Amgen Inc. (NDAQ:AMGN) received a boost from George Putnam's The Turnaround Letter, which called this a great opportunity to buy Amgen stock. The famed turnaround artist explained that a who's who list of value investors, including David Dreman and Bill Miller, have been accumulating the stock and he'd recommend joining them.

Here's an excerpt from the letter:

"Not only are the short-term regulatory issues abating, but more importantly, Amgen has the drug pipeline, the manufacturing capability and the financial resources to remain a leader in providing biotech solutions to the many health problems faced by the graying population across the developed world.

"While there is still a risk that Medicare and private insurers might impose restrictions that would hurt sales of the drugs, those risks are pretty well priced into the stock. Moreover, the physician community appears to favor continued widespread use of these drugs. The company is also reducing costs, which should help offset any loss of revenues from these two drugs.

"Longer term, Amgen's pipeline of products in development – targeting conditions from osteoporosis to diabetes to prostate cancer to Alzheimer's disease – is widely considered to be the strongest in the biotechnology industry.

"Over the last few years, the pipeline has more than doubled in size and become much more diverse. In 2006 the company spent $3.4 billion on research and development, and it is also willing to make acquisitions that boost the drug pipeline.

"For example, in 2006 Amgen spent $2.1 billion to purchase Abgenix, thereby greatly expanding the company's expertise with human monoclonal antibodies. Now Amgen is poised to launch Denosumab, a monoclonal antibody that helps prevent the loss of bone-mineral density, and it is viewed as having the potential to be a revenue blockbuster.

"Another strength of Amgen is its manufacturing capability. Producing biologic drugs is more complex than many other kinds of pharmaceuticals. With nearly $6 billion invested in plants and a highly trained workforce, the company is well positioned to prosper as the industry grows.

"In addition, Amgen has the financial resources, including more than $5 billion in cash, to support all aspects of its business. Today, as in 2000, Wall Street is wondering how fast Amgen will be able to grow in the years ahead. There's a big difference today, though: in 2000, the P/E ratio was as high as 77; now, it's a much more attractive 16."

Overall, this is solid research and a great recommendation to purchase Amgen stock at these low prices. Whether or not the market chooses to follow this advice remains to be seen, but AMGN is definitely a stock worth watching in the meantime!

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Dell Inc. (NDAQ:DELL) shares fell over 13 percent today amid concerns that rising costs from a turnaround would destroy profitability for the computer-maker in future quarters. The company reported better-than-expected earnings growth of 8.5 percent in its third quarter, but said gross profit margins narrowed by 1.4 percent while operating expenses rose 24 percent.

Many analysts are now questioning if Dell's turnaround can succeed at all. It may take more than a year to build a worldwide retail network similar to HPs while it is likely to continue losing market share in the meantime. The company's direct-to-consumer business model has far too little share of the global market to succeed against larger competitors. The server market is also hurting with increased competition from Sun and others.

Dell may now be finding itself in a situation that it cannot fix. The company does not have a broader array of businesses than its competitors. The company no longer has cost advantages when it comes to ordering online or scalability. And it no longer the only computer manufacturer to offer computers online. There is clearly a plethora of issues facing the company that mere cost-cutting and restructuring cannot solve.

Dell's old business model was one that was built atop of a platform with a notoriously low barrier to entry while they focused on competiting on price. That's a battle that very few companies can win. These factors make DELL and interesting stock to watch as investors have very little hope for the company now...

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TXCO Resources Inc. (NDAQ:TXCO) shares rallied recently after an activist hedge fund notified that it would be nominating its own slate of directors for the company's board in order to unlock shareholder value. Shareholders and investors are hoping that this move will help the company capitalize on assets to bring the company's shares to its intrinsic valuation.

Daniel Loeb's Third Point LLC, which owns an 8% stake in the company, indicated in the regulatory filing that they believe the company's stock represents an attractive investment opportunity. Moreover, they contend that the potential value in the company's existing development projects has not been adequately recognized in the market price of the common stock. This could be due to the fact that management lacks the development experience and technical expertise to manage the opportunities presented by those projects.

As a result, the activist hedge fund indicated that it would be nominating its own directors to the company's board during the company's next annual meeting in 2008. Third Points three candidates would constitute half of the company's board and would provide the technical expertise to hire and manage executives capable of capitalizing on the company's existing development projects.

In the end, this is great news for shareholders as it could mean significant share appreciation over the short-term. The stock is also trading at a fundamental discount, which means that it has a little downside protection built-in. Combined, these factors make TXCO a stock worth watching!

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Bank of America (NYSE:BAC) is treading in rough waters these days ever since it sunk $2 billion into the struggling mortgage company Countrywide. That stake has since halved in value as Countrywide shares continued to decline during the past few months. This has led to speculation that BAC will be pressured into throwing more money onto the fire or perhaps even purchasing the mortgage company outright.

A recent Wall Street Journal article pointed out that "people familiar with the thinking in its executrive suite say the company is in a wait-and-see mode". This unearthed speculation that the company could acquire the troubled mortgage banking firm once it hits a bottom to create the world's largest mortgage bank. Bank of America already has the right of first refusal if another company makes an offer for Countrywide, but many believe that it may not wait.

So, what does this mean for shareholders? Well, the mortgage banking firm probably will not sell for much more than its current $5 billion market cap given all of the troubles that it is facing. Moreover, any potential deal might be questioned by antitrust officials concerned that the company will have a monopoly on the vulnerable market. The real value of such an announcement would be the idea of a bottom in the subprime mortgage crisis. Combined, these factors make BAC a stock worth watching!

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Marsh & McLennan Companies, Inc. (NYSE:MMC) shares rallied over two points today after a Toronto investment firm controlling around 1.1 million shares urged the company to spin off two of its business units. K.J. Harrison & Partners said the insurance broker's performance had "deteriorated financially and operationally" and that its strategy was flawed.

"In our view, holding companies are effective only when they demonstrated that they can add value through excellence in capital allocation and management selection and retention," said K.J. Harris CEO Jim Harrison. "Marsh & McLennan is currently doing neither. Consequently, the share price trades 40% below our estimate of the underlying enterprises and these enterprises are each at a disadvantage to competitors."

K.J. Harrison demanded that the company put a proposal for such a split off in the proxy for the company's next annual meeting. It is likely, given this analysis, that other shareholders will jump on board. Similar actions taken on other holding companies have resulted in significant value being unlocked for shareholders. Combined, these factors make MMC a stock worth watching!

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Citigroup Inc. (NYSE:C) reportedly received a call from an invetment banker suggesting that it explore the possibility of merging with Bank of America (NYSE:BAC) as the bank deals with billions of dollars in writedowns stemming from losses in the subprime and credit markets. The rumor caused a spike in the stock, but the two banks immediately dismissed it as nothing more than rumor.

Citigroup's board responded by calling the approach "totally out of hand" saying that no discussions have taken place. Meanwhile, Bank of America said it never authorized a formal proposal to Citigroup. And finally, a person familiar with the matter reportedly said that Citigroup would be unlikely to consider such a merger as the bank would be very difficult to manage.

The rumor gained traction due to Citigroup's recent $7.5 billion cash infusion from the Gulf Arab emirate of Abu Dhabi, which gave it fresh capital to repair the subprime mess and explore other opportunities.The new Arab emirate will be the bank's largest shareholder following the transaction. Many speculated that the company may use this cash to acquire other bank stocks that are cheap as a result of the crisis.

In the end, this is news that is worth following. After all, there is likely to be continued speculation on the use of the funds Citigroup acquired. Bank stocks are also up today on hopes that the Fed will cut interest rates once again. Combined, these factors make C a stock worth watching!

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Transocean Inc. (NYSE:RIG) shares are up over four percent in today's trading as the stock continues its run despite a credit downgrade from Fitch. The stock is up recently on an announcement of its inclusion in the S&P 500, which will force many mutual funds to begin acquiring the shares during their next rebalance. It also marks the company as an industry giant.

So, is this downgrade worth worrying about? Well, Fitch downgraded the company's debt to BBB-, two notches above "junk" status, because of Transocean's intent to devote free cash flow during the next two years towards debt repayment. Luckily, the company has a very strong backlog and recently increased the diversification of its fleet, meaning that this may not be such a bad idea. In the end, the company will probably not have a problem with cash.

However, the company did establish a 364-day $15 billion bridge loan to fund its cash dividend to shareholders (as a result of the SantaFe merger), which will be reduced through a combination of debt and equity. This is what has caused some concern by the credit agency and several institutional investors because it means the company will be leveraging itself substantially in order to unlock value in its future cash flows in today's dollars.

In the end, Transocean is banking on the fact that it is underleveraged given its future cash prospects. This may be true, but we now know how quickly markets can turn when excess leverage is used. It was probably prudent for Fitch to cut ratings, but it doesn't mean their is a problem quite yet. Combined, these factors make RIG a stock worth watching!

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Steak n Shake (NYSE:SNS) may be in for a shake-up of its own after Sardar Biglari's Lion Fund increased its stake in the company from 7.3% to 8.6%, according to a Schedule 13D/A filing with the SEC. The activist hedge fund has been targeting the company lately, voicing their concern about mismanagement of the company by the present board of directors.

The move is welcomed by many investors frustrated with the company's recent performance. Shares in Stake n Shake have plummeted in recent weeks after it reported that net earnings dropped by more than 50 percent on same-store sales down 3.8% for fiscal 2007. According to one analyst, "I think the best way to describe it at this point is basically it's a big mess, and it's going to take some time to turn it around."

In fact, things have gotten so bad that disgruntled shareholders have formed a website (EnhanceStakenShake.com) and are placing billboard ads in the Indianapolis area lobbying for board seats. The campaign is spearheaded by The Lion Fund and is very similar to what happened when it lobbied for a sale of Friendly Ice Cream - which turned out to be a great success.

In the end, it is uncertain as to whether or not these efforts will pay off. The company has suffered horrible losses and shares are trading at a low. Many investors are hoping, however, that The Lion Fund can work to unlock shareholder value using the same successful tactics that it has in the past. Combined, these factors make SNS a stock worth watching!

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Lahde Capital, a California-based hedge fund, has made more than 1,000 percent return this year by betting against subprime home loans, making it one of the world's best performing funds of all time. Andrew Lahde, the man behind the fund, noted that his returns had exceeded every estimate that he has ever offered any investor.

“We believe that all of these positions have further downside. However, the risk/return characteristics are far less attractive than they have been in the past. We do not plan on adding any positions at current levels. If the ABX indices were to bounce, we may short them again,” wrote Lahde in a letter to investors.

Lahde's portfolio consists primarily of short positions in AA down to BBB- holdings on the ABX index. The hedge fund plans to close out its positions in BBB- holdings within the next 90 days, only holding onto As and AAs, which will - according to the fund - take awhile to disintegrate but still may be worth nothing at all. Meanwhile, Lahde's new focus will be in a new fund that will short credit, as there is still plenty of bad credit to short!

In the end, this hedge fund's great performance can give us some insight into how much damage is left. Clearly, the scaling back of his position indicates that some of the mortgage problems may be coming to an end; however, there is still a lot of bad credit on the credit markets that may be worth shorting.

Borders Group (NYSE:BGP) shares rose over four percent today after Bill Ackman's Pershing Square Capital Management disclosed an increased 17.1% stake in the company, according to a Schedule 13D/A filing with the SEC. The activist investor has reportedly been soliciting the board for its views on the firm's management, but gave no further details into his interest in the company.

Borders Group is well off of its 52-week highs of $24.15, trading at just $12.29 today. However, the company said last week that it expects its holiday sales be benefit from a toy backlash and strong best-seller lineup and customer rewards program. Management did not give an exact estimate, but did say that its fourth quarter earnings - excluding restructuring charges - will exceed last year's earnings from continuing operations of around $1.48 per share.

"If you mention the toy business, they have had a lot of issues there because of safety issues, recalls, etc.," said Borders CEO George Jones in a conference call with analysts. "We are going to have signing in our stores ... talking about what a nice, safe alternative books can be and what a great gift they are for kids."

Borders Group is also in the middle of a turnaround launched in March. The move includes the sale of some international stores, efforts to improve operates at U.S. bookstores, and the development of its own website to replace its existing agreement with Amazon.com. To this end, the company announced its decision to sell its 42 superstores and 28  Book etc. stores in the UK and Ireland for up to $40 million.

In the end, Ackman may be interested in the turnaround process combined with the potential boost obtained from the toy recalls in China. Others speculate that he may be interested in switching up management and implementing a new strategy. Regardless, these factors make BGP a stock worth watching!

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Transmeta Corporation (NDAQ:TMTA) shares rallied today after Riley Investments disclosed a 5.9% stake in the company and demanded that the company review its strategic alternatives. The activist hedge fund also indicated its belief that the stock is undervalued relative to its intrinsic value and peers. Shareholders are hoping that the company will heed the advice and work to unlock shareholder value.

Riley Investments said it believes that the public market valuation reflects a negative enterprise valuation despite strong prospects for positive free cash flow in 2008 and the five years for which it will be paid license fees under its recent agreement with Intel. Moreover, the hedge fund indicated that after Intel's first $150 million payment, Transmeta will have close to $180 million in cash on its balance sheets. This equals out to $13 per share in cash compared to the market value of $12 per share!

Riley Investments demanded that the company review its strategic options to enhance shareholder value. Specifically, the hedge fund recommended that the company sell the intellectual property to a company who can better leverage the costs associated with pursuing the strategy, delist from the NASDAQ, go "dark" to significantly reduce public company costs, or finally, engage in a significant dutch tender offer to unlock value.

In the end, this is all good news for shareholders as it means the company's intrinsic value could be realized. Whether or not the company takes action remains to be seen, but this is definitely a stock worth watching closely!

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Wynn Resorts Ltd. (NDAQ:WYNN) announced today that it would be issuing a $6.00 per share cash dividend for all shareholders of its common stock. The distribution will be payable December 10th for shareholders on record November 30th and will begin to trade ex-dividend on November 28th. Shares moved up over 6 percent on the news after a substantial drop yesterday.

The news comes amid a mass exodus from the casino stocks. Barrons came out yesterday saying that early profits from Macau were strong, but forecasts for this to continue fail to consider the impact of over-building and maturation. Since entering Macau, Wynn has surged more than 140 percent and it is going to slow down. They believe that investors are in for a surprise when they see margins being pressured.

Some analysts disagree, however, saying that forecasts are on-track for a total market size of over $15 billion by the end of 2010. However, one wildcard acknowledged by both parties is the risk of the Chinese government intervening with new rules and regulations that could curb growth. Combined, these factors make WYNN a stock worth watching!

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Target Corporation (NYSE:TGT) shares are down marginally after the retailer announced disappointing third quarter earnings but managed to mask it with a giant share buyback. Shareholders are hoping that the company will be able to turn itself around in a tough sales environment, while many are encouraged by the giant share buyback announced.

"Our third quarter earnings were disappointing due to soft sales in our higher margin categories, leading to lower-than-expected gross margin in our core retail operations," said Chairman and CEO Bob Ulrich. "However, we have not observed any meaningful change in the intensity of the competitive environment and continue to believe that we are well-positioned to operate in a variety of sales environments going forward."

Target also announced a giant $10 billion share buyback program along with an update to credit card receivables unit that is still pending. In September, the company said it was considering selling $7 billion in credit card assets in order to unlock further value for shareholders. The buyback alone would result in nearly a quarter of its shares being repurchased while the $7 billion cash infusion from a sale would also be a windfall.

In the end, Sears is facing a variety of problems. The company is facing a credit downgrade and a tough competitive environment. However, a share buyback combined with the prospects of a $7 billion sale of its credit card division. Combined, these factors make TGT a stock worth watching!

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Sears Holding Corporation (NDAQ:SHLD) disclosed a 13.7% stake in Restoration Hardware Inc. (NDAQ:RSTO) and indicated that it may be interested in a takeover of the hardware company. The news comes after Restoration Hardware entered a definitive merger agreement at $6.70/share with an affiliate of Catterton Partners. Shareholders are hoping that Sears will make a higher bid and unlock additional value for shareholders.

Currently, Sears Holdings is seeking to obtain certain non-public information from Restoration Hardware and has indicated that it would enter into a confidentiality agreement to do so. The two companies have reportedly discussed the terms of such an agreement, but there is no guarantee that anything will come of it. Presumably, this agreement will enable Restoration Hardware to open its books and perhaps lead to a higher bid.

This speculation led to an 11.85% jump in the stock price today - far in excess of the $6.40 per share buyout offer that is currently on the table. Notably, this number is still well below the company's 52-week high of $9.17. But it is unclear whether Sears would raise the bid that significantly in order to beat out a $6.40 bid that is unlikely to be raised in response.

In the end, Sears' previous offer of $4.00/share was too low and an additional bid may be possible once they have more information about the company. This is great news for RSTO shareholders, as it could mean more money for the buyout. Combined, these factors make RSTO and SHLD two stocks worth watching closely!

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O'Charley's, Inc. (NDAQ:CHUX) may find itself under pressure from shareholders after activist investor Crescendo Partners disclosed an 8.9 percent stake in the company. The news came shortly after shares plummeted early Friday without reason. The restaurant chain is trading near its 52-week lows off of its high of $23.45 earlier this year.

O'Charley's is a casual dining restaurant company that owns and operates three restaurant concepts under the trade names O'Charley's, Ninety Nine Restaurants, and Stoney River Legendary Steaks. The company owns and operates 227 restaurants in 16 states along with six franchise operations. Restaurants have been a popular activist target recently with many activists demanding spin-offs or share buybacks to unlock value.

Crescendo Partners is most well known for its recent involvement with Topps, where it is attempting to force a buyout of the company. In this case, the hedge fund noted that it was not currently considering taking any typical activist action, but it may amend the filing in the future to include those possibilities. For now, the activist seems content in acquiring shares of the company at near a 52-week low.

In the end, this is a situation definitely worth watching as an activist investor is acquiring a sizable stake at near 52-week lows. Whether or not they will take future actions to actively unlock value remains to be seen, but the possibility is strong given the hedge fund's past actions. Combined, these factors make CHUX a stock worth following!

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E*Trade Financial (NYSE:ETFC) shares dropped marginally today after reports surfaced that the company may be looking to accept a cash infusion or sell itself to a competitor after a 60% cut in its market capitalization. The drop was fueled by analyst reports that there could be a run on deposits at E*Trade's bank, which reported a drop in the value of its mortgage holdings last week.

So, is E*Trade a value play at this point? Well, a cash infusion would likely increase investor confidence after the company's market cap fell to just $2.28 billion from $10.9 billion just a few weeks earlier. However, diluting the equity base might cause some issues with shareholders who have already seen a steep decline in the value of their holdings.

Meanwhile, a buyout may be the better option. The most likely suitor would be TD Ameritrade (NYSE:AMTD) and there would be plenty of benefits for the two firms as customer accounts could be transferred at almost no cost. Additionally, the long-term savings of such a combination would be over $600 million annually. In effect, this would make the deal pay for itself after five years or so.

In the end, this deal is great news for shareholders who stand to benefit from any such transaction. The brokerage also noted yesterday that it was not in any danger of default and would not face a cash crunch. Combined, these factors could mean a potential value play in the future.

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Cisco Systems (NDAQ:CSCO) shares rallied today after the company announced that its board authorized up to $10 billion in additional share repurchases of its common stock with an indefinite time period. This brings the total authorized amount under the program to $62 billion if it is fully completed.

Cisco's current market cap stands at just $178 billion, meaning that if all the shares are repurchased the company will nearly be taken private. The news comes after the company's stock slumped nearly 10 percent when chief executive John Chambers said that declining orders from automobile and financial companies are curbing growth.

Results ended up being in line with expectations but failed to impress investors  who had been expecting faster growth. After all, Cisco has exceeded sales predictions for the last seven out of eight quarters! To help increase growth, the company has looked to invest in emerging markets, making acquisitions and pushing into new products such as television set-top boxes.

Int the end, this share repurchase is good news for investors. While the unlimited timeframe is of some concern, it is good to know that the company is interested in unlocking shareholder value during tough times. Cisco remains a solid stock with solid growth numbers, and should recover along with the general economy. Combined, these factors make CSCO a stock worth watching!

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Warren Buffet's Berkshire Hathaway (NYSE:BRK) revealed its portfolio today in a mandatory Schedule 13F filing with the SEC. The regulatory filing showed the billionaire investor increasing his holdings in banks, including Bancorp, which he was rumored to be considering for acquisition. Investors are carefully watching the investors actions as it could mean an opportunity for them to piggyback on his famous market knowledge.

Buffet added to his stakes in three large U.S. banks, including Wells Fargo, U.S. Bancorp, and Bank of America. He also disclosed a new stake CarMax Inc. (NYSE:KMX), which surprised many investors since the auto industry is not expected to turn for some time now. The timing is also questionable as the company appears to be headed towards a recession and car loans are becoming more scarce.

Wells Fargo made the news in another way today after its CEO said that its exposure to CDO's and asset-backed commercial paper is minimal. He also noted that the U.S. housing market is now the worst since the Great Depression and is far from over. This dropped many bank stocks while Wells Fargo traded higher on news that its own exposure was limited.

The banking market is still being hit hard from subprime and credit market concerns that have caused deep losses in many investment banks like Merrill Lynch and even brokerages like E*Trade. Whether or not we have hit a bottom remains to be seen, but it appears that Warren Buffet may be predicting a bottom coming relatively soon given his large move.

In the end, this is good news for the banking industry and very interesting news for investors who are sitting on the sidelines. Buffet has been involved with the banking world through several crisises like this one (read: LTCM) and has experience in the industry. Combined, these factors make the banking industry worth watching closely!

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Billionaire investor Carl Icahn acquired stakes in Genzyme Corporation(NDAQ:GENZ) and Harrah's Entertainment Inc. (NYSE:HET) after selling his stakes in Kraft Foods Inc. (NYSE:KFT) and Clear Channel Communications Inc. (NYSE:CCU), according to a Schedule 13F filing released Wednesday. Shareholders are hoping that the activist investor will work to unlock value in some of these new investments.

Icahn also reported new stakes in several video game providers (TTWO, PLCE), medical companies (MOGN, CYBX, ACOR, CRA, ABI, LSR), and gas and oil companies (CMT, TLM). Interestingly, he sold off his stake in aluminum producers (AA, AL). Meanwhile, he significantly increased his stake in larger companies like BEAS, MOT, REGN, and APC.

Carl Icahn is well known in the investment community as an activist investor willing to do what it takes to unlock value in his investments. The investor has ousted several CEOs and enforced "strategic alternatives" like share buybacks and outright sales. It is likely that at least his stake in BEAS will result in an activist situation. Combined these factors make Carl Icahn worth watching!

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Delta Airlines (NYSE:DAL) announced that it has formed a special board committee to evaluate strategic options after being pressured by an activist hedge fund. Pardus Capital Management, which holds stakes in Delta and United, sent a letter to Delta Management Tuesday renewing its call for airline consolidation and advocating a Delta-United merger. Shareholders pushed up the stock of both companies in response.

Pardus noted in their letter that they believe it is, "imperative that Delta enter into a merger transaction with another carrier given the rapid rise in fuel prices and increased risk to the business as a stand alone entity." The letter came in response to word that Delta had consulted industry experts, including a former Continental Airlines chief executive. Some believe that this may have caused concern that Delta was looking elsewhere for merger possibilities.

Pardus insisted that a merger between Delta and United could result in $585 million in synergies along with other benefits that would result in a combined company stock worth $53 per share - a 75% improvement over today. The hedge fund even offered to support the Delta management team leading the strategic direction of the combined entity.

"We have been consistent in our public statements that Delta believes that the right consolidation transaction could generate significant value for our shareholders and employees and that strategic options should be evaluated," said Delta in a statement. "With oil at over $90 a barrel, this analysis takes on a heightened importance as we factor those prices into our long-term planning process."

In the end, this is all good news for Delta shareholders and may finally mark an end to the problems that have plagued the company before it was forced to declare bankruptcy and emerge in debt. These factors make DAL a stock worth watching closely!

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Och-Ziff Capital Management (NYSE:OZM) became yet another public hedge fund after shares opened even, priced in middle of their range at $32.00 per share today on the NYSE. Wall Street appears to remain skeptical as to the viability of a public hedge fund after Blackstone's blockbuster initial offering in June, which was followed by a series of negative tax law changes.

Och-Ziff Capital Management was founded in 1994 by former Goldman Sachs trader Daniel Och and the Ziff publishing family. The firm institutional alternative asset management firm and an alternative asset manager has approximately $26.8 billion of assets under management for over 700 fund investors. It invests in equity securities, convertible securities, and debt instruments. It also trades in high-yield debt, options futures, forwards, swaps, other derivatives, private securities and assets, real estate entities, and other investments.

Och-Ziff posted 2006 net income of $588 million on revenue of $1.01 billion after returning 16.7 percent annually to investors over its 13-year history. The company is formed as a limited partnership, which is a tax structure that currently enjoys a lower tax rate. Instead of being charged a regular income tax, the managers can collect their income taxed under the capital gains tax. However, tax law has changed and this company may face higher taxes after a few years of being grandfathered.

In the end, Och-Ziff is a successful hedge fund with excellent returns. However, risks associated with potential tax liability just over the horizon combined with the bad press many hedge funds have received over excess fees may weigh into the share price. Regardless, this stock is definitely one worth watching!

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Kraft Foods (NYSE:KFT) bowed to activist pressure last week by appointing two Peltz-approved directors to the company's board. The move follows pressure from the activist to spin-off the company's Post cereals and Maxwell House Coffee divisions to unlock shareholder value. Shares rose marginally on the news as shareholder are hoping that such initiatives now take hold.

Kraft reached an agreement to appoint two new directors to the company's board in exchange for a "standstill agreement" that prevents Peltz from publicly criticizing management or the growth strategy of the company for the next two years. The activist also gave up any rights to solicit proxies and agreed to vote for incumbent directors during the next election.

"We see the agreement as a pragmatic path forward for Kraft," said a spokeswoman. "Kraft adds two directors, Trian pledges support for our board, and the agreement clarifies our relationship with Trian."

Peltz has been targeting the food industries recently, targeting not only craft but also Cadbury Schwapps. The activist investor is known for sending whitepapers to the company documenting his reasoning for certain actions. And while his plans for Kraft were never made public, there was a lot of speculation that the plan called for a spin-off of two key business segments.

In the end, this is good news for shareholders as it means Peltz's plan will likely receive serious consideration. If implemented, we can assume that it will result in substantial value being unlocked for shareholders in the long-term. Combined, these factors make KFT a stock worth watching closely!

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The Coca-Cola Company (KO)

Goldman Sachs (NYSE:GS) shares are up over five percent today after the investment banking firm announced that it does not expect to take any significant asset write-downs this quarter. The news also boosted confidence in other financial stocks around the market, including Bank of America. Many investors are hoping that this will signal the end of the credit crunch.

"We're convinced we have a pretty good grip on [CDO and mortgage] valuations," said Blankfein at the Merrill Lynch Banking & Financial Services Conference after some investors voiced concerns about Goldman's valuations. The CEO assured investors that it has properly valued its assets. In fact, when the firm isn't certain, it has traders execute test trades to assign a value that has some merit.

Interestingly, Goldman also has a bearish view on the US mortgage markets where rising default rates and a lack of buyers has caused steep declines in mortgage values and derivatives like CDOs. The firm reported solid gains on its bets against the mortgage markets and indicated its belief that things will likely get worse before they get any better.

In the end, it appears the Goldman made the correct bet on the mortgage markets by positioning itself as net short. Whether or not the firm's valuations are correct remains to be seen, but it appears that the only factor they fail to fully consider is liquidity (after all, test trades don't account for that). Combined, these factors make GS a stock worth watching!

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Kellwood Company (NYSE:KWD) shares are up nearly ten percent today after Sun Capital threatened to take its $544 million buyout offer to the company's shareholders unless the board would reconsider its offer. Shareholders are clearly hoping that the company will either accept the offer or the firm will bring a higher buyout offer on the table.

"Our strong performance is to acquire Kellwood in a friendly negotiated transaction, but we are prepared to take all the necessary steps to protect the value of our existing 9.9% ownership position in Kellwood, including making a $21-per-share offer directly to Kellwood's other shareholders," said Sun Capital in a letter to the board.

Since Sun Capital did not increase their buyout price at all, it is very unlikely that we will see a response from the company. The next step would therefore be a tender offer by Sun Capital during which they would offer to tender shares for cash at $21/share or a proxy contest in which they would bring the issue to vote at the company's next annual meeting.

Kellwood shares dropped to a 52-week low of $14.21 after reporting severely damaged earnings earlier this year. The first Sun Capital offer came in shortly after this occurred and shares are still down over 50 percent on the year. Ultimately, this means that many shareholders are underwater on their investments and may not be interested in selling if the company can present a compelling long-term value proposition.

In the end, it will be interesting to see what becomes of this situation. It is highly uncommon for a private equity firm to go through with a hostile tender, but it will likely be their only option. Combined, these factors make KWD a stock worth watching!

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PDL BioPharma Inc. (NDAQ:PDLI) shares are down five percent today after Daniel Loeb's Third Point disclosed that they sold the rest of their stake in the company. Last month, the activist hedge fund announced that it cut its stake from 9.7 to 5.1 percent but noted that it was encouraged by the board's plan to sell the company - an effort that it spearheaded.

Many shareholders have sold out of PDLI as it made the WSJ's largest outflow of capital. The selling on strength suggests that some investors may be concerned that a potential deal may have trouble in today's markets. Several deals have fallen through after most banks have included clauses in their financing packages that let them get out of deal early if markets get worse.

PDLI minus their number one activist shareholder may now be tempted to abandon its sale process. This is especially true after the company announced narrowed losses in the third quarter. The company continues to lose money as a result of restructuring charges, but did manage to improve bottom line results. There have also been several layoffs and other efforts to reduce costs.

In the end, the situation may go downhill from here. Shares have rallied substantially since the hedge fund got involved and there may now be a sideways trading period after they exited amid a run-up. Whether or not the company will be sold remains to be seen, but this is still a stock that is definitely worth watching over the next few months!

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Wendy's International (NYSE:WEN) shares are up marginally today despite news that its pending sale process may be in jeopardy due to continued turmoil in the credit markets, according to an article in the New York Times. Buyers are reportedly concerned that any financing provided by major banks would be highly conditional and include several clauses that buyers may find unattractive.

The banks financing the deal sent term sheets to prospective buyers two weeks ago but have not yet made any formal commitments. One of the largest problems with the deal is a reported loophole that would allow banks to withdraw the financing if the credit markets deteriorate. Consequently, Wendy's said it may attempt to line up additional banks for its financing efforts.

Bids are due at 5pm EST today but some are predicting that the Wendy's sale may be forced on hold until the credit markets improve, which could be six months or longer. This may anger activist investor Nelson Peltz who had not only been hoping to purchase the company but is also one of its largest shareholders. In the end, this stock is definitely one worth watching!

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E*Trade Financial Corporation (NDAQ:ETFC) may become yet another victim of the subprime crisis after a Citigroup analyst downgraded the stock to a "Sell" and lowered his price target from $13 to $7.50. The analyst said that there's a 15 percent chance that E*Trade will declare bankruptcy and said management may be forced to sell loans and securities at significant discounts.

The Citigroup analyst expects the value of E*Trade's home mortgage holdings to fall significantly and lead to bigger-than-expected write-downs in the fourth quarter. It's $3 billion portfolio of asset-backed securities contains $450 million worth of collateralized debt obligations and second-lien securities. Meanwhile, the company is also facing a SEC informal inquiry related to issues with its loan and securities portfolios.

E*Trade responded this morning by saying that it can absorb an immediate write-down as high as $1 billion and still remain well capitalized. The company also acknowledged that "news in the market" will get worse before it gets better as the company takes "prudent measures" to manage its balance sheet. The company expects additional write-downs to this end.

The Citigroup analyst noted that this continued negative news flow about charges resulting from its mortgage and CDO exposure, an SEC inquiry, and continued deterioration of its financial condition, all increase the likelihood of significant client attrition. However, the company noted that its client base did increase by four percent during October.

In the end, this is bad news for shareholders that only promises to get worse before it gets any better. While the company may be safe from any liquidity issues, these combined problems may cause problems with customers and impact future growth. However, if the company can turnaround, this stock could end up becoming a great value play!

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VMWare (NYSE:VMW) shares are a third off of their highs today after the stock hit $84.60. The company managed to lose $15 billion in market cap in only ten trading days amid a steep market downturn - particularly in tech. The move has many investors wondering whether or not this company is really worth the $40 billion market cap that it has now.

VMWare posted revenues last quarter of $357 million, which was up 88% over the same quarter last year. Meanwhile, earnings per share tripled to $0.18 per share. However, does this justify a valuation of $40 billion? Well, assuming that VMWare will raise its earnings 100% for the next five years and then 50% for another 5 years after that, we can discount all this future cash flow to a present value of $31 billion.

VMWare also faces significant competition. Microsoft recently announced its own initiatives to include virtual desktop tools with its operating system. And with billions of dollars at their disposal, Microsoft will likely be able to promote their product substantially more than VMWare.

In the end, it will be interesting to see how fast VMWare is able to grow their revenues and earnings. Whether or not this valuation is justified remains to be seen, but VMW is a stock that is definitely worth watching!

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Omnicare, Inc. (NYSE:OCR) investors are growing increasingly restless with shares trading near their 52-week low but some investors are upping their stake. ValueAct Capital increased their stake in the company despite an investigation by the Department of Justice. It will be interesting to see if this aggressive investment pays off, but there are many investors watching.

The Department of Justice issued a subpoena last week seeking information about Omnicare from the UnitedHealth Group "under its authority to investigate health-care fraud offenses". The subpoena called for UnitedHealth to provide all documents concerning "attempts by Omnicare to steer patients to Medicare prescription-drug plans".

"We do not believe there is anything significant related to this review that has not already been disclosed in our public filings," Omnicare said in a statement. "Our programs related to the implementation of (the Medicare drug benefit) have been carefully reviewed by outside legal counsel, and we firmly believe that we have complied with all applicable laws and regulations with respect to these matters."

In the end, events like this happen all the time without justification. A few years ago, the DOJ investigated online education companies for taking too much state tuition money, but the investigation turned up nothing. These stocks trade near 52-week lows and eventually return to their highs if they are found innocent. Whether this company is innocent or not remains to be seen; however, at least one investor is showing his cards!

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Ford Motor Company (NYSE:F) reported a net loss of 19 cents per share for the third quarter compared to a loss of $2.79 per share a year ago. The news could signal the beginning of a successful turnaround for the troubled automaker and came as a surprise to many investors. Margins are growing, incentives are falling and sales are becoming more profitable.

Ford has traditionally been the weaker of the big three automakers as it does not have hedge fund backing, massive sales outside of the USA, or cost cutting already behind it. However, this earnings announcement indicates that they may be able to pull off a turnaround anyway. The company reported improved overseas sales, increased margins in the United States, and is ahead of its $17 billion cash outflow target for 2007-2009 period.

Ford also said it was close to selling its Jaguar and Land Rover units but its CEO said there are no longer any plans to sell the Volvo market. The company likely decided to hold off because of the lowered cost of a turnaround. The company leveraged its assets to borrow $23.4 billion last year, but now doesn't expect restructuring costs to reach even that level.

In the end, Ford is on track to reach profitability in 2009. This is a remarkable achievement given the short timeframe for their turnaround and the increased competition in the auto market. Combined, these factors make F a stock worth watching closely!

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Unisys Corporation (NYSE:UIS) is starting to feel the pressure from shareholders who believe the company is undervalued. One shareholder, MMI Investments, disclosed a 9.9% stake in the company and indicated that they plan on pushing the company towards pursuing strategic alternatives. Shareholders are hoping that the activist investors will be able to help the company turn itself around and come to value.

Unisys Corporation's poor growth record over the short and long term indicate a troubled and uncertain business model. The company's latest earnings announcement caused a 20% drop in the days surrounding the announcement while the company is averaging a -230% earnings surprise over the last six quarters - not exactly what investors want to see! Many shareholders are skeptical as to whether or not the company will be able to turn itself around.

Management has performed well in the past growing the company's earnings per share; however, recent losses and a lack of top line growth suggest that the company is facing serious problems. This becomes a big problem when you consider Unisys' long term debt that accounts for 98% of its total capital. This makes the balance sheet somewhat unsafe given that the company only has $448 million in cash and total debt amount to $1.04 billion.

In the end, there are a few good things about this company. First, the company's price to sales ratio sits at just 0.4x, making it one of the most undervalued in the sector. Meanwhile, the company did report strong cash flows during the last quarter, which is a good sign. However, there are many negative aspects of this company as well. Ideally, an activist shareholder would be able to seek strategic alternatives and turn thing around. This makes UIS a stock worth watching!

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TheStreet.com (NDAQ:TSCM) announced record traffic of over 6 million unique visitors to its recently-redesigned website each month. The company is benefiting from its acquisition of Corsis and other acquisitions that it has made recently in the financial sector. TheStreet.com reported record revenue of $16.1 million for the quarter - a 24% increase over the same time last year.

"We had a record quarter where our total revenue grew 24% from the same period last year," said Thomas J. Clarke Jr., chairman and chief executive officer of TheStreet.com. "With our recent acquisitions and the many other initiatives we have undertaken, TheStreet.com has dramatically altered and broadened the landscape of opportunities for the Company. I look forward to cohesively and profitably integrating these opportunities as we strive toward becoming the premier online destination for money."

TheStreet.com's acquisition of Corsis, a leading provider of custom solutions for advertisers, enabled it to shift into higher-margin advertising. The acquisition included the internet property Promotions.com, which is known for working with some of the largest brands in the world. The company's subsidiary, StockPickr, also become the first financial social networking website to surpass 100,000 user-generated portfolios.

These acquisitions, combined with a series of new partnerships, has propelled TheStreet.com's earnings and future outlook as it diversifies its revenue base and expands into other markets. All in all, TheStreet.com is definitely a high-growth stock that is worth watching!

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