and Securitas. Tyco, BCO's largest competitor, recently completed its long-awaited spin-off and transformed itself into a security monitoring pure-play. The new Tyco trades at 10.2x 2007 EBITDA versus BCOs 6.6x. Similarly, Securitas' spin-off is trading at 9.7x - also higher than BCO's 6.6x.



Clearly, the valuations presented here would be a windfall for shareholders as even the lowest valuation represents more than a 25% premium to today's closing price. More, with two activist shareholders standing behind these proposals, there is a strong likelihood that management will at least review the idea. Combined, these factors make BCO a stock worth watching!

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Liz Claiborne (NYSE:LIZ) updated shareholders on its restructuring efforts and gave an upbeat long-term outlook. The American sportswear maker announced that it would shed 16 of its apparel brands and cut nearly 800 jobs in an effort to reduce its reliance on department stores and push their own in-house brands. CEO William McComb said the company is targeting operating margins in the mid-teens percentage with ROIC growth in the high-teen percentage.

Liz Claiborne has traditionally been known in the investment community as an acquisition-driven company. The company's previous strategy had been building a big brand portfolio to hedge against unpredictable fashion cycles. However, this strategy led to some unforeseen consequences that drew concern from investors. While the company's revenues grew, the company saw a substantial increase in both management complexity and overhead costs.

Liz Claiborne plans to cut these expenses and reduce complexity by selling off 16 of its brands while doubling its spending on advertising for its remaining brands. The company also wants to open 300 of its own stores by 2010 to further reduce its dependence on department stores. At the same time, the company plans to cut $190 million in annual expenses through workforce reductions and other cost-cutting measures.

Analysts expect improvements in the company's financials to be visible in 2008. Many analysts and investors are also hoping that CEO McComb will be able to turn around Liz Claiborne's brands like he did J&J's Tylenol brand in his prior position at that company. Combined, these cost-cutting and restructuring efforts could lead to a turnaround in a company that has seen somewhat dismal performance amid a struggling apparel market. This makes LIZ a stock worth watching!

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Advanced Medical Optics (NYSE:EYE) may face some opposition to its proposed acquisition of Bausch & Lomb (NYSE:BOL) from its largest shareholder. ValueAct Capital, who owns 14.7% of the company's outstanding shares, said the $4.75 billion bid would reduce their returns and expose the company to "unacceptable risk"

ValueAct Capital insisted that the proposed acquisition increases business risk by further concentrating cash flows in a consumer contact lens and lens care business that is clearly prone to product recalls and that has a long-term demand profile that is much more questionable than EYE's surgical business. The debt financing reduces the margin for error operationally and, together with the proposed issuance of collarless equity, subjects current shareholders to significant capital market risk.

Many investors purchased stock in Advanced Medical Optics due to its diverse revenues and the strength of its surgical assets. Favorable demographics support solid secular growth rates, which the hedge fund and others believe will be augmented by less emphasis on reimbursement-based demand and more emphasis on consumer-based demand.

Unfortunately, this transaction will destroy these strengths and consolidate its cash flows in the consumer contact lens market. If ValueAct Capital is able to breakup this proposed transaction, it could save shareholders a significant amount of money in the future. This makes EYE a stock worth watching!

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Angelica Corporation (NYSE:AGL) may face more heat from Pirate Capital's Thomas Hudson after the activist hedge fund disclosed a 9.8% stake and expressed strong disappointment with the company's operating results. The Chesterfield, MO-based company recently posted a first quarter loss of $1.14 million on revenues of $107.8 million compared to a loss of $1.5 million on $107 million during the same period last year.

The largest concern that many shareholders have is the disconnect between the intrinsic value of the company and the current market valuation of its shares. Specifically, many are concerned that the aggregate price of Angelica's 11 bolt-on acquisitions between 2003 and 2006 is substantially higher than the value that the market currently assigns to these assets. The company ended up paying 1x sales while the company remains valued at just 0.5x sales. Clearly this is a problem with either the market's mis-valuation or management's recklessness.

Pirate Capital is a well-known activist hedge fund but had some troubles in the past when lackluster returns led to multiple limited partners pulling their money out of the fund. The hedge fund is now trying to turn itself around, however, amid a healthy M&A market that has seen more deals than ever before. While Pirate Capital never indicated that they were specifically seeking a sale, the hedge fund did say that they would actively pursue strategic alternatives. Combined, these factors make AGL a stock worth watching!

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Borders Group (NYSE:BGP) may soon become an activist target after Spencer Capital disclosed a 6.8% stake in the company along with communications it had with management. The investment management firm disclosed in a Schedule 13D filing with the SEC conversations that it had with the company's Chief Financial Officer while announcing its intent to have further discussions with the company's management and board of directors.

The books, music and movies superstore chain was also targeted not long ago by Bill Ackman's Pershing Square - an activist hedge fund that also owns a large stake in Barnes and Noble (NYSE:BKS). There was speculation that the famous investor may be interested in merging the two competitors in an effort to strengthen their position against key competitors like Amazon.com (NDAQ:AMZN).

The involvement of another activist shareholder reignited hopes that the company may be exploring a merger or other strategic transaction aimed at unlocking shareholder value. But just how far fetched is this idea? Well, the company has already seen interest from Pacific Equity Partners - a private equity firm that expressed interest in the Australian unit of the company. If there are other interested buyers, BGP could see itself split-up and sold at a substantial premium to the current market price. Combined, these factors make BGP a stock worth watching!

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Google Inc. (NDAQ:GOOG) shares received a boost today after the company announced the acquisition of Postini Inc. - a privately held email security money - for $625 million in cash. The move gives Google access to the lucrative market with 35,000 businesses and over 10 million users.

Postini provides security, archiving and encryption products used to protect email, instant messages and other web-based communications. These products have becoming increasingly popular during the past few years as more and more critical business data gets transferred through these channels. Postini is one of the largest companies operating in the sector.

Google made the acquisition in hopes to expand its hosted businesses which are included in its Google Apps lineup. The company claims that over 1,000 businesses are signing up for its Apps products daily, but larger businesses have been reluctant so far to lean away from MS Office. The acquisition of Postini should enable the company to move into these new markets.

The acquisition follows Google's recent strategy to diversify its revenues away from its existing Adsense and Adwords programs as investors remained concerned about its long-term growth prospects. The company's most publicized purchase was a multi-billion dollar deal for DoubleClick Inc. which it hopes will help it to move into the CPM-based banner advertising market. The purchase of Postini should help the company expand its revenues even further into the lucrative business applications market. Combined, these factors make GOOG a stock worth watching!

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Lear Corp. (NYSE:LEA) shares rose $0.87, or 2.43%, to $36.73 after Carl Icahn increased his buyout offer for the company to $37.25/share from a previous $36/share offer. The revised offer comes after Penza Investments voiced strong opposition along with two shareholder advisory firms.

The shareholders criticized the $36/share offer saying it undervalued the company; however, Icahn argued that the company still faced substantial risks as a North American supplier. Shareholders countered saying that the company has improved its footing in the difficult auto-supplier segment.

Shareholders are expected to vote on the new proposal at the company's next annual meeting scheduled for July 16th. There is no word on whether the new proposal has widespread support from shareholders, but many analysts believe that the offer remains undervalued. The prospects for a higher buyout offer in the future makes LEA a stock worth watching!

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Dana Corporation (OTC:DCNAQ) said Friday that it has reached an agreement with its unions and secured $750 million to help it exit Chapter 11 bankruptcy. The bankrupt auto parts maker announced that its unions have agreed to back a reorganization plan that includes labor settlements and funding commitments.

The union agreement would replace the company's healthcare and long-term disability obligations for retirees and union employees with trusts to which the company would contribute $700 million in cash and $80 million in stock. This change is expected to save the company more than $100 million per year.

Now that agreements have been reached with its unions, investors are beginning to see the light at the end of the tunnel. Centerbridge Capital Partners and its affiliates have agreed to purchase $500 million in convertible stock and facilitate an additional $250 million in funding from others. Many now believe that the company is on track to have a reorganization plan in place by September and be able to emerge from bankruptcy by the end of the year.

So, what does this mean for shareholders? Well, the fate of existing shareholders remains uncertain. While the company's assets outnumbered its liabilities as it entered bankruptcy (suggesting that common stock still had value), there are costs associated with the reorganization itself that may push down value further. Until these costs are fully detailed, it's hard to say whether or not the current common stock is worth anything.

Investors looking for bankruptcy investing opportunities may find this stock interesting. New stock in a company that has just emerged from bankruptcy is often undervalued. This is simply because the holders of this stock are often debtors that want nothing more to do with the company. Obviously, people are also skeptical as to whether or not the company can turn itself around after having already burned shareholders once. This deep value can translate to healthy profits in the event that the company is successful in turning itself around.

The healthy M&A market for automakers and auto parts makers is also something that is worth noting. Many private equity firms have already taken advantage of companies fresh out of bankruptcy court as their stock is often traded at a substantial discount while most of their large debts have been satisfied. The best examples of these transactions occurred in the airlines industry a few years ago.

Combined, Dana Corporation is definitely a company worth watching as it emerges from bankruptcy. While investment in its bankrupt shares may be a risky bet, investors may find an appetite for newly issued post-bankruptcy shares as they will likely be undervalued.

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NovaStar Financial (NYSE:NFI) shares rose as high as 13 percent yesterday amid rumors that the troubled subprime lender may have found a buyer. The Kansas-based company, which provides loans to borrowers with poor credit, has been searching for a buyer since April without success. Investors are hoping that the troubled company can avoid bankruptcy by finding a buyer willing to take on its debt and reward shareholders with a premium buyout price.

NovaStar is one of many subprime lenders that fell victim to an overzealous public. Subprime lenders were able to make a substantial amount of money by lending money to borrowers with poor credit and charging higher interest rates to make up. However, problems began occurring when many of these borrowers began to default on their loans as their variable rate mortgage payments began to balloon. Unfortunately, many subprime lenders were highly leveraged, which led to a substantial windfall.

So, what are the chances that NovaStar will find a buyer? Well, Accredited Home Lenders (NYSE:LEND) was able to find a private equity fund willing to pay $400 million for the company, but this appears to be the exception amid many bankruptcies including that of New Century. Investors must also not forget the "imminent sale" rumor that surfaced last month leading to a 16 percent run-up that was quickly erased. Of course, the company would also not comment on any rumors.

Overall, investors should remain skeptical and prudent when trying to read this stock. The company may be open to a buyout - which helps - but selling a subprime lending firm in this environment could prove to be difficult without a substantial discount. This is definitely a stock to watch, but maybe not one to buy until more solid information surfaces.

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Cadbury Schweppes (NYSE:CSG) may have a buyer for its Snapple brand after reports surfaced that Coca Cola (NYSE:KO) has approached several private equity firms involved in bidding for Cadbury's drinks business. The confectionery company agreed to sell the division - which includes brands like 7-Up and Dr. Pepper - to private equity firms who are expected to pony up around $15 billion.

Snapple has proven to be a great investment for its owners over the years. Billionaire Nelson Peltz sold the brand to Cadbury for $1.5 billion, which was five-times more than his purchase price of $300 million just three years earlier. Now Coca Cola's interest in the brand could dramatically increase the value of its drinks business being sold to private equity.

Coca Cola confirmed that it was exploring the possibility of either purchasing the Snapple iced-tea brand or creating its own brand from scratch. Since the company cannot make a bid for the entire division due to antitrust regulations, it will be forced to purchase the Snapple division from one of the several private equity firms that are making a bid. The firms expected to be placing bids include Blackstone, KKR and others.

In the end, the Snapple brand is clearly a valuable asset to Cadbury that may end up increasing the value of its drinks portfolio. This makes CSG a stock worth watching as this sale process unfolds.

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Kohlberg Kravis Roberts & Co. released the preliminary prospectus for its initial public offering yesterday stating that the company would seek to raise $1.25 billion and use the proceeds to expand its business, make additional capital commitments to its funds and for general corporate purposes. Interestingly, none of KKR's owners appear to be liquidating their stake, in stark contrast to Blackstone's use of its IPO proceeds.

The most interesting part of the filing, however, was a new strategy KKR hinted towards that would end its dependence on third party capital from investment banks like Goldman Sachs and Morgan Stanley. The firm has shelled out billions of dollars to these banks in fees over the years in exchange for help placing more than $350 billion in debt used to finance its leveraged buyouts.

KKR is seeking to avoid these fees by constructing its own in-house syndication desk - similar to the ones that brokerages and banks maintain. The firm also plans to deploy an in-house proprietary trading team that would enable it to deploy capital behind the firm's insights into companies and markets that would have gone unutilized in the past.

The move will not only allow KKR to hand debt placements on its own (a great boost to its LBO division) but will also lead to more syndication fees and trading profits. The new strategy will also enable the firm to pursue opportunities in any credit market while their $5 billion publicly trading equity fund gives the firm an unlimited source of equity funding.

Unlike Blackstone, KKR's IPO is not simply a liquidation for the company's owners. Rather, KKR appears to be using the money to setup a new division that will be able to save it billions of dollars in fees while allowing it to tap into other potential revenue generating activities. The firm plans to IPO in the fourth quarter of 2007 under the ticker "KKR" - it's definitely one to watch!

Chapman Capital sent a letter to American Community Property Trust (AMEX:APO) today demanding that the company re-evaluate the activist hedge fund's $25/share liquidation proposal. The hedge fund, which specializes in small cap restructurings and turnarounds, has been fighting for a liquidation since REITs went out of favor causing substantial discounts to net asset values. Chapman is hoping that it can talk some sense into the resistant controlling Wilson family and unlock significant value for shareholders through a liquidation at roughly a 25% premium.

In a heated letter to ACPT today, Mr. Chapman commented, "The management team in place is implementing a long-term strategy that IS NOT WORKING. If you understood, even slightly, that your job is not to develop real estate but to build shareholder value in the public markets through real-estate related development, this would be patently obvious to you. Instead, your response, like all those that preceded it, confirms every fear I have about the Wilson family's role in the tragic underperformance of this asset-rich enterprise. Like TrizecHahn and others in the 'Old Economy', selling assets to the private market rather than waiting for the public market to realize the estimated $25/share in intrinsic value is the only viable option. Thus, on behalf of the public shareholders of ACPT, I demand that you begin an orderly liquidation of the company immediately."

Many shareholders have been disappointed with the trust's performance during the past year and are ready for change. Unfortunately, the Wilson family holds a controlling stake in the company and has openly stated that it would not support a liquidation. Usually this would eliminate any possibility of returns; however, Chapman Capital has a lot of experience in these situations and may be able to force change. If successful, the resulting liquidation would result in around 25% return to shareholders based on today's market price. This makes APO a stock worth watching!

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Wendy's International (NYSE:WEN) shares moved up $1.63, or 3.64%, to $38.75 today after Nelson Peltz disclosed a 9.8% stake and identified Triarc as a "natural, strategic buyer" for the struggling restaurant chain. Many investors are hoping that Nelson Peltz will be able to use his weight on the board to pursue the best value for shareholders.

Nelson Peltz is a successful activist investor that was responsible for Wendy's earlier decisions to spin-off its Tim Horton subsidiary and sell off its Baja Fresh chain to an investment group. These efforts provided healthy returns to shareholders in the past and many are hoping that the activist investor's new push to remove substantial barriers for a sale of the entire company will yield similar results.

Nelson Peltz expressed his concern today over Wendy's restrictive one-year standstill clause that drew criticism from Triarc. The activist investor believes that the company has a strong bias against Triarc but should work to include them in the sale process despite these differences - as the board has a fudiciary to shareholders to pursue the greatest value.

While there are no official bids for the company yet, clearly we have two parties that may be interested in putting a bid together. Nelson Peltz request that the standstill clause be removed (which should be followed given his board presence) which should pave the way to more bids from a wider audience. Whether or not these bids materialize at a substantial premium remains to be seen; however, WEN is definitely a stock worth watching in the meantime.

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FairPoint Communications (NYSE:FRP) is one step closer to its purchase of Verizon's (NYSE:VZ) land lines businesses in Vermont, New Hampshire and Maine. The $2.47 billion deal will provide FairPoint with 1.48 million access lines - more than eight times the company's current 248,000 lines. The telecommunications company hopes that this deal will give them a larger footprint in key markets; however, many investors are concerned that the transaction will put the company in a weak financial position.

The majority of the concerns over the deal stemmed from unions representing the bulk of Verizon's workers in the three states who are worried that the $1.7 billion in debt assumed may hinder promised investments and endanger the workers' pensions and benefits. Meanwhile, other shareholders are worried that the large acquisition will necessitate additional infrastructure spending that will significantly impair the company's financial condition.

FairPoint executives addressed these concerns on Thursday by reassuring investors that the existing $1.2 billion revenue stream from Verizon's operations in these states will support operations, capital improvements, dividends and interest on debt. Management also predicts that the transaction will be immediately accreditive to the company's earnings. Many large investment banks have also offered opinions on the transaction that is being spearheaded by Morgan Stanley.

Overall, the transaction should significantly increase FairPoint's footprint in the Eastern United States while increasing the company's revenues. Management's estimates also suggest that the transaction will leave the company in a strong financial position. Plans do not always turn out perfect, however, so investors should pay close attention to the company's costs through the process. In the end, this is a big move by the company that could either reward shareholders with a much larger entity or hurt them with excessive debt.

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Angelica Corporation (NYSE:AGL) shares rose $0.94, or 4.46%, to $22.03 today after Pirate Capital disclosed a 9.8% stake and urged the company to hire an investment banker to explore strategic alternatives. The activist hedge fund insisted that the company's failure to improve operating results has eroded shareholder value and demanded that the company explore how to unlock this value.

Pirate Capital's letter to the Board of Directors indicated a disappointment in management's ability to improve operating results. The company painted a picture of a turnaround by projecting a 7 to 10 percent increase in organic growth in April 2006; however, actual numbers for subsequent quarters turned out to be 0.2%, 0.6% and 0.7%. This prompted the activist hedge fund to recommend that the company hire an investment banker to explore ways in which value could be unlocked through a sale of the company, an asset sale or other extraordinary transactions.

Pirate Capital is well known in the markets as one of the premier activist hedge funds, but experienced some problems late last year when lackluster returns led to a pullout by many of its investments. Regardless, the hedge fund is now back on its feet and working to re-establish its trackrecord by focusing on niche activist opportunities in the marketplace. The strong M&A environment along with optimism amongst shareholders may help them with their push to put AGL up for sale without a fight. However, Pirate Capital said it would nominate its own slate of directors at the company's next annual meeting if necessary.

Overall, Angelica Corporation is an under-performing stock trading at a discount to its peers. Pirate Capital, a well-known activist, is acting as a catalyst to help push the company to explore strategic alternatives. If they eventually comply, shareholders could see significant upside from any sale, asset sale or other extraordinary strategic transactions. This makes AGL a stock worth watching!

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