SAC Capital Buys Up 5%+ Position in Pantry (PTRY)

Here's another 13G filing (passitve 5%+ investors) of note as reported at our mother site: http://www.streetinsider.com/13Gs

In a 13G filing on Pantry Inc. (Nasdaq: PTRY), SAC Capital and related funds disclosed a 5.3% stake (1.2 million shares) in the company. This is up from the 166K share stake the firm disclosed for the quarter ended September 30, 2006.

Headquartered in Sanford, North Carolina, The Pantry, Inc. is the leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country.

Run by Steven A. Cohen, SAC Capital is one of the world's largest and most powerful hedge funds.

Jove Partners Discloses 5.2% Stake in Lifetime Brands (LCUT), Says Company Would Benefit From Additional Expertise on its Board

In a 13D filing on Lifetime Brands, Inc. (Nasdaq: LCUT), Jove Partners disclosed a 5.2% stake (700K shares) in the company. The firm also noted that they have engaged in discussions with management, members of the board of directors, other shareholders of the Company and other relevant parties concerning, among other things, the business, operations, management, strategy, board composition and future plans of the company, and may do so again in the future.

The firm believes that the company would benefit from additional marketing and industry expertise on its board of directors, and have suggested individuals for consideration by the board.

Third Avenue Management Looks For Changes at Pogo Producing (PPP)

In a 13D filing after the close Monday on Pogo Producing Co. (NYSE: PPP), Third Avenue Management disclosed a 6.2% stake (3.6 million shares) in the company. The firm disclosed a letter to the company expressing their dissatisfaction with the company and its CEO.

In the letter the firm said, "we are notifying you that we are actively considering the various alternative courses of action with respect to our investment as described in item 4 of our recent Schedule 13D filing, which we may undertake alone or with others, in an attempt to generate a better return for TAM as well as for all of Pogo's shareholders."

Some changes the firm may propose includes: changes in the composition of the board of directors or management, including an increase in the size of the board of directors or in the nominees offered to fill any then existing vacancies on such board, changes to the certificate of incorporation or bylaws, changes in the capitalization or dividend policy, the acquisition or disposition of additional securities of the company and the sale of material assets or another extraordinary corporate transaction, including a sale transaction.

NOTE: Pogo Producing is also the target of activist investor Dan Loeb through his Third Point LLC hedge fund.

A Copy of the Letter:

Dear Mr. Van Wagenen:

Third Avenue Management LLC ("TAM"), on behalf of its advisory clients, currently owns 3.6 million common shares of Pogo Producing Company("Pogo"), representing a 6.2% ownership interest. We have been Pogo shareholders for approximately three years. TAM's philosophy is to investin strongly financed and well-managed companies, and we are typically long-term supportive shareholders. When we originally invested in Pogo, itmet our stringent investment criteria. However, during the three years thatwe have been shareholders, we have become increasingly disappointed with Pogo's operating performance and with your performance as CEO.

Particularly disconcerting is the deterioration in the company's financialposition. As the table below indicates, since 2003 net debt has increased by more than six times and net debt per mcfe of proved reserves has increased by more than five times. While we believe that the debt load is manageable, the apparent strategy of levering up during a period of historically high commodity prices is troubling.

In addition, the company's operations appear to have deteriorated markedly during the last three years. Production per share has dropped by more than 20%. On a unit of production basis, lease operating expense has increased by 178% and G&A has tripled. It is difficult to find a peer company whose operating costs have escalated as rapidly and to the high level that Pogo'shave. Although some increase in operating costs would have been understandable, given industry-wide cost inflation and hurricane related costs and production delays, the magnitude of these increases is alarming.

This combination of higher debt, lower production, higher operating costs,and the underwhelming results from your recent acquisition of NorthrockResources appear to have driven the poor relative performance of Pogo's stock over the last three years. Since the end of 2003, Pogo's stock is down 1% while the S&P Midcap Oil and Gas Exploration and Production Indexis up 78%. In May 2006, Moody's acknowledged the company's deterioration by downgrading Pogo's Corporate Family Rating to Ba3 from Ba2 citing "risingunsustainable reserve replacement costs, inconsistent production trends,and a sharp decline in organic reserve replacement."

It is readily apparent from the numbers contained in the chart below that Pogo is clearly in need of stronger leadership and a new strategic direction.

TABLE

Despite Pogo's poor performance over the past several years, your compensation has been rising. In 2005, you received an 11.8% increase in your base salary and your bonus grew by 25%. You also received a restricted stock award valued at approximately $2 million, up 55% compared to 2004. We believe that if Pogo's compensation structure were tied more closely to performance, these significant increases would not have occurred. These increases are even more concerning because they serve to increase the already overly generous termination provisions of your employment agreement, which provides, among other things, that in the event of a termination due to a change of control, you will receive lump sum payments of five years' salary and bonus plus an amount equal to four times the fair market value on the grant date of your most recent equity award.

We have no doubt that the value of Pogo and its business is substantial. To date, however, you have not been able to maximize shareholder value. It is clearly time for a change in direction. As a result, we are notifying you that we are actively considering the various alternative courses of action with respect to our investment as described in item 4 of our recentSchedule 13D filing, which we may undertake alone or with others, in an attempt to generate a better return for TAM as well as for all of Pogo's shareholders.

Sincerely,

Curtis Jensen

Portfolio Manager, Co-Chief Investment Officer

Ian Lapey

Portfolio Manager

Brooks Automation Holder Nierenberg Votes to Re-Elect Entire Slate of Directors

In an amended 13D filing after the close on Brooks Automation Inc. (Nasdaq: BRKS), 6.4% holder Nierenberg Investment Management said they disagree with the recent recommendation by Institutional Shareholder Services and Glass Lewis which both told client to withhold their votes from several incumbent Brooks Automation directors. The firm said they voted all of their shares enthusiastically to re-elect the entire BRKS director slate.

Nierenberg said, "We believe that the formulaic approach taken by ISS and GL would, if followed in this case, cause shareholders to withhold votes from directors who have been doing difficult work exceptionally well. We believe that doing the right thing should be rewarded, not punished."

From the Purpose of Transaction section of the filing:

Recently Institutional Shareholder Services (ISS) and Glass Lewis (GL) recommended that clients withhold their votes from several incumbent BrooksAutomation (BRKS) directors. We strongly disagree with ISS and GL and have voted all of our shares enthusiastically to re-elect the entire BRKS director slate.

We believe that the Board of Directors of BRKS has improved dramatically the quality of its corporate governance in the past year. First, the Board announced that former Chairman and CEO Robert Therrien would not be re-nominated for another term on the Board. Second, when the Wall Street Journal broke the story last March about the appearance of back-dated stock option grants made to Mr. Therrien, the Board immediately appointed a special committee of newer, independent directors to examine the matter and empowered the special committeeto engage independent legal and accounting counsel. Later, after several months of intensive examination of the Therrien and other suspect stock option grants,the two board members who had been the Board's compensation committee at the time the Therrien grants were made resigned from the Board of Directors. Now BRKS' Board has a capable new Chair; the former Lead Director is no longer on the Board; and BRKS' compensation committee and its nominating and governance committee also have new Chairs. The company is publicly committed to cooperatingfully with federal examinations of past option practices and to never repeatingthe unfortunate practices of the past. Fundamentally, we believe that BRKS has a strong balance sheet, a sensible corporate strategy, and excellent management to execute the strategy.

None of the directors opposed by ISS and GL served on the BRKS Board when the problematic stock options were granted to the former Chairman and CEO. In fact, directors Robert Lepofsky and Mark Wrighton did not join BRKS' Board until the company acquired Helix Technology late in 2005. Director Krishna Palepu joined the Board at about the same time precisely to improve the quality of its governance.

In conclusion, we have voted enthusiastically to re-elect all eight incumbent BRKS directors. We believe that the formulaic approach taken by ISS and GLwould, if followed in this case, cause shareholders to withhold votes from directors who have been doing difficult work exceptionally well. We believe that doing the right thing should be rewarded, not punished.

Ken Griffin's Citadel Accumulates a Large Stake in NVE Corp (NVEC)

Here's another interesting 13G filing as noted at our main site http://www.streetinsider.com/13Gs

In a 13G filing on NVE Corp. (Nasdaq: NVEC), hedge fund Citadel LP disclosed an 8.3% stake (384K shares) in the company. The fund did not show a stake in NVE for the quarter ended Sept 30, 2006.

Started by market-guru Kenneth Griffin in his Harvard dorm room in 1987, Citadel has become one of the world's largest hedge funds.

NVEC is a battleground between long and shorts. The stock rises and falls related to the promise of MRAM.

Shares are higher on the news.

Icahn Targets Motorola (MOT)

Icahn sets his sights on Motorola (NYSE: MOT):

A short time ago, Motorola confirmed receipt of notice from certain Carl Icahn entities for the nomination of Carl C. Icahn to Motorola's Board of Directors at the Company's 2007 Annual Meeting of Stockholders.

The notice contained no additional information regarding his intentions. The Company has not yet set a date for its 2007 Annual Meeting.

The company said the notice states that the Carl Icahn entities "may be deemed to beneficially own, in the aggregate, 33,529,000 shares, representing approximately 1.39% of the Corporation's outstanding shares."

Samson Investment Co Offers to Acquire PYR Energy (PYR) for $1.23/Share

In a 13D filing on PYR Energy Corp. (AMEX: PYR), Samson Investment Company disclosed a letter to the company pursuant to which Samson notified the company of its proposal to offer to purchase 100% of the outstanding common stock at a cash price of $1.23 per share.

Samson requested a response to the proposal by no later than 4:00 p.m. Central Time on February 1, 2007.

Blum Capital Accumulates 5% Stake in Getty Images (GYI)

In a 13D filing after the close Friday on Getty Images Inc. (NYSE: GYI), Blum Capital disclosed they accumulated a 5% stake (3 million shares) in the company.

In a pretty standard disclosure, Blum said, while they have no current plans, they may engage in communications with shareholders and management. The firm also said they may discuss ideas that, if effected may result in any of the following: the acquisition by persons of additional Common Stock of the Issuer, an extraordinary corporate transaction involving the Issuer, and/or changes in the board of directors or management of the Issuer.

Shamrock Activist Value Fund Raises Coinstar (CSTR) Stake to 6.28%

In an amended 13D filing on Coinstar Inc. (Nasdaq: CSTR), Shamrock Activist Value Fund disclosed a 6.28% stake (1.74 million shares) in the company. This up from the 5.22% stake (1.45 million shares) the firm disclosed in the original May 13D filing.

In the original filing, Shamrock said it had no current plans or proposals with respect to the Company or its securities of the types enumerated in paragraphs (a) through (j) of item 3 to the form Schedule 13D promulgated under the Act. This has not been changed.

Applebee's (APPB) Holder Breeden Partners Express Concerns With Bonus Eligibility Criteria

In an amended 13D filing on Applebee's International Inc. (Nasdaq: APPB), 5% holder Breeden Partners disclosed a new letter sent to the CEO of the company. In the letter the firm expresses concerns with the bonus eligibility criteria adopted by the Compensation Committee. Breeden also offered specific suggestions for improving the company’s compensation policies.

In the letter Breeden said, "Even if the Committee’s charter did not so clearly contemplate it, peer group performance comparisons should be a major part of the compensation formula for all senior officers, as they are across many well-run American businesses. However, despite having the next to worst performance of peer companies as discussed above, the top 5 officers of Applebee’s received over $30 million in total compensation2 over the period 2003-2005. The board’s willingness to award pay without performance seriously weakens the sense of urgency management should feel about the need to cure the company’s performance issues."

Breeden also said Burton Sack should resign from the Committee, saying he operates restaurants that compete with those of the company.

Breeden Partners was founded by former SEC Chairman Richard C. Breeden.

A Copy of the Letter:

Dear Mr. Conant:

I am writing to you in your capacity as Chairman of the Compensation Committee (the “Committee”) of Applebee’s International, Inc. on behalf of Breeden Partners, which owns 3.9 million Applebee’s shares, or just over 5% of the company’s outstanding shares. We wish to express our concerns with the bonus eligibility criteria adopted by the Committee, particularly the failure to utilize relative shareholder returns or other measures of competitiveness. In addition, we want to offer specific suggestions for improving the company’s compensation policies.

“In determining the long-term incentive component of CEO compensation, the Executive Compensation Committee will consider, among other matters, the Company’s performance and relative shareholder return...” Charter, Applebee’s Compensation Committee

Given that the slide in the company’s operating performance has now entered its fourth year, it is long past time to start basing senior executive compensation in significant part on “relative shareholder return,” exactly as the Committee’s charter suggests. Unfortunately, the “performance criteria” recently adopted by the Committee under Applebee’s 1999 Management and Executive Incentive Plan and the 2001 Senior Executive Bonus Plan as disclosed in the company’s Form 8-K don’t appear to measure relative performance in any area.

Unless there is detail that has not yet been disclosed, the Committee’s “performance criteria” seem vague and ineffectively targeted. The result is essentially a license to pay anything to anyone, irrespective of actual performance in the marketplace. While I understand that the Committee held back cash bonuses for 2005 on a discretionary basis, the Committee should revise its current criteria formally to put the “performance” back into “performance criteria.” At the same time, other compensation practices should also be changed to eliminate unnecessary expense and unhealthy practices.

Applebee’s Dreadful Performance Record

The starting point for evaluating Applebee’s compensation practices should be the company’s performance, which has been abysmal in recent years. As shown in the table below, during the three years ended December 1, 2006 (immediately before the Committee adopted the current performance metrics), Applebee’s was next to worst in creating total shareholder return (“TSR”) of any publicly traded casual dining company (13th out of 14 companies).

TABLE

No matter which comparison to its peers one chooses to use,1 Applebee’s shareholders have lost hundreds of millions of dollars in value compared to what they would have enjoyed had Applebee’s achieved a competitive level of performance. The Committee’s compensation scheme seems to ignore this reality.

Pay Without Performance

Even if the Committee’s charter did not so clearly contemplate it, peer group performance comparisons should be a major part of the compensation formula for all senior officers, as they are across many well-run American businesses. However, despite having the next to worst performance of peer companies as discussed above, the top 5 officers of Applebee’s received over $30 million in total compensation2 over the period 2003-2005. The board’s willingness to award pay without performance seriously weakens the sense of urgency management should feel about the need to cure the company’s performance issues.

The disastrous performance of Applebee’s share values during the past three years mirrors the steady deterioration that has been going on in Applebee’s operations. Among other important measures, same store sales, margins on company operated restaurants and return on invested capital have all fallen sharply in recent years.

TABLE

While management routinely offers various excuses for the company’s deteriorating performance, serious internal problems appear to underlie Applebee’s lack of results. These issues include:

• a fundamentally flawed growth strategy;

• ineffective leadership during several years prior to Dave Goebel becoming CEO;

• serious ongoing internal weaknesses in marketing and finance;

• poor capital allocation policies;

• excessive overhead costs;

• an ineffective board;

• poor governance practices of various types; and

• inability to make timely decisions of consequence.

The compensation issues at Applebee’s appear to reflect a broader set of problems at the top of the company. Left uncorrected, the deterioration in the company’s fundamentals will continue to cause serious and long-lasting harm to the company. In this situation, the board needs to be using every tool at its disposal, including the compensation system, to correct these problems and ignite growth.

Unhealthy Compensation Practices Encourage Business Failure

In recent years the company has followed several unhealthy compensation practices that ought to be ended.

Personal Use of Corporate Aircraft

On several occasions we have expressed our objection to management to the company’s practice of allowing Applebee’s executives to use corporate aircraft for personal use.

On 29 occasions from April 2006 through January 2007, Applebee’s corporate aircraft flew into and out of Galveston, Texas, where former CEO Lloyd Hill happens to own a beach house. The nearest Applebee’s restaurant is more than 40 miles away. Though Mr. Hill ceased to be CEO in September 2006, company planes continue the Galveston shuttle.

We do not believe that shareholder interests are served by turning corporate aircraft into flying limousines for senior executives’ personal vacations. Just as importantly, this practice is inconsistent with the wholesome “neighborhood values” that Applebee’s claims to embody as a company. I am quite certain that most Applebee’s customers would be shocked to find out that a portion of the cost of their meal goes to fly the former CEO back and forth to his beach house aboard a corporate plane.

Paying Executives’ Income Taxes with Shareholder Funds

It is bad enough that at a time of rapidly shrinking margins the company operates more aircraft than it needs for business purposes. However, the Committee also decided that Applebee’s executives should be able to take personal trips aboard Air Applebee’s as a gratuity, paying absolutely nothing in cost reimbursement for the privilege. In addition to not requiring executives to pay any of the costs for their personal travel, the Committee has taken the extraordinary step of requiring shareholders to pay the income taxes owed by the CEO and other senior executives for their aerial vacation tours.

Grossing up the income of the CEO to cover the income taxes he owes for free flights on company planes is a reprehensible practice, particularly for a company beset by excessive overhead and declining shareholder value. This policy is emblematic of the board’s insensitivity to, and disregard for, the company’s earnings, the interests of its shareholders and basic values.

These senseless practices cannot be justified by the argument your executives have made in response to our criticisms that that the aggregate cost of such waste is not too great. Beyond the fact that little things add up, principles are important irrespective of the dollar amounts. One of those principles is the fundamental importance of using shareholder funds as wisely as possible. Hopefully as the leader of a major American business you would agree that it isn’t just what you pay, but how you pay it that is important to the ethical and business tone within the company.

Turning a blind eye to egregious expenses for the CEO and other senior executives - even if they are relatively modest amounts - sends the wrong message across the Applebee’s system that unjustifiable expenses can be overlooked. A better message would be that everyone from the Chairman on down needs to identify every possible way to improve efficiency and profitability. It is our strong hope that, as conscientious directors, the Committee will terminate the tax gross-up policy forthwith, along with ending personal use of Air Applebee’s altogether. This would send a positive signal to Applebee’s executives as well as to the entire employee base that the board means business in cutting overhead and restoring growth in profitability.

The Committee’s Bonus Criteria

The performance criteria selected by the Committee cover important issues, but they don’t do so as effectively as they should. While I will briefly mention problems with each of the criteria identified in the company’s 8-K filing last month, each of these criteria could benefit from more extended discussion. We would be happy to discuss alternatives with you at any time. In the meantime, everyone would benefit from increased disclosure of the standards and benchmarks for which executives will be held accountable. Frankly we do not see how you can expect any incentive plan to be successful in creating the desired results without a clear articulation of required targets.

At the outset, it is worth noting that four of the five criteria used by the Committee overlap one another to a very significant degree. Turnover, guest preferences and traffic growth are all component parts of restaurant operating profit. Since they are already included in restaurant operating profit, the company doesn’t need to pay twice for reduced employee turnover, guest preferences and traffic growth. These criteria should be deleted altogether.

A. Employee Turnover. As a simplistic matter, it sounds sensible to reward management for reducing employee turnover, and turnover is a significant issue in any food service company. Companies will benefit if they can reduce turnover without incremental cost, though companies will not necessarily benefit if a reduction in turnover is accomplished by overpaying staff, lowering selection standards or retaining poor performers. While the public disclosure does not make clear how this factor (or, indeed, the other criteria) will be applied, it has the potential to encourage faster than necessary wage cost spirals, as well as to create a disincentive to terminate problem or unproductive employees.

B. Guest Preference Opinion Polls. Guest preference opinion polls are another inappropriate bonus factor. For three years same store sales have declined as Applebee’s management lost touch with its customer base. That is the most accurate and relevant measure of guest preferences. However, the Committee has evidently decided to base compensation in part on opinion polls concerning guest preferences rather than actual results. We are all familiar with the fact that opinion polls have built in margins of error that can be significant, and results can easily be manipulated depending on the exact wording of the questions. Since guest preferences are already a component of restaurant operating profit, we would suggest that this element be turned into a minimum eligibility threshold. For example, you could require that the company generate a minimum percentage (such as 3%) annual growth in same store sales in order for executives to be eligible for some percentage (such as 25%) of their overall incentive payments.

C. Traffic Growth. Like reducing turnover, this factor is important to any restaurant chain. However, if traffic growth in restaurants is achieved by heavy discounting through coupons, “two for one” promotions or price reductions that significantly reduce average check size and profit margins, then traffic growth could be counterproductive rather than beneficial. Such discounting is a potentially dangerous practice that causes customers to wait for further discounts before returning to the restaurants, making this a factor that could unwittingly create counterproductive incentives.

D. Restaurant Operating Profit. As long as Applebee’s continues to own nearly 500 company-owned restaurants, the level of restaurant operating margins in these company-owned facilities is obviously critical to Applebee’s financial results. Even if the number of company-owned restaurants is reduced as we have suggested, this factor will still be an important driver of profitability. However, we would suggest that as a factor in computing bonus payments two changes should be made. First, we believe that a specific minimum hurdle rate should be required in order to be eligible for some portion of annual incentive targets.3 Second, we think that this factor should be based on comparative performance among the peer companies.

E. Earnings Per Share. Growth in EPS does not always result in growth in share price. Management can cause EPS to increase through use of accounting conventions and accruals even if operating margins are declining. Of course EPS is also affected heavily by share repurchases, without necessarily reflecting any performance improvement. For these and other reasons we believe that measures such as TSR, Economic Value Added (“EVA”) or free cash flow generation are superior to EPS in measuring financial performance for bonus eligibility purposes.

This is an area where performance comparisons are essential. If Applebee’s increases EPS (or TSR or EVA) but does so at a rate lower than every one of its competitors, then surely incentive compensation would not be warranted. During the past three years 93% of Applebee’s competitors had superior performance in creating shareholder wealth. If that record continues, executives should be replaced, not awarded bonuses.

By eliminating any bonus component comparing Applebee’s performance to that of its competitors, and by failing to set minimum performance targets that can be rigorously measured, the Committee appears to have made it possible for Applebee’s management to earn incentive compensation even if their performance is terrible. We hope that is not what the Committee intended, and that you will act promptly to rectify this problem. We believe in awarding incentive compensation, but we think it should be earned by meeting serious performance targets, not given out as an entitlement. Accountability for performance is essential to avoid pure waste of corporate assets.

Our Suggestions

1. There should be a moratorium on any incentive compensation for any tier one executives so long as TSR remains negative.4 Similarly, incentive compensation should be zero if the company remains in the fourth quartile of relative performance in generating TSR.

2. A large proportion of incentive compensation (such as 50-75%) should be based on relative measures of performance compared to the company’s publicly traded casual dining competitors shown on page two of this letter.5

3. Growth in average per restaurant royalty fees from franchise operations should be included as an incentive target for relevant executives (including the CEO and CFO), since franchisees represent 73% of the company’s system.

4. The level of free cash flow would be a healthy measure for some portion of incentive opportunities, especially for the CEO and CFO.

5. Minimum relative performance in generating TSR or EVA (such as being in the top 20%) should be a significant part of every executive’s target incentive eligibility. All executives should have a vital stake in the company outperforming its peers.

6. Personal use of corporate aircraft should be banned.6 Tax gross-up payments made during the last three years should be repaid to the company.

7. The Committee should retain new compensation consultants. These consultants should not have previously worked for the company, and they should not perform any other work for the company other than advising the Committee.

Compensation Committee Independence

It is a fundamental principle of healthy governance that the board’s compensation committee should be comprised entirely of directors who are independent of management, both in fact and in appearance. Indeed, Applebee’s Proxy Statement for 2006 states “[n]o current or past executive officers or employees of the Company serve on our Executive Compensation Committee.” However, one member of the Committee, Mr. Burton Sack, served as an Executive Vice President from 1994 to 1997. Prior to serving as a senior officer, Mr. Sack sold his franchises to the company for millions of dollars. Today he operates restaurants that compete with those of the company. Given these facts, we believe that Mr. Sack should resign from the Committee.

I would have preferred to write to you privately concerning these issues and our suggestions to improve the company’s practices. However, in the current circumstances our lawyers have advised us that we must publicly file this letter with the United States Securities and Exchange Commission. Nonetheless, we hope that you will not wait until the 2007 annual meeting before addressing the company’s compensation issues. Please don’t hesitate to call me at (203) 618-0065 at any time to discuss any of the foregoing ideas.

Sincerely,

Richard C. Breeden

CtW Investment Group Calls Station Casinos (STN) Buyout Offer Inadequate

In a letter directed to members of the Special Committee of the Board of Directors of Station Casinos Inc. (NYSE: STN), CtW Investment Group urged them to reject as inadequate the proposal by Fertitta Colony Partners to acquire the company for $82 per share. The group believes the fair value of the company is in excess of $97 a share.

The group also said they are concerned that Special Committee Chairman James E. Nave may not be adequately independent of Fertitta Colony Partners given his recent role in facilitating a strategic acquisition by the Fertitta family’s investment arm. The group is calling for Mr. Nave to step down.

CtW Investment Group said the pensions funds they work with control an estimated 171,600 shares of Station Casinos and other public employee pension funds in which CtW union members participate own an additional 2.5 million shares.

Blair (BL) Holder Holtzman Plans to Vote Against Merger Deal, Wants Shareholder List

In a 13D filing on Blair Corp. (AMEX: BL) 5.1% holder Seymour Holtzman said he will vote against Appleseed's Topco, Inc.'s acquisition of the Issuer at the price of $42.50 per share. Additional, Mr. Holtzman requested a shareholder list from the Issuer so he may communicate with stockholders of the Issuer regarding the proposed merger.

Delafield Hambrecht Calls for Immediate Sale of Cost-U-Less (CULS)

In an amended 13D filing on Cost-U-Less Inc. (Nasdaq: CULS) filed yesterday afternoon, 9.5% holder Delafield Hambrecht disclosed a letter sent to the company noting that they still believe the stock is significantly under-valued and is ill-suited to be publicly owned. The firm is calling for an immediate sale. Delafield Hambrecht said they would participate as a potential buyer in the auction.

In the letter the firm said, "As the largest owners of the Company, we maintain that our capital would be better utilized by realizing fair value through a sale of the Company today than by continuing to wait for new investors to embrace a small, illiquid company whose capital is chewed up by the cost of being public. We have been patient long enough and request that you immediately appoint an investment bank to market the Company broadly through an auction process to both strategic and financial buyers. Although strategic investors should pay more for the Company, financial buyers will pay a healthy premium to today’s market price. As you know, we would participate as a potential buyer in the auction of the Company since all along we have had an interest in buying it. We may or may not be the ultimate buyer but realizing significantly higher value through a sale is preferable to us to continuing to watch our capital stagnate."

A Copy of the Letter:

Dear George:

Delafield Hambrecht, Inc. and certain other investors together own approximately 9.5% of Cost-U-Less, Inc. (the “Company”). We have communicated with you in person, at the 2006 annual shareholders’ meeting and in writing our belief that the Company is significantly under-valued and is ill-suited to be publicly owned. We have filed two 13D statements (November 1, 2005 and April 26, 2006) elaborating our thinking. Our views have not changed.

The Company’s enterprise value today is approximately $30 million (adjusting for the cash raised in the St. Croix store sale/leaseback). EBITDA in 2006 and 2007 should be approximately $7.0 million and $7.5 million, respectively. Adding back $1.0 million in public company costs, 2007 pro forma EBITDA to a buyer would be $8.5 million. Assuming we are correct, the market currently values our Company (on an enterprise value basis) at 3.5x EBITDA. Clearly, this is too low and a sale of the Company would yield a significantly higher price than we enjoy today.

Please note that we are not casual observers of the Company and our estimates assume the opportunities (new Grand Cayman store, lower oil prices, etc.) you enjoy and the challenges you face (coup in Fiji, Costco opening in Kauai, etc.). Furthermore, we do not assume any impact for other synergies a strategic buyer might realize – purchasing power, employee redundancies, real estate consolidation, etc. Value is building in the business; however, the market refuses to recognize it.

As the largest owners of the Company, we maintain that our capital would be better utilized by realizing fair value through a sale of the Company today than by continuing to wait for new investors to embrace a small, illiquid company whose capital is chewed up by the cost of being public. We have been patient long enough and request that you immediately appoint an investment bank to market the Company broadly through an auction process to both strategic and financial buyers. Although strategic investors should pay more for the Company, financial buyers will pay a healthy premium to today’s market price. As you know, we would participate as a potential buyer in the auction of the Company since all along we have had an interest in buying it. We may or may not be the ultimate buyer but realizing significantly higher value through a sale is preferable to us to continuing to watch our capital stagnate.

You and the other directors have an obligation to the shareholders to act in the interest of the owners of the Company. In the event the Company has not publicly initiated this process by the spring, we will propose certain actions at the next meeting of the shareholders, including the election of directors who support our point of view.

Sincerely,

J.D. Delafield

Chairman

Delafield Hambrecht, Inc.

Chapman Capital reiterates its demand for a Cypress Semi (CY) Reorganization

UPDATE: Activist investor Chapman Capital reiterates its demand for a Cypress Semiconductor Corporation (NYSE: CY) reorganization.

The firm said it has been contacted by Chairman Rodgers related to its recent proposal, but said Rodgers failed to rebut even one of its pro-split arguments.

Chapman reiterated several core components of its reorganization proposal ahead of the 01/27 earnings conference call. 1. "No Firm Cypress Acquisition Bid Was Made Due To Rogers'/Board's Refusal to Solve Rather than Merely Identify Deal Hurdles. 2. "A Premium Bid Over Market Value Is Not Requisite to an "Adequate" Merger Proposal"

Link to Press Release

Link to Past Chapman activity on CY

Morgan Stanley Disappointed After Share Class Proposal Rejected

In a 13D filing on New York Times (NYSE: NYT), large shareholder Morgan Stanley disclosed a letter send to the board after the company refused to include their shareholder proposal which would have put the fate of company's two-class share structure to a vote. The firm said they were disappointed in the action, saying, "by excluding the proposal from the proxy, the Company has left the Class A shareholders with limited avenues for expressing their dissatisfaction with the poor performance of the managers of their business."

The firm also said, "Ordinarily when we are dissatisfied with the management of a company in our portfolio, we sell our investment. However, The New York Times Company is an exceptional case. Barron's recently reported that several independent analysts have calculated that the Company's shares are worth 50% more than the current stock price. We also believe that the shares do not reflect the intrinsic value of the Company if it were managed and governed properly. After patiently holding the stock for more than ten years, we do not believe that we would be serving our clients' best interests if we sold at such a substantial discount to fair value."

Morgan also noted that at last year's annual meeting approximately 30% of Class A votes were withheld from Class A Directors, reflecting shareholder dissatisfaction. The firm said as another annual meeting approaches Class A shareholders must again consider whether to withhold their votes.

Large Electro Scientific (ESIO) Holder Nierenberg Investment Comments on Proposals to Enhance Shareholder Value

In an amended 13D filing on Electro Scientific Industries Inc. (Nasdaq: ESIO) 11.6% holder Nierenberg Investment Management comments on their proposal that the company put excess cash to work to maximize shareholder value. The firm also commented on yesterday's proposal from ESIO's largest shareholder, Third Avenue Management LLC, which was advocating a combined share repurchase and dividend program.

From the 'Purpose of Transaction' section of the filing:

Our proposal that ESIO put excess cash to work to maximize shareholder value seems to be progressing. We cite three recent developments to illustrate our point.

First, and foremost, we thank ESIO's management and Board of Directors for their constructive and timely announcement yesterday reiterating their commitment to enhancing shareholder value. We know that ESIO is working to prepare it ssubstantive response to our suggestions. As current and former public company board members ourselves, we appreciate that doing this the right way takes time. We are prepared to be patient while good people do the right thing.

Second, we note the Schedule 13D filed earlier today by ESIO's largestshareholder, Third Avenue Management LLC. We particularly note the thoughtfulletter from Third Avenue's Co-Chief Investment Officer, Curtis R. Jensen, toESIO's CEO, Nick Konidaris, advocating a combined share repurchase and dividend program to improve ESIO's return on equity (ROE) and tangibly demonstrate the company's commitment to maximizing shareholder value. Though Third Avenue's suggestions differ from those in our last 13D, we think they have improved our original ideas.

Third, we note with enthusiasm today's announcement that United Microelectronics Corp. (UMC), which is Taiwan's second largest contract chip manufacturer, will use its excess cash to retire fully 30% of its outstanding shares and pay shareholders a one time cash dividend. Taiwanese technology companies ares howing American technology companies how to use cash to build shareholder value.

In conclusion, we would like to update the Schedule 13D to disclose that in two separate recent conversations we have told ESIO's CEO and Board Chairman that we do not require the company to use a one time cash dividend as the only or principal way to return excess cash to the shareholders. As Mr. Jensen's letter points out so powerfully, there are other perfectly acceptable ways to use excess cash to build shareholder value. If, for example, ESIO's Board and advisors were to conclude that the best way to improve ROE were to repurchase shares, we could support that decision with just two conditions. First, we would want the size of the repurchase program to be large enough that it would meaningfully boost both ROE and earnings per share, like we believe UMC's program will. And, second, we would like ESIO to make a continuing commitment to use excess cash flow to repurchase a significant percentage of shares on an ongoing basis. To illustrate the size of programs which could be acceptable tous, we could support a one time repurchase of six million shares, which is over 20% of the outstanding share count, succeeded by a continuing program to repurchase at least onemillion more shares annually.

The previous statements by the Reporting Persons to their views regarding their investment in ESIO represent solely their own analyses and judgments, based on publicly-available information and their own internal evaluation thereof. Those statements are not intended, and should not be relied on, as investment advice to any other investor or prospective investor. To the extent those statements reflect assessments of possible future developments, those assessments are inherently subject to the uncertainties associated with all assessments of future events; actual developments may materially differ as a result of circumstances affecting ESIO and/or extrinsic factors such as developments inthe company's industry and the economic environment. The Reporting Personsreserve the right to change their internal evaluation of this investment in thefuture , as well as to increase or decrease their investment depending on theire valuation, without further amending their Schedule 13D except as required by applicable rules.

Shamrock Activist Value Fund Discloses 5% Stake in TNS (TNS); Wants $6/Share Dividend, New Directors

In a 13D filing on TNS Inc. (NYSE: TNS), Shamrock Activist Value Fund disclosed a 5.02% stake (1.2 million shares) in the company. The firm also disclosed a letter sent to the company.

The firm said the four broad areas they want to discuss with the company are:

1. Disclosure of Key Financial Targets: Propose that the Board disclose EBITDA, FCF (free cash flow: operating cash flow less maintenance capital expenditures) and ROIC (return-on-invested capital) targets for FY 2007 and FY 2008

2. Long-Term Incentive Compensation: Disappointed that the most recent issuance of restricted stock had no alignment to internal financial metrics that, we believe, correlate to long-term shareholder value creation

3. Capital Management Strategy: Urging Board to consider distributing to shareholders approximately $150mm of cash or $6.00 per share.

4. Board Composition: Encouraging the Board to recruit immediately two new independent directors

A Copy of the Letter

Dear John:

Thank you for your call yesterday explaining the Board’s unwillingness to participate in a proposed conference call with shareholders of TNS (the “Company”). You indicated that the Board considered the risks of selective disclosure on such a call too significant.

The Shamrock Activist Value Fund’s (“SAVF”, “our”, “we”) intention was to share with the Board a set of ideas that it believes would enhance value and begin to restore trust and confidence between shareholders and the Board; we only asked that the Board listen on this proposed call. Following the 2006 fiscal year, all TNS stakeholders should strive for improved communication and understanding in 2007.

The four broad areas we want to discuss are:

1. Disclosure of Key Financial Targets: We propose that the Board disclose EBITDA, FCF (free cash flow: operating cash flow less maintenance capital expenditures) and ROIC (return-on-invested capital) targets for FY 2007 and FY 2008. With this critical information, shareholders can judge for themselves the performance of management and the Board and whether or not an offer for the Company is adequate.

2. Long-Term Incentive Compensation: A Board’s design and implementation of an overall compensation plan, particularly the long-term incentive elements, represent a vivid lens to its governance. We were disappointed that the most recent issuance of restricted stock had no alignment to internal financial metrics that, we believe, correlate to long-term shareholder value creation. I will send to you under separate cover a summary compensation “white paper” outlining a conceptual framework consistent with emerging best practices that seek to provide a meaningful relationship between pay and performance.

3. Capital Management Strategy: We urge the Board to consider distributing to shareholders approximately $150mm of cash or $6.00 per share. Because the Company has a solid customer base, and steady and recurring revenues, it should not require the current level of financial flexibility. We believe an overly capitalized balance sheet often results in poor capital allocation decisions and presents the opportunity for a financial buyer to capture value at the expense of the existing owners. Capital can be returned to shareholders through a variety of mechanisms: dividends, special dividends, share repurchase, etc. Importantly, the Board should seek to articulate a comprehensive capital management policy given the Company’s current corporate strategy.

4. Board Composition: We encourage the Board to recruit immediately two new independent directors. The directors should be selected through a disciplined process that specifies key skills and attributes that compliment those of the existing Board members and match well the strategic challenges and opportunities of the Company over the next several years. We also strongly suggest that you actively seek input in good faith from your shareholders during this process. Fresh perspectives seem vital and appropriate given the recent history at the Company.

John, I wish to discuss with the Board at an in-person meeting these and other matters as soon as practical. Irrespective of the former CEO’s offer, or any other offer, it is our belief that these ideas would be beneficial to all shareholders. I look forward to hearing from you and we welcome the opportunity to share our views and actively participate in efforts to improve long-term shareholder value.

Kind regards,

Michael J. McConnell

Electro Scientific (ESIO) Largest Shareholder Recommends One-Time Dividend and Long-Term Buyback

In a 13D filing on Electro Scientific Industries Inc. (Nasdaq: ESIO), the company's largest shareholder, Third Avenue Management LLC (14.4%), noted they changed their filing status from 13G to 13D. The firm sent a letter to CEO expressing their thoughts and recommendations regarding possible share repurchases and/or extraordinary dividends as a means of returning value to the Issuer’s stockholders. In the Letter, the firm stated that it believes that if the Issuer were to consider a return of capital to its shareholders, that some combination of a one-time dividend and a committed, long-term share repurchase program would effectively balance the needs of the Issuer and those of the outside passive shareholders (like Third Avenue Management).

In the letter, the firm said, "Were the Board to consider a return of capital to shareholders, as I suggest it does, my sense is that some combination of a one-time dividend (say $2 per share) and a committed, long-term share repurchase program would effectively balance the needs of the corporation and those of the outside passive shareholders like TAM."

NOTE: Another large Electro Scientific shareholder, Nierenberg Investment Management, has been pushing the company to issue a special one-time cash dividend.

A Copy of the Letter:

Dear Nick,

It was a pleasure meeting recently with you, John and Craig. In the spirit of being constructive, I wanted to share some thoughts and recommendations regarding our conversation on share repurchases and extraordinary dividends as a means of returning value to shareholders. As you know at September 30, 2006 Third Avenue Management (“TAM”) owned 4.5 million shares of Electro Scientific Industries’ common stock (“ESI Common”). TAM has been a long-term and supportive shareholder. While uninterested in short-term stock price performance, we remain a keen observer of the business. We believe the company remains overcapitalized, and that a return of capital, in some form, ought to be considered very seriously.

From the TAM point of view, the facts, observations, and recommendations are these:

•
Our preference is for management to use excess resources in the business to grow the per share value of the business. Only if management concludes that it is not likely to use that surplus capital in such a manner should it consider returning that capital to shareholders (i.e., the corporation comes first);

• A strong balance sheet is a competitive advantage, and is especially critical in cyclical industries like the ones in which the company participates;

• In the 10 years we have owned ESI Common, the company has never made a large acquisition using either cash or stock, and has carried large cash balances during the entire period, suggesting that the company does, indeed, have an element of surplus capital;

• The company’s operations have - over the course of several business cycles - been self-funding;

• In the past few years the company appears to have earned less than 4% on its portfolio of cash and securities, which comprise nearly one-half of the company’s assets. While net interest income appears to be rising, it makes little economic sense to retain so much capital earning sub par returns;

• A committed share repurchase program requires management to make a judgment about the value of its share price since, presumably, management will not pay more than “fair value” for its shares or more than the company is worth. Share repurchase programs are most effective when management acts opportunistically in this regard;

• As the attached analysis suggests, the benefits of a long-term share repurchase program likely accrue more to long-term holders of ESI Common, in the form of higher reported EPS and the avoidance of taxes at the shareholder level, in contrast to a large, one-time dividend whose benefits would benefit even short-term oriented investors;

• A share repurchase program and an extraordinary dividend almost certainly carry different “signals” to the market (i.e., share repurchases suggest undervaluation of the shares, a dividend may connote limited growth opportunities);

• A share repurchase program can be implemented in various forms, including Open Market Purchases, Fixed Price Tender Offers, Dutch Auction Tender Offers and Privately Negotiated Transactions;

• A share repurchase program, in contrast to a one-time dividend, may be modified in the case of a prolonged industry downturn, or should an extraordinary growth opportunity present itself, and the company needs capital;

• Were the company to need capital, it appears that it has the requisite and properly-oriented shareholder base that might participate in a rights offering, a cost effective, quick and shareholder friendly approach to capital raising;

• Given the company’s extensive international business, it’s not clear how much of the company’s cash resides outside the United States and how much would need to be repatriated in order to pay a large dividend. On the surface it does not seem to make sense to pay U.S. taxes on repatriated funds simply to return capital to shareholders;

• It’s likely that a large, one-time extraordinary dividend would correlate with a smaller market capitalization. Less clear, perhaps, is the effect of a long-term share repurchase program on the company’s market capitalization;

• A share repurchase program, if large enough, may adversely affect share liquidity, in contrast to a dividend, which would have no such effect on the stock, per se.

Were the Board to consider a return of capital to shareholders, as I suggest it does, my sense is that some combination of a one-time dividend (say $2 per share) and a committed, long-term share repurchase program would effectively balance the needs of the corporation and those of the outside passive shareholders like TAM.

Should you wish to discuss these ideas further, please don’t hesitate to contact me.

Sincerely,

Curtis R. Jensen

Co-Chief Investment Officer

Ackman's Pershing Square Capital Nominates Eight to Ceridian (CEN) Board

In an amended 13D filing on Ceridian Corporation (NYSE: CEN), 11.3% holder Bill Ackman's Pershing Square Capital hedge fund notified the company that they propose to nominate the following persons for election to the Board of Directors at the 2007 annual meeting of stockholders: William A. Ackman, Michael L. Ashner, John D. Barfitt, Harald Einsmann, Robert J. Levenson, Michael E. Porter, Gregory A. Pratt and Alan Schwartz.

SAC Capital's Stake in Phelps Dodge (PD) Falls to 4.1%

In an amended 13D filing on Phelps Dodge (NYSE: PD), SAC Capital disclosed a 4.1% stake (8.4 million shares) in the company. This is down from the 5.1% stake (10.3 million shares) the firm disclosed in a past filing.

SAC said, "On January 20, 2007, option contracts on 1,778,000 shares of Common Stock held by certain of the Reporting Persons, which were previously reported, expired "out-of-the-money" pursuant to their terms. The Reporting Persons' have not changed their intention to vote against the proposed FCX transaction, as previously reported."

Icahn Accumultaes 6.73% Stake in Temple-Inland (TIN); Wants Company to Divest or Spin-Off Component Businesses

In a 13D filing on Temple-Inland Inc. (NYSE: TIN) Carl Icahn disclosed a 6.73% stake (7.2 million shares). Icahn said the stock is undervalued due to the conglomerate structure of the company. Icahn plans to recommend a divestiture or spin-off of one or more of the Company's component businesses.

The aggregate purchase price of the 7,201,939 Shares purchased by High River, Icahn Master and Icahn Partners, collectively, was $301,187,629.

From the 'Purpose of Transaction' section of the filing: "The Reporting Persons acquired their positions in the Shares in the belief that they were undervalued due to, among other things, the conglomerate structure of the Issuer in which various disparate and non-complementary businesses are combined under one corporate umbrella. The Reporting Persons believe that this structure obfuscates the true value of the Issuer's assets and note that various analysts have issued sum of the parts analyses that imply a value for the Shares that is significantly higher than their current market price. The Reporting Persons intend to seek to have conversations with members of the Issuer's management to discuss ideas that management and the Reporting Persons may have to enhance shareholder value, which may include, among other things, the divestiture or spin-off of one or more of the Issuer's component businesses (which may include Guaranty Bank, the corrugated packaging business, timberland holdings, the building products business and/or the real estate division). The Reporting Persons may consider engaging in a proxy contest to attempt to replace one or more members of the Issuer's staggered board of directors with persons nominated by the Reporting Persons, but have as yet made no definite decision to do so."

Large General Maritime (GMR) Holder Bergesen Worldwide Changes Filing Status to 13D

In a 13D filing on General Maritime Corp. (NYSE: GMR), Bergesen Worldwide/Sohmen Family Foundation disclosed a 11.9% stake (3.86 million shares) in the company. The group changed their filing status from 13G (passive) to 13D (active). The stake remains the same as was reported in an August 13G filing.

The group said while they have no current plans relate to, or that would result in, any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D of the Exchange Act, they may change their intention.

Bergesen Worldwide is a large international shipping company focusing on shipping and the maritime sector.

On August 14, 2006, Bergesen Worldwide purchased an aggregate of 3,860,000 Shares of General Maritime in the open market at a price of $40 per Share for an aggregate purchase price of $154,400,000. Shares of General Maritime are currently at $35.26.

Large Cornell Cos (CRN) Holder Wynnefield Wants Company To Remain Independent

In an amended 13D filing on Cornell Companies Inc. (NYSE: CRN) Friday afternoon, Wynnefield Partners and related funds disclosed a 17.5% stake in the company saying they "continue to believe that the shareholders would best be served if the Company were to remain an independent entity and participate in the growth opportunities that exist in the private corrections industry."

The group said a recent news release regarding Criminal Alien Requirement 6 highlighted another example of the growth opportunities available to the Company. They also noted that in a research report dated January 19, 2007 regarding Cornell, Patrick Swindle of Avondale Partners, LLC wrote: "CRN [Cornell] appears to have meaningfully improved its position with what appears the addition of 500+ inmates based on our analysis." -and- ". . . these extra inmates could add $10.0 million in incremental revenue and $2.0 million - $2.5 million in incremental EBITDA at full capacity."

In October, Cornell agreed to be acquired by Veritas Capital for $18.25 per share in cash. Shares of Cornell $19.30 on Friday.

Prides Capital Accumulates 5.4% Stake in Valassis Communications (VCI)

In a 13D filing on Valassis Communications (NYSE: VCI) after the close Friday, Prides Capital Partners disclosed a 5.4% (2.6 million share) stake in the company.

In a pretty standard disclosure, Prides said, while it has no current plans, they may engage in communications with management and the board of directors of the company, including but not limited to its operations.

The firm disclosed purchasing a significant portion of their stake from 12/18 thru 01/18 at prices from $13.49 to $15.02.

Reports Fidelity to Oppose Clear Channel (CCU) Buyout

Is Fidelity going "active" on Clear Channel Communications (NYSE: CCU)? According to reports from Bloomberg, the mutual fund giant will oppose the acquisition of the company by private equity firms Thomas H. Lee Partners and Bain Capital Partners, calling the $37.60 per share offer too low. Fidelity owned a 10.83% stake in Clear Channel's for the quarter ended September 30, 2006, making them the largest shareholder. Link

Golden Gate Capital Offer to Acquire Blair Corp (BL) for $37.50/Share

In a 13D filing late Thursday on Blair Corporation (Amex: BL), 8.1% holder Golden Gate Capital, and its wholly owned subsidiary Appleseed's Topco, delivered a preliminary acquisition proposal on January 3, 2007 to acquire all of the outstanding shares of Blair for a cash purchase price of $37.50 per share.

Commenting on the proposal, Blair's Chairman, Craig Johnson, said, "Since receiving the letter we have been in discussions with this group. Although it is premature to comment further, I do want to emphasize that we will continue to act in the best interest of the company and its stakeholders."

Shares of Blair are 3.82% higher to $37.48 in early action Friday.

Pirate Capital Takes Much Needed Victory Lap on PW Eagle (PWEI) Investment

Pirate Capital LLC took a victory lap this week related to its investment in PW Eagle, Inc. (Nasdaq: PWEI), which earlier in the week agreed to be acquired by J-M Manufacturing for $400 million, or $33.50 per share.

Tom Hudson, the head of Pirate, said, "We are very pleased with the proposed merger". Hudson said his firm encouraged the company to take initiatives to benefit all of their shareholders for some time.

Pirate noted they began accumulating its 22% stake at $21.61 per share over the last eleven months for an average purchase price of $26.03 a share (indicating a 29% gain on the investment).

Pirate Capital has been the subject of much negative speculation related to redemptions following the hedge fund's fall 2006 shake-up.

Link to the Press Release

Link to past Pirate Capital reports

Ackman's Pershing Square Capital Takes Active Stance With Ceridian (CEN) Investment

In a 13D filing on Ceridian Corporation (NYSE: CEN) this morning, Bill Ackman's Pershing Square Capital hedge fund disclosed an 11.3% stake (15.7 million shares) in the company. The firm changed its filing status from 13G (passive) to 13D (active). The stake is the same as was reported in the December 13G filing. The firm also sent a letter to the firm reflecting their concerns and their intent to nominate directors to the Issuer's board of directors.

In its letter the firm said, "In our view, Ceridian has underperformed and failed to achieve its business potential for more than a decade. We believe that this view is widely shared by the investment and analyst communities. We also believe that the fundamental value of Ceridian substantially exceeds the value implied by its current share price. Furthermore, we are confident that, properly managed, the company offers the opportunity for shareholders to earn extraordinary returns."

The firm also said, "We had originally intended to hold Ceridian shares as a passive investment. However, two recent events have caused us to reconsider our intent. First, we now find ourselves very concerned that Comdata, which represents the majority of Ceridian's cash flow and equity value, may be on the verge of losing its President, whom we believe is very important to the successful operation ofthat business. Second, based on our recent meeting with Ms. Marinello, we now fear that Ceridian as a whole may pursue a completely different strategic direction than what we or any other shareholder would have reasonably anticipated or desired."

See our origianl note on the passive stake here

A Copy of the Letter:

Ladies and Gentlemen:

As you are likely aware, Pershing Square Capital Management, L.P. and certain of its affiliates own approximately 11.3% of Ceridian's outstandin gstock. We are writing to express concern about a number of recent developments that have caused us to reconsider the passive nature of our investment in the company.

We have followed Ceridian for some time. In our view, Ceridian has underperformed and failed to achieve its business potential for more than adecade. We believe that this view is widely shared by the investment and analyst communities. We also believe that the fundamental value of Ceridian substantially exceeds the value implied by its current share price. Furthermore,we are confident that, properly managed, the company offers the opportunity for shareholders to earn extraordinary returns.

As a result of our view of the company's undervaluation and the board's decision to replace the prior CEO, we initiated an investment in Ceridian with the expectation that the board and new management would pursue the low-risk,high-return strategy afforded by the company's current circumstance. To that end, we were cautiously optimistic when Kathryn Marinello was hired as CEO. That being said, we were somewhat surprised that the board hired a CEO with no experience in payroll or human resource services, but rather with a background principally focused on payments and trucking - industry experience most relevant to Ceridian's well-functioning Comdata division. At a minimum, however, we thought management change would be a significant positive for the company.

We had originally intended to hold Ceridian shares as a passive investment. However, two recent events have caused us to reconsider our intent. First, we now find ourselves very concerned that Comdata, which represents the majority of Ceridian's cash flow and equity value, may be on the verge of losing its President, whom we believe is very important to the successful operation of that business. Second, based on our recent meeting with Ms. Marinello, we now fear that Ceridian as a whole may pursue a completely different strategic direction than what we or any other shareholder would have reasonably anticipated or desired.

POTENTIAL LOSS OF COMDATA SENIOR MANAGEMENT

Comdata is Ceridian's best performing and most valuable operating subsidiary. Late last week, we were surprised to learn that the continued employment of senior Comdata management, in particular its President, Gary Krow,may be in jeopardy. We are of the view that Mr. Krow's departure from Comdatamay substantially reduce the value of Comdata and thereby Ceridian. We further believe that his exit could be followed by the departure of other key managers,causing a further significant diminution in value. The prospect of losing Comdata's President and other senior operating management poses an unacceptable risk to our investment.

POTENTIAL CHANGES TO CERIDIAN'S STRATEGIC DIRECTION

Shortly after Ms. Marinello joined Ceridian in October, we attempted to arrange a meeting with her, but we were told that we would not be able to do so until January. Last Friday, we attended a three-hour meeting at Ceridian headquarters with Ms. Marinello. This was the first opportunity afforded to usto meet or speak with Ms. Marinello since her appointment as CEO.

In the meeting, Ms. Marinello came across as a hardworking, direct, and experienced executive. In other respects, however, we were alarmed by what we learned.

During the course of the meeting, we were surprised to hear that Ms.Marinello does not share our concern about the potential loss of Mr. Krow. As important, however, we left the meeting with the understanding that Ms.Marinello currently intends to retain Comdata as a captive subsidiary and may leverage its cash flow and balance sheet to invest in or acquire diversified businesses, potentially on a global basis. In other words, rather than management exclusively focusing on the company's flagging HRS operations and liberating Comdata - an unrelated, high-quality, faster growing business thatwould benefit greatly from independence - it appears that Ceridian may pursue a conglomerate holding company strategy.

When we pressed on the subject of the future of Comdata, Ms. Marinello was appropriately careful to state that she had not yet made a final decision inthat regard and that such a decision could take upwards of 18 months to explore. She did indicate, however, that a Comdata spinoff would necessarily reduce Ceridian's market capitalization, and therefore limit the size of the acquisitions that the company could pursue. These comments are troubling to us as we are strongly of the view that size should take a backseat to growth in the per-share value of Ceridian.

In our view, an acquisition-driven conglomerate strategy would be a serious mistake for Ceridian and its shareholders. We believe that such astrategy is unlikely to increase shareholder value without undue risk. This is particularly true in light of the current acquisition environment which is characterized by extremely competitive auctions and well-capitalized private equity and corporate acquirers. In addition, Ceridian possesses few if any competitive advantages in making acquisitions. We believe that there are few successful conglomerates other than GE and Berkshire Hathaway, and even these superb companies were created over many years during much more favorable acquisition environments.

We believe strongly that Ceridian should be run with the objective of increasing shareholder value, rather than growing assets under management.Therefore, we are of the view that the company should pursue a materially different and simpler, higher-return, lower-risk corporate strategy that will best serve shareholders, customers, and employees.

As a first step, we believe that Ceridian should spin off Comdata to its shareholders. We believe - and expect the substantial majority of thecompany's shareholders and the investment community agree - that the logic ofseparating Comdata from Ceridian is so overwhelming that it is a business imperative.

Comdata's business is materially different from that of the balance ofCeridian's operations, is managed by a distinct management team, and is located in a different geography. Its employees have not been adequately compensated for their achievements because the equity compensation they receive in the form of stock options on Ceridian has been diluted by HRS's long-term underperformance.Beyond the strategic imperative, Comdata's growth, margin, and cash flow characteristics deserve a materially higher valuation than the current value themarket assigns to Ceridian in its current configuration. As a result, we believe the spinoff of Comdata would generate significant value in the intermediate andl ong term for all of Ceridian's stakeholders.

In the more than 11 years that Ceridian has owned Comdata, Ceridian has yet to identify any meaningful synergies between its two principal operatingunits. When we raised the subject with Ms. Marinello, she was unable to cite any such synergies, but postulated that some day Comdata could sell payment products to HRS customers. In response, we pointed out that if Comdata continued as awholly owned subsidiary of Ceridian, the potential market opportunity for itsproducts would be diminished because ADP (and other competing payroll companies that offer a much larger potential market for such a product) would be unlikelyto choose to purchase that product from a Ceridian-owned Comdata.

During our meeting with Ms. Marinello, she suggested that there were a number of acquisition opportunities which might make strategic sense for Comdata. While we acknowledge that this may be true depending upon the terms andother specifics, we believe that Comdata will be in a much stronger competitive position in making acquisitions if it is a standalone pure-play enterprise that can use its likely-to-be highly valued equity currency in pursuing such transactions.

We believe it is self-evident that Comdata's long-term value would be maximized as an independent company. In addition, the ability to reward its management with equity incentives that are directly tied to the performance ofits business would be an invaluable tool to retain and attract talentedindividuals, and may obviate some of the personnel risks highlighted earlier.

With regard to HRS, we believe Ceridian management should focus on improving its remarkably low operating margins, its lackluster customer service record, weakness in its sales organization, and deficiencies in its technology infrastructure. These basic operational improvements would provide more than ample opportunity to enhance long-term value for all of Ceridian's stakeholders, including shareholders, customers, and employees alike. Furthermore, the intelligent use of the company's free cash flow and borrowing capacity createdby a dramatically improved, rationalized, and standalone HRS business will further enhance shareholder returns over the long term. These goals should command the full focus of Ceridian's senior management for the foreseeable future. In addition, this strategy is materially less risky than expanding a noperationally challenged business through acquisitions.

In light of recent events, we feel that we can no longer remain a passive Ceridian shareholder. We would have greatly preferred to voice our concerns in a less public arena. Given what we have learned over the past week, coupled with the imminent deadline under Ceridian's unusually early advance notice provision regarding the nomination of directors, we are compelled to act now to protect our investment.

As a consequence, we currently intend to nominate a slate of alternative directors at the company's upcoming meeting of shareholders and provide the requisite notice on or before the January 23, 2007 deadline.

We welcome the opportunity to commence discussions with you in advance of the director nomination notice deadline regarding the matters discussed inthis letter. We would appreciate a response at your earliest convenience.

PERSHING SQUARE CAPITAL MANAGEMENT, L.P.

William A. Ackman

Caxton Associates Seeks To Replace a Majority of InFocus (INFS) Board

In an amended 13D filing after the close Tuesday on InFocus Corporation (Nasdaq: INFS), 11.2% holder Caxton Associates said a result of the concerns previously expressed, and in light of the unsatisfactory conversations in the fourth quarter of 2006 between representatives of the Reporting Persons and members of the Board and the Company's operating management, they now intend to call a special meeting of the Company's shareholders and to seek to replace a majority of the current members of the Board.

Icahn Raises Stake in Telik (TELK) to 9.92%, May Seek Talks Regarding Plans and Prospects

In a 13D filing on Telik, Inc. (Nasdaq: TELK), Carl Icahn disclosed a 9.92% stake (5.2 million shares) in the company. Icahn's Icahn Management LP subsidiary disclosed a 1.5 million shares stake in Telik for the quarter ended September 30, 2006.

In a pretty standard disclosure, Icahn said he acquired the position believing the shares were undervalued and said he may, from time to time, seek to have discussions with the Company regarding the Company's plans and prospects.

SulphCo (SUF) Chairman/CEO Gunnerman Dismissed After Failed Attempt To Amend Bylaws

SulphCo, Inc. (Amex: SUF) announced this morning that they dismissed Dr. Rudolf W. Gunnerman as Chief Executive Officer and Chairman of the Company after Dr. Gunnerman presented the Board with putative amended and restated By-laws which they said threatened the ability of the Board to function in the best interests of the shareholders. The Board rejected such changes as not being effective in accordance with applicable federal securities laws.

Dr. Gunnerman, who owns 39% (28.27 million shares) of the company, disclosed the various amendments in a 13D filing with the SEC. The Bylaw Amendments include, among others, "(a) the requirement that an Annual Meeting of the stockholders be held on the first Tuesday in April at 850 Spice Islands Drive, Sparks, Nevada; (b) modifications to the procedures for stockholder nominations of directors to serve on the Company’s Board of Directors; (c) the fixing of the number of Board members at six; (d) the elimination of “cause” as a requirement for the removal of directors; (e) the inability of the Board to remove any officer of the Company until the first annual Board meeting to be held following the next annual meeting of stockholders following January 11, 2007; (f) the inability of the Board of Directors to issue, prior to the next annual meeting of stockholders (i) any shares of capital stock of the Company entitled to more than one vote per share, and (ii) in the aggregate, in excess of 10% of the outstanding shares of capital stock of the Company; and (g) that the Amended and Restated Bylaws may be amended only by stockholders holding a majority of the Company’s voting stock."

Following delivery of the Written Consent, Dr. Gunnerman became aware of a miscalculation in the number of shares held by the persons that had executed the Written Consent. Gunnerman said based on the correct number of shares actually held by the stockholders executing the Written Consent its was not executed by the holders of a majority of the outstanding shares. NOTE: Gunnerman disclosed a miscalculated 44.9% stake personally, which was later adjusted to 39% in an amended filing.

Gunnerman said he will continue his effort to obtains the consent of the stockholders and, whether or not the Bylaw Amendments are adopted, he may propose his own slate of nominees to the board of Directors.

Shares of SulphCo are relatively flat at $3.52 after trading lower earlier in the session.

Mills (MLS) Holder Farallon Capital Offers to Buy $499M in Stock for $20/Share

In an amended 13D filing on Mills Corp. (NYSE: MLS), 10.9% holder Farallon Capital disclosed they submited a Term Sheet for a proposed acquisition of additional shares of the company. Under the terms, the firm proposed that, subject to the satisfaction of certain conditions, certain of the Farallon Funds or their assigns would purchase from the Company $499 million of Shares of the Company at a price of $20.00 per Share. The Farallon Investors would receive a commitment fee equal to 4% of the aggregate Subscription Amount upon execution of a subscription agreement relating to the Subscription Shares. The commitment of the Farallon Investors to purchase the Subscription Shares would terminate if the Company entered into a Competing Transaction before the Closing for theSubscription Shares.

From the Purpose Of The Transaction section of the filing:

The Reporting Persons are filing this amendment to report that, on January 15, 2007, at the request of the Company, the Reporting Persons submitted to the Company's financial advisors a Term Sheet for a proposed acquisition of additional Shares of the Company by certain of the Reporting Persons (the "TermSheet"). The Term Sheet was submitted with a cover letter which sets forth whythe Reporting Persons believe the transaction described in the Term Sheet isattractive for the Company. The Term Sheet and the accompanying cover letter are attached as Exhibit 4 to the Schedule 13D. Upon execution by the Company, theTerm Sheet would be binding but the proposed acquisition would be subject to definitive documents being entered into and to the conditions set forth in theTerm Sheet.

As set forth in the Term Sheet, the Reporting Persons have proposed that, subject to the satisfaction of certain conditions, certain of the FarallonFunds (the "Farallon Investors") or their assigns would purchase from theCompany $499 million (the "Subscription Amount") of Shares of the Company (the"Subscription Shares") at a price of $20.00 per Share (the "Per Share Price").The Farallon Investors would receive a commitment fee equal to 4% of theaggregate Subscription Amount upon execution of a subscription agreement (the"Subscription Agreement") relating to the Subscription Shares. The commitment of the Farallon Investors to purchase the Subscription Shares would terminate if the Company entered into a Competing Transaction before the Closing for theSubscription Shares.

Pursuant to the Term Sheet, the Company would be required to pay a break-up fee of $15,000,000.00 and the Farallon Investors would have the right to terminate all of their obligations under the Term Sheet and under the Subscription Agreement, if applicable, if (i) the conditions set forth in theTerm Sheet are not met within fifteen (15) days from the date that the Companysigns the Term Sheet, except to the extent such failure is due to the Farallon Investors' breach of their obligation to use good faith efforts to consummate the transactions under the Term Sheet, or (ii) the Company enters into or consummates a Competing Transaction from the date the Term Sheet is executed by the Company through and including September 30, 2007. A Competing Transaction is defined in the Term Sheet to be any (i) any issuance or sale of any preferre dstock, common stock or other equity interests in the Company other than the Subscription Shares and any Permitted Equity Offering; (ii) any issuance of anysubordinated notes or other debt of the Company, The Mills Limited Partnership("MLP") or their subsidiaries other than collateralized mortgage-backedsecurities financing and/or other permanent debt used to refinance the Company'sexisting senior term loan with Goldman Sachs Mortgage Company; (iii) any sale ortransfer of the Company or the MLP or a substantial portion of the Company's or the MLP's assets, by merger or otherwise; or (iv) any issuance of any new equity interests in the MLP; provided, that this shall not prohibit the MLP from entering into bona fide joint ventures that do not individually or in the aggregate constitute a sale or transfer of a substantial portion of the Company's assets

A Permitted Equity Offering is defined in the Term Sheet to be any issuance or sale of Shares by the Company to be engaged in only after the funding of the Subscription Amount, which can be structured either as (i) a private placement to certain investors or (ii) a rights offering offered prorata to all of the Company's shareholders, in either case in which both (a) theFarallon Investors have the right, but not the obligation, to purchase their pro rata share of the Shares issued in such equity offering, such pro rata share based upon the Farallon Investors' holdings of Shares compared to the aggregate outstanding Shares immediately prior to such Permitted Equity Offering, and (b)the aggregate amount of equity capital to be raised in such equity offering doesnot exceed, taken together with all previous Permitted Equity Offerings, if any, $250 million in the aggregate. In addition, the Farallon Investors would have the right, but not the obligation, to purchase from the Company in a privateplacement (the "Backstop Private Placement") any unsubscribed-for amount of anyPermitted Equity Offering, subject to mutually-agreeable terms, conditions and documents.

If the Company or the MLP issues any equity capital from the date theTerm Sheet is executed by the Company through September 30, 2007 (includingwithout limitation in any Permitted Equity Offering) at an effective price lessthan the Per Share Price, the Company would be required to issue that number ofadditional Shares to the Farallon Investors sufficient to provide the FarallonInvestors with full ratchet anti-dilution protection with respect to suchissuance for any Subscription Shares or pursuant to any Backstop Private Placement.

In addition, the Company would agree to use best efforts to pursue collateralized mortgage-backed securities financing and/or other permanent debt to refinance the Company's existing senior debt owed to Goldman Sachs Mortgage Company.

Pursuant to the Term Sheet, the purchase of the Subscription Shareswould be made under a mutually acceptable Subscription Agreement. In addition,the Farallon Funds and the Company would enter into a mutually acceptable registration rights agreement (the "Registration Rights Agreement") which would provide customary demand, shelf and piggyback registration rights to theFarallon Funds and their affiliates with respect to (i) any Shares held on datethe Farallon Funds purchase the Subscription Shares, (ii) the SubscriptionShares, (iii) any additional Shares acquired thereafter and (iv) any such Sharesheld by any transferees of the Farallon Funds or their affiliates.

The proposed transaction is subject to the Company signing the TermSheet, definitive agreements being entered into, and specified terms andconditions being met, including but not limited to: (i) the Company's board ofdirectors being reduced to eleven (11) members, with the composition of theremaining members to be reasonably acceptable to the Farallon Investors, (ii)the Company agreeing to nominate a 2007 board slate reasonably acceptable to theFarallon Investors which would include two directors that are acceptable to theFarallon Investors in their sole discretion, (iii) all required approvals andconsents being obtained, (iv) the absence of any material adverse change sinceJanuary 1, 2005 that has not been disclosed to the Farallon Investors, (v) thetermination of the standstill arrangements entered into with the Company, (vi) awaiver of the REIT limitations, if applicable, and (vii) receipt by the Companyof a fairness opinion with respect to the proposed transaction.

The Term Sheet will terminate if not executed by the Company on orbefore January 19, 2007.

This description of the Term Sheet and the accompanying cover letter is qualified in its entirety by the full terms and conditions thereof.

The Farallon Investors intend to acquire the Subscription Shares as provided in and subject to the terms and conditions of the Term Sheet. In addition, each Reporting Person may, at any time and from time to time (butsubject to the terms of the Confidentiality and Standstill Agreement to theextent applicable), acquire additional Shares or dispose of any or all of itsShares depending upon an ongoing evaluation of the investment in the Shares,prevailing market conditions, other investment opportunities, liquidityrequirements of the Reporting Person and/or other investment considerations. NoReporting Person has made a determination regarding a maximum or minimum numberof Shares which it may hold at any point in time.

As previously reported (but subject to the terms of the Confidentialityand Standstill Agreement to the extent applicable), the Reporting Persons have engaged in communications and intend to engage in further communications with one or more officers of the Company and/or one or more members of the board ofdirectors of the Company and may also engage in communications with one or more shareholders of the Company regarding the Company, including but not limited to its operating properties, its development projects, its joint venture structures, its capital structure, its proposed recapitalization, its proposed asset sales, the Term Sheet and the proposed transaction set forth thereinand/or other strategic alternatives, the Company's restatement process, andshareholder communications. During the course of such communications with theCompany (but subject to the terms of the Confidentiality and StandstillAgreement to the extent applicable), the Reporting Persons may advocate one or more courses of action or transactions (including but not limited to the transaction proposed in the Term Sheet), which potential transactions may include the Reporting Persons or their affiliates as participants.