Friday, August 31, 2007

ValueAct Capital Notes 5.7% Stake In Newly Created Exterran Holdings (EXH)

In a 13D filing after the close on Exterran Holdings, Inc. (NYSE: EXH), ValueAct Capital disclosed a 5.7% stake (3,771,495 shares) in the company.

In a pretty standard disclosure, the firm did not make any direct requests on the company, but said they will monitor their investment and may enter discussions with management, the Board of Directors or others.

This is not a new stake. Exterran Holdings is the company created from the merger of Hanover Compressor Co. (old symbol 'HC') and Universal Compression Holdings (old symbol 'UCO'). ValueAct had previously held an 11.6 million share stake in Hanover and, based on the merger agreement, ValueAct received 0.325 shares of Exterran common stock for each share of Hanover they held.

Labels: , ,

Thursday, August 30, 2007

Norwegian Fund Takes a Liking to Oil Driller Pride International (PDE)

In a 13D filing on Pride International Inc. (NYSE: PDE), SKAGEN Funds, a Norwegian Investment company, disclosed a 9.03% stake (15,053,900 shares) in the company.

In a pretty standard disclosure, the firm did not make any direct requests on the company, but said they believe the shares are undervalued and said they may enter discussions with the company or others.

Labels: , ,

Southeastern Gets 'Active' With Hilb Rogal & Hobbs (HRH)

In a 13D filing on Hilb Rogal & Hobbs Co. (NYSE: HRH), 9.7% holder Southeastern Asset Management noted they changed their filing status from 13G 'passive' to 13D 'active' noting they changed their status in order be be more active in corporate governance and management matters, and to have the ability to enter into discussions with third parties concerning proposed corporate transactions of a significant nature.

Southeastern said they have had talks with the company's management and may have additional conversations with management and/or third parties regarding opportunities to maximize shareholder value.

Labels: , ,

K Capital Requests Sale of Sun-Times Media (SVN); Also Wants Board Changes, Buyback

In a 13D filing on Sun-Times Media Group (NYSE: SVN), 9.9% holder K Capital Partners disclosed they changed their filing status from 13G 'passive' to 13D 'active', saying the company is trading at a significant discount to its intrinsic value and that immediate action must be taken to preserve shareholder value. The firm said management's operational plan must be implemented concurrently with a strategic review and sale of the Company.

K Capital recommended the following actions to be taken IMMEDIATELY: Hire a strategic advisor and put the Company up for sale; Raymond Seitz should step down as Chairman of the Board; Gordon Paris should step down as a member of the Board; The Company should appoint two institutional shareholders to the Board; The Company should execute a share buyback with the remaining unused capacity under the existing buyback program.

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

While the Reporting Persons are supportive of management's current operational plan over the short-term, the Reporting Persons believe management's plan must be implemented concurrently with a strategic review and sale of the Company. Specifically, the Reporting Persons recommend the following actions to be taken IMMEDIATELY:

- The Company should hire a strategic advisor and put the Company up for sale.

- Raymond Seitz should step down as Chairman of the Board. While the reporting Persons have great respect for Mr. Seitz as an individual, his personal travel schedule and other interests do not allow him to provide present and active leadership.

- Gordon Paris should step down as a member of the Board. Mr. Paris was CEO of the Company during its deterioration and during its costly decision to invest in Canadian commercial paper; given these facts, there is no justification for allowing Mr. Paris to remain on the Board.

- The Company should appoint two institutional shareholders to the Board, so that the Board has greater shareholder representation. The current Board has minimal ownership, as has been evident in its decisions and actions.

- The Company should execute a share buyback with the remaining unused capacity under the existing buyback program, which the Reporting Persons believe to be in excess of twenty million dollars. The Reporting Persons believe a twenty million dollar buyback is very conservative and prudent given the Company's potential financial liabilities and operational requirements.

Labels: , ,

VA SmallCap Partners Looks To Make Music With Steinway (LVB) Position

In a 13D filing late-afternoon yesterday on Steinway Musical (NYSE: LVB), VA SmallCap Partners, an affiliate of ValueAct Capital, disclosed a 5.2% stake (422,690 shares) in the company.

In a pretty standard disclosure, the firm did not make any direct requests on the company, but said they will monitor their investment and may enter discussions with management, the Board of Directors or others.

Labels: , , ,

Wednesday, August 29, 2007

Lawndale Raises Stake in Sparton (SPA), Requests Board Form Committee To Explore Strategic Alternatives

An interesting 13D on micro-cap company Sparton Corp. (NYSE: SPA), filed a few weeks ago, has been brought to our attention recently.

In the 10th amendment to an original 13D filled in February of 2003, Lawndale Capital disclosed that they raised their stake in the company to 9.1% and issued a letter to the Board of Directors expressing concern over the company's continued operational deterioration and the Board's apparent inaction and failure to provide management oversight and accountability.

In the letter, Lawndale Capital's President Andrew Shapiro requested that the company "Immediately form a special committee of independent board members, who, with the advice of a reputable financial advisor, explore strategic alternatives to maximize value for all shareholders, including, but not limited to, significant restructuring, management changes and/or sale of the Company or one or more of its divisions in order to maximize value for all shareholders", among other things.

A Copy of the Letter:

Dear Sparton Board Members,

Lawndale Capital Management, LLC and its affiliates have increased their ownership of Sparton Corp. ("Sparton" or the "Company") to 890,086 shares, constituting 9.1% of the Company, and remains Sparton's largest independent shareholder. We have become increasingly troubled by the Board's inaction and acquiescence to Sparton's perennially underperforming management team-a team that has presided over a decades-long decline in both the Company's book and stock values.

The Company's poor governance mechanisms, including a staggered board (which has now been eliminated from a majority of Fortune 500 companies), the improper stripping of cumulative voting rights and the over allocation by the employee pension to Sparton stock has entrenched the Board and management. As a result, we believe both the Board and management have been insulated from the problems faced by the Company's shareholders, and have failed to take the necessary actions to improve Sparton's business. Sparton's Board needs fresh perspective from qualified and energetic new Board members willing to explore all strategic options to maximize shareholder value and provide necessary oversight and accountability of a management team that has underperformed for years.

The consequences of Sparton's poor governance can be seen in the Company's dismal operating results. In spite of years of worldwide economic expansion, Sparton's management has an extended record of value destruction through ongoing operational mediocrity and recurring "non-recurring" losses. As the Board seems so oblivious to such troubling results, and we don't want to be accused of short-term focus, let us succinctly summarize a whole decade of mismanagement and underperformance.

- Book Value per share has fallen from $10.90 in 1997 to $9.21 in 2007, reflecting a decade's worth of poor operating results and mediocre re-allocation of shareholder capital. Mr. Hockenbrocht has presided over Sparton as a senior executive throughout this time period.

- Executives and directors, demonstrating their own lack of confidence in the Company and its management, routinely and consistently sell their equity holdings in the Company. As a result, while Mr. Hockenbrocht has been President at Sparton since 1978 and received numerous equity grants designed to "encourage management to remain dedicated to maximize long-term shareowner value", he owns less than 1% of Sparton's stock and habitually sells stock below book value upon exercising his options. Sparton's independent directors show a similar lack of confidence in the Company. On average, these directors, excluding the recently appointed Mr. Schrank, own just over 3,500 shares each after sitting on Sparton's board for an average of more than 13 years.

- For years, management has entrenched itself by over-allocating the Sparton employee pension plan (over 25% of plan assets per the 2006 Annual Report) to Sparton stock so that Mr. Hockenbrocht might vote its stock as he sees fit, including voting in 2004 to reduce board accountability through removing shareholders' cumulative voting rights. As a result, while Mr. Hockenbrocht personally sells Sparton stock, he maintains more than a quarter of the Company's employee pension fund assets in Sparton stock, whose votes he alone controls. This reckless over-allocation of Sparton employees' retirement assets to Company stock imprudently jeopardizes employees' retirement funds and flies in the face of lessons learned earlier this decade at companies like Enron and WorldCom. How can the same senior executive who continually disposes of his personal shares below book value consider such a large allocation of employees' retirement funds to Sparton stock prudent? Why should employees' retirement be jeopardized so that Mr. Hockenbrocht can garner enough votes to entrench a lackluster operating team?

- Sparton's operating metrics have struggled despite global prosperity and increased profits at competing firms. Internal growth initiatives designed to offset losses in the core business have failed. While continuing to lose money more than two years since it began operations, the Vietnam facility remains behind budget and underutilized.

- Through the end of July, Sparton's stock is down 29% from a decade ago and down 48% from twenty years ago. The S&P 500 has risen 79% and 619%, respectively.

A decade's worth of shareholder capital abuse reflected in decreased book value and stock market value speaks for itself and, even by Sparton's antiquated standards of corporate governance, justifies action. These depressing results have occurred on this Board's watch. It is inexplicable to us why you have been willing to acquiesce to an arrogant, underperforming management team with little economic stake in the Company. Long-term investors are appalled that senior management has not been held accountable after so many years of deterioration at our Company. How much value must be destroyed before you take belated action? Have the members of the Board forgotten their fiduciary obligations to shareowners? What tangible goals, if any, will management be held accountable to?

In recent months, we have constructively reached out to your Nominating and Corporate Governance Committee offering access to our extensive network of qualified director candidates. When informed, in February, that Sparton's criteria for selecting directors might be modified at an upcoming Board meeting, we immediately requested that Sparton provide us with its revised criteria so that we might provide fitting candidates willing to go through the interview process. Unfortunately, highlighting the Board's disregard for modern governance standards, this simple request from your largest independent shareholder was met with stonewalling, obfuscation and circuitous nonsense. The Board has subsequently named Mr. Schrank to fill a director vacancy. While we find Mr. Schrank's background encouraging, given Sparton's history we do not understand why his appointment was hidden from the Company's shareholders until after it was announced, or why we have not been allowed to meaningfully participate in the process of providing candidates for the Sparton Board.

In light of the perpetual deterioration in Sparton's operating results and on behalf of the Company's long-suffering shareholders, Lawndale makes the following requests of Sparton's Board:

- Immediately form a special committee of independent board members, who, with the advice of a reputable financial advisor, explore strategic alternatives to maximize value for all shareholders - including, but not limited to, significant restructuring, management changes and/or sale of the Company or one or more of its divisions in order to maximize value for all shareholders.

- Immediately hire an outside pension consultant to review Sparton's defined pension benefit plan asset allocation to the Company stock, which, at over 25% of plan assets, recklessly endangers employees' retirement assets.

- Enable employees owning shares in Sparton's employee 401(k) plan to vote their shares anonymously from management scrutiny

- Immediately begin the necessary action to modify Sparton's Charter to eliminate the Company's staggered board, so that all directors may be elected on an annual basis, which is consistent with best governance practices and the policies in place at a majority of the Fortune 500.


- Establish and enforce share ownership requirements for both management and the Board, mandating minimum stock holding requirements relative to salary and amend equity compensation policies to require a minimum holding period for shares obtained from options exercise.

We continue to make ourselves available to management, shareowners and board members to discuss ways to improve the Company's governance and performance in an effort to maximize shareholder value.

Yours Sincerely,

Andrew E. Shapiro

President

Lawndale Capital Management, LLC

Labels: , , ,

Activist Target PDL BioPharma (PDLI) Up in Flames; Loeb And Others Likely To Turn Up The Heat

Shares of Dan Loeb (Third Point LLC) activist target PDL BioPharma (Nasdaq: PDLI) are down 20% today after the company announced a significant realignment, including a planned sale of commercial assets and the termination of the Nuvion phase 3 program. Adding to the downside pressure is the cloudiness regarding the sale of the company as a whole, which is what investors, including Loeb, wanted.

PDLI said it engaged Merrill Lynch to advise it on the sale of the rights to its various commercial assets (Cardene, Retavase, IV Busulfex and ularitide), but made no mention on the review of alternatives related to the sale of the entire company. On the conference call, when asked by Deutsche Bank analyst Jennifer Chao about a sale of the entire company, PDLI danced around the issue.

When a Third Point LLC analyst was selected to ask a question on the call, Dan Loeb himself got on the phone to address the company. Loeb expressed his delight that McDade is now out as CEO and noted that the company is finally taking action on a divestiture of assets. Loeb again called for Chairman Patrick Gage to step down and advised that PDLI's board pursue a strategy to sell the company as a whole and not go it alone. Loeb also asked that a representative appointed by Third Point be added to the board.

Investors, led by Loeb, will likely turn up the heat on PLDI to sell the whole company. Loeb may also initiate a proxy fight to get his way. Even with today's setback many analysts still see significant value in PDLI, with some estimates over $30 per share (stock currently at $19). It is unclear why the company is reluctant to sell as a whole ---- it is without a doubt what most investors want. I would venture to guess that within the next 6-9 months the company will pursue a sale as a whole, voluntarily or forced.

UPDATE: Loeb issued a late-afternoon press release disclosing a letter sent today to the Board of Directors:

In the August 28th conference call, PDL BioPharma ("PDL" or the "Company") Chairman, Patrick Gage, sent a confusing and unwelcome message about PDL's strategy. Dr. Gage's message is especially disconcerting because we believe a significant majority of PDL's shareholders and board members share the view that the Company should be sold in its entirety or in pieces and that the entire proceeds should be returned to shareholders.

Only eight days before the conference call, the Company announced that the board was continuing its ongoing corporate strategic review in conjunction with Merrill Lynch & Co. While we understand that the announced sale of the Company's commercial operations is simply the first step in exploring the sale of the entire Company, Dr. Gage failed to communicate this clearly. Instead, he gave the impression that repositioning the Company could be an alternative to selling the Company.

Dr. Gage's destructive, "go-it-alone" research and development approach (contrary to the wishes of PDL's shareholders) -- combined with his history as chief apologist for Mark McDade's failed strategies and his own spotty record as a Board member at other public companies (witness the poor stock price performance of Neose Technologies, where he is also Chairman, as well as the similarly dismal performance of ArQule during his time on that Board) -- lead us to respectfully request that Dr. Gage step down from his role as Chairman and a member of the Board. We believe that his chances for re-election to the Company's staggered board at the next annual meeting are slim, and his "lame duck" status further impairs his credibility.

Although we are mystified as to why it took so long, we view favorably the belated adoption of Third Point's recommendations: that PDL has agreed to sell its specialty pharmaceuticals business, drastically reduce operating and r&d costs, and retain an investment banker to examine all options to maximize value for shareholders. We also acknowledge the resignation of Mark McDade as CEO, which we have also been advocating. We were, however, perplexed as to why he was present on yesterday's conference call, and why he has retained anything more than a consulting role at the Company.

A prompt sale of all of PDL, in whole or in pieces, will generate significant value for shareholders. In this regard, while we are of course disappointed by the termination of Phase III trials of Nuvion after 6 years of development -- a failure that underscores the Company's inability to successfully commercialize drugs -- we remain convinced that there is substantial value and interest in the Company's royalty stream, commercial products, manufacturing assets and pipeline of promising drugs, provided they are placed under the management of companies better suited to exploit the assets and successfully develop and commercialize the pipeline. Nuvion was not a major component of our estimated value of PDL, and we continue to believe that PDL's shareholders would realize a substantial premium in a change of control transaction.

We reiterate the previous offer of the Third Point nominees to serve on the board, where they can be expected to work constructively with management, other board members and representatives of Merrill Lynch to bring the strategic review to the successful conclusion of maximizing value for all PDL shareholders.

Sincerely,
Daniel S. Loeb

Labels: , , ,

Ramius Capital Nearly Doubles Activist Stake in Kensey Nash (KNSY)

In an amended 13D filing on Kensey Nash Corp. (Nasdaq: KNSY), Ramius Capital disclosed an 18.5% stake (2,204,622 shares) in the company. This is up from the 9.9% stake (1,180,634 shares) the firm disclosed in the original 13D filing on 07/02.

In the original 13D filing, Ramius Capital disclosed a letter to the President and CEO expressing its belief that the Shares are significantly undervalued and highlighting several opportunities to improve the value of the shares, including refocusing efforts on its core biomaterials business and significantly reduce spending and management effort on the endovascular business. The firm also said the Board should consider a Dutch auction tender offer to repurchase up to 42% of its shares outstanding.


Ramius Capital made no amendments in the 'Purpose of Transaction' section of the filing.

Labels: , ,

Tuesday, August 28, 2007

Peltz's Trian/Triarc Enter Confidentiality Agreement with Wendy's (WEN)

In an amended 13D filing on Wendy's International (NYSE: WEN) today, 9.8% holder Nelson Peltz's Trian Fund/Triarc Companies disclosed that on August 27th they entered into a Confidentiality Agreement with Wendy's.

As part of the agreement, Triarc and Trian have agreed that they will not acquire additional shares of Wendy's prior to December 1, 2007, unless certain circumstances of the agreement are met.

In the past, Peltz said his companies were prepared to offer $37-$41 per share for Wendy's. Today, shares of Wendy's are trading up about 3% to $32.86.

Labels: , , , ,

Monday, August 27, 2007

SLS Management Wants Fleetwood Enterprises (FLE) Sold to Champion Enterprises (CHB)

In a 13D filing on Fleetwood Enterprises Inc. (NYSE: FLE), 11.8% holder SLS Management disclosed a letter to the company saying the time is right for the Board to immediately explore consolidation alternatives to maximize shareholder value. The firm believes the best available alternative is a sale of the Company to Champion Enterprises, Inc. (NYSE: CHB).

A Copy of the Letter:
As you know, SLS Management, LLC beneficially owns approximately 11.8% ofFleetwood Enterprises, Inc. ("Fleetwood" or the "Company"). We commend the Company's CEO, Elden Smith, for recognizing that the Company has significant intrinsic value and for the steps he has taken to unlock that value sincere placing Ed Caudill in 2005. Despite these efforts, however, the Company has remained unprofitable over the past two fiscal years and has still not optimized its cost structure. We strongly believe for the reasons detailed below that the time is right for the Board to immediately explore consolidation alternatives to maximize shareholder value. We believe the best available alternative is a sale of the Company to Champion Enterprises, Inc. ("Champion").
While we understand that the Company's inability to earn a profit owes much to prior management, more must be done to drive profitability. Specifically, there remains ample room to reduce the cost structure, bringing it more in line with that of Fleetwood's peers. In fact, Fleetwood's public competitors have by and large been able to generate positive margins and net income despite the cyclical nature of the industry and the current challenges that the industry faces. A single statistical SG&A comparison between the Company and Winnebago Industries,Inc. ("Winnebago") highlights the Company's cost structure woes. In fiscal year2007 in the motor home division, SG&A, inclusive of warranty costs, was $110M onrevenues of $961M (11.5%). During the same period and with lower sales than Fleetwood, Winnebago's SG&A, inclusive of warranty costs, was $60M (7.1%). Even allowing for differences in the way the two companies operate, this comparison demonstrates the Company's bloated cost structure.
We have repeatedly encouraged Fleetwood's management to address its cost issues,and though we are frustrated with the pace of change, we are supportive and encouraged by steps taken to start to right size the cost structure such as the recent decision to reduce the manufacturing footprint of the Company. However there remains significant opportunity to cut SG&A costs at the Folding Trailers and Travel Trailers units and the failure to do so at this point is frustrating.
While we believe the Company's latest efforts to restructure its RV group wil leventually support the profitability of this unit, this is not enough. We believe the only practical way the Company can unlock the potential in its manufactured housing unit is by dramatic reductions in capacity. Fleetwood's manufactured housing business has the capacity to manufacture 40,000 homes per year. Based on the Company's current market share, the industry would have to ship 300,000 units a year in order to absorb Fleetwood's capacity. This goal is quite simply unattainable in any realistic investment time frame. The latest2007 estimates have the industry shipping between 95,000-110,000 HUD code homes.In total, we estimate industry capacity at somewhere around 200,000-250,000 units.
Industry overcapacity is clearly not only a Fleetwood issue. We have repeatedly urged Fleetwood's management to rationalize capacity. In response, we have been told that there is only so much capacity to take out before the Company starts to exit markets. Since this is the same answer that every other industry player gives, massive overcapacity is not surprising. The only sure path to capacity reductions is through consolidation. We have therefore encouraged Fleetwood management to explore consolidation alternatives. We believe the best alternative available is a sale to Champion structured in a tax-free merger transaction.
The most uniquely compelling aspect of the combination of Fleetwood and Champion is their ideal overlap of manufacturing facilities. Out of fourteen states where Fleetwood has one or more plants, Champion also has facilities. We believe that the synergies and efficiencies of this combination would result in combined annual savings in excess of $60M. Our assumptions are as follows:
- A tax free share exchange is done at a 1:1 or slightly higher basis for Fleetwood shareholders
- The combined company closes at least 11 plants without exiting any market.
- The combined company saves $14M from elimination of management at those plants.
- The combined company saves additional $6M of SG&A from elimination of manufactured housing redundancies
- The combined company would be able to operate at 80% capacity utilization up from current 40-50%, thereby resulting in combined annual manufacturing efficiencies in excess of $40M.
- Our assumptions do not include extra savings that could result from elimination of corporate overhead.
We believe a strategic combination between Fleetwood and Champion Enterprisewould create more than $600M in value for shareholders of both companies. We think the value creation for Fleetwood shareholders alone would be approximately$3 per share, more than 30% increase from where the stock is trading today.According to the latest SEC filings a significant percentage of Fleetwood shareholders are also Champion shareholders. Therefore we believe that our fellow shareholders would be quite comfortable with this share exchange and with Champion's management.
For the reasons we have detailed, we believe it is in your shareholders' best interests to immediately pursue consolidation alternatives to maximize shareholder value. We look forward to continuing discussions with you and your management team, and we trust that the best interests of all Fleetwood's shareholders will remain of paramount importance. We must, however, reserve the right to take any action we deem appropriate to protect the interests of shareholders.
Sincerely,

Scott L. Swid
SLS Management, LLC

Labels: , ,

Icahn Sets His Sights on Biogen Idec (BIIB)

Shares of Biogen Idec Inc. (Nasdaq: BIIB) rose nearly 5% on Friday after activist investor Carl Icahn received FTC clearance to increase his stake in the company. Shares of Biogen have gained another 0.65% in today's session.

Icahn's Icahn Management hedge fund disclosed a new 2,740,000 share stake in Biogen Idec as of the quarter ended June 30, 2007.

According to Bloomberg, citing people familiar with Icahn's thinking, he bought the stock because he believes the company is undervalued and is a takeover candidate.

Speculators are looking at Icahn's past action in MedImmune as a tell on Biogen. Icahn was accumulating shares on MedImmune shortly before the company announced a sale to AstraZeneca PLC (NYSE: AZN).

We noted Icahn's new BIIB stake in our recent summary of his latest 13F.

Labels: , , ,

Oliver Press Partners Discloses 6% Stake in Coherent (COHR)

In a 13D filing on Coherent (Nasdaq: COHR), Oliver Press Partners disclosed a 6% stake (1,872,865 shares) in the company.

In a pretty standard disclosure, the firm did not make any direct requests on the company, but said they may discuss their views on the direction of the company with management or others and may pursue representation on the Company's Board of Directors.

Labels: , ,

Thursday, August 23, 2007

Sidus Takes An 'Active' Role in LookSmart (LOOK)

In a 13D filing on LookSmart Ltd. (Nasdaq: LOOK), 10.3% holder Sidus Investment Management noted they changed their filing status from 13G 'passive' to 13D 'active'.

In a pretty standard disclosure, Sidus did not make any direct requests on the company. The firm said they reserve the right to discuss various views and opinions with members of the company's senior management.

Labels: , ,

Wednesday, August 22, 2007

New Trades From Top Activists

Here are a few intereting new trades put on from some of our favorite activist funds as disclosed in their lastest 13F filings (Qtr Ended 06/30/07). The stakes mentioned below are all under 5% so no 13Ds are required and the stakes are not nessecarly 'active', but we thought were interesting.

Williamn Ackman's Pershing Square Capital noted a new 10.3 million share stake in office product retailer Staples Inc. (Nasdaq: SPLS).
Jana Partners noted a new 6.5 million share stake in cable company Charter Communications Inc. (Nasdaq: CHTR), a new 725K share stake in broker Goldman Sachs (NYSE: GS), and a new 3 million share stake in rail service company Trinity Industries Inc. (NYSE: TRN).
Robert Chapman's Chapman Capital disclosed a a 460K shares stake in market research firm Harris Interactive Inc. (Nasdaq: HPOL).
Dan Loeb's ThirdPoint disclosed a new 9.65 million share stake in business software company BEA Systems Inc. (Nasdaq: BEAS), a 2.75 million share stake in REIT Douglas Emmett Inc (NYSE: DEI), and a 1.4 million in Veeco Instruments Inc. (Nasdaq: VECO). A full summary of Loeb's 13F is here.
Carl Icahn's Icahn Management's disclosed a new 2.4 million share stake in department store operator Macy's, Inc. (NYSE: M), a 3.5 million share stake in aluminum company Alcoa (NYSE: AA) and a 3.9 million share stake in packaged foods maker Kraft Foods Inc. (NYSE: KFT). A full summary of Icahn's 13F is here.
MMI Investments disclosed a small 138,300 share stake in utility National Fuel Gas Co. (NYSE: NFG)
Warren Lichtenstein's Steel Partners II disclosed a new 2 million share stake in home improvement retailer Home Depot (NYSE: HD), a 642K share stake in adult entertainment company Playboy Enterprises Inc. (NYSE: PLA), a 4.4 million share stake in oil driller Pride International Inc. (NYSE: PDE)
Atticus Capital disclosed a new 1.6 million share stake in heavy equipment maker Caterpillar Inc. (NYSE: CAT), a 2.1 million share stake in electric utililty Entergy Corp. (NYSE: ETR), and a new 4.6 million share stake in oil driller Transocean Inc. (NYSE: RIG).

Labels: , , , , , , ,

Tuesday, August 21, 2007

Loeb Builds Up 9% Passive Stake in Bausch & Lomb (BOL), May Let Others Take the Lead on Activism

In a 13G filing after the close on Bausch & Lomb Inc. (NYSE: BOL), Daniel Loeb's Third Point LLC disclosed a 9% stake (5,000,000 shares) in the company. Loeb's firm held a 1,605,000 share stake in BOL at the quarter ended 06/30/07.

Bausch & Lomb is currently in a definitive merger agreement with Warburg Pincus to be acquired for $65 per share. Rival Advanced Medical Optics Inc. (NYSE: EYE) recently withdrew its $75 per share offer for Bausch & Lomb.

The 13G filing indicates a passive stake, but Loeb is considered an activist investor.

So what does Loeb have up his sleeve for Bausch & Lomb? If Loeb had immediate intentions to rattle management he would have had to file a 13D, so the 13G indicates Loeb prefers to take a 'wait and see' approach.

One thought is that Loeb could be letting another firm take the lead. In the past, Stevie Cohen's SAC Capital filed a 13D on Bausch & Lomb. Loeb could be giving the Wall Street icon first dibs to grill management on its dumb decision to pursue a $65 deal with a private equity firm when a $75 deal was on the table. Cohen cut his stake in BOL below 5% in July and held less than 1 million shares as of July 10, 2007, but it is conceivable that Cohen is still involved with the stock given its recent pullback. Other firms could also be involved.

Labels: , , , , ,

Monday, August 20, 2007

Loeb Gets The Head of PDLI's McDade

Dan Loeb got his wish today - the head of PDL BioPharma, Inc. (Nasdaq: PDLI) CEO Mark McDade.

"PDL BioPharma, announced that a three-month internal investigation of the company's chief executive officer (CEO), Mark McDade, found no credible evidence of improper personal conduct or breach of fiduciary duty by McDade to corroborate the various allegations investigated. The company also announced that McDade, following the investigation and due to the personal toll created by the unsubstantiated rumors and related investigation, has decided to step down as CEO and a member of the board by the end of 2007."

Loeb's Third Point LLC has also been pushing for a sale of PDLI. So today's announcement could re-ignite takeover talk on the stock.

Here is some backround of the Loeb/McDade saga

Labels: , , ,

Atticus Capital Loads Up on Freeport-McMoRan (FCX) Stock

In an amended 13D filing on Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), Atticus Capital LP disclosed that they raised their stake in the company to 7.48% (28,565,673 shares). The firm held 12,774,473 shares and call options on 8,919,500 shares at the quarter ended June 30, 200 (now at 15,336,173 shares and 13,229,500, respectively). The fund has additional long economic exposure to 19,359,974 shares through various arrangements.

In their original filing, Atticus said they "have met with, and may in the future continue to meet with, third parties to encourage them to consider strategic transactions."

Labels: , ,

Friday, August 17, 2007

Ned Sherwood Discloses 6.6% Stake in Capital Southwest (CSWC), Wants Company Liquidated

In a 13D filing on Capital Southwest Corporation (Nasdaq: CSWC), Ned Sherwood disclosed a 6.6% stake and disclosed a letter delivered a letter to the Board of Directors expressing its belief that the shares trade at an excessive discount to the market value of its assets and highlighting several concerns it has about certain aspects of the strategy and direction of the Issuer. Sherwood recommends the company completely liquidation distribute the proceeds to investors.

From the letter, "it is our belief that the Company's stock price continues to trade at an excessive discount to the market value of its assets, which we estimate to range between $175 and $200 per share."

The firm also said, "Given our discussions with management and our review of publicly available information, however, we have little faith that the Board and the Company's new CEO are prepared to make the necessary changes. Absent such changes, we believe that a complete liquidation of the Company is the best way to realize the Company's full value for stockholders."

A Copy of the Letter:

We appreciate the time management took to speak with us earlier this week. Based on our discussions with Capital Southwest Corporation ("CSWC" or the"Company") management and our in-depth review of publicly available information, it is our belief that the Company's stock price continues to trade at an excessive discount to the market value of its assets, which we estimate to range between $175 and $200 per share. This market value is 58% to 81% greater than yesterday's closing price of CSWC of $110.66 per share. We believe that the Company is trading at a significant discount to its intrinsic value because of,among other things, certain policies and practices that the Company has historically adopted and has indicated it will continue to apply for the foreseeable future.

We also have serious issues with certain judgments of CSWC's Board of Directors (the "Board"). Unlike most Business Development Companies ("BDCs"),CSWC has generally chosen to retain its realized gains rather than distribute the proceeds to its shareholders. CSWC has also chosen not to exercise its registration rights on its four most significant holdings in public companies so such shares can be freely traded as market conditions warrant. Based on CSWC's Quarterly Report on Form 10-Q for the period ended June 30, 2007 (the "Form10-Q"), these two policies resulted in a reduction of the Company's stated net asset value ("NAV") by nearly $100 per share. In other words, as of June 30,2007, CSWC's NAV would have been $233.95 per share as opposed to the $135.61 per share that was reported.

It is clear to us that the Board and senior management have adopted policies or utilized accounting presentation practices which result in a significant understatement of CSWC's NAV, and that these policies and practices should be changed immediately.

The rationale for this belief is as follows:

o CSWC owns significant equity positions in four publicly traded companies(Alamo Group Inc., Encore Wire Corporation, Palm Harbor Homes, Inc., and Heelys,Inc.). Although CSWC has held these stakes for many years, it has chosen not to exercise its registration rights with respect to these securities and,therefore, it values these stakes at significant discounts (generally 30% or more) to their end-of-quarter market prices. Further, as a result of its affiliate's status, the failure to register the shares does not permit CSWC to sell a significant portion of its position when market conditions warrant.

o CSWC has historically adopted a policy of electing to "retain all gains realized with one exception during the past 39 years" (quote from the Form10-Q), and its stated intention is to continue to do so in the future. This policy is the most damaging with regard to value obfuscation because it the justification for the accrual of the deferred tax liability which totaled $219.6million, or $56.47 per share, as of June 30, 2007.

CSWC is structured as a BDC and, therefore, all income and tax liabilities are the responsibility of the shareholders, and not of the Company. Nonetheless,CSWC, by choosing to retain all gains, has obligated the Company to pay on behalf of its shareholders a 35% tax to the IRS. If gains were distributed to the shareholders rather than retained, CSWC would owe no tax, and the shareholders would owe long-term capital gains taxes at either a 15% rate (for individuals) or 0% (for tax-exempt entities). In either case, the 35% rate is well in excess of what actually is owed. This practice is unwarranted and totally inconsistent with good business practice.

The Company has indicated that this policy permits it the flexibility to make new investments without having to raise new equity in the capital markets;however, the Form 10-Q showed that CSWC had approximately $94.6 million of cash and unrestricted marketable securities plus $41.4 million of available credit lines or a total of $136.0 million of liquidity. The Company could also increase its credit lines very significantly if it so decided.

During the past five years, CSWC has made new venture capital investments at the rate of approximately $8.5 million per year. Therefore, the maintenance of a policy that requires the booking of a $219.4 million deferred tax liability when the Company has enough liquidity to make 16 years of investments at its recent pace is unwarranted and totally inconsistent with good business practice.By just changing CSWC's distribution policy, this liability would no longer have to be accrued and CSWC's NAV would increase by $56.47 per share from $135.21 to$191.68 per share (as of June 30, 2007). This figure does not include the discount attributable to CSWC's failure to register its shares in its four major public company holdings.

We also believe that CSWC has created value historically by being a successful growth capital investor in private companies. Your policy of retaining virtually all of your securities holdings even after the companies have matured (i.e., earnings have leveled off and/or the company has gone public) has significantly impaired shareholders' returns.

For example, in the case of Alamo, its compound annual return since its1993 IPO has been approximately 5.4% versus the S&P 500's compound return of10.2% over the same period. Similarly, since Palm Harbor's IPO in 1995, is stock price has increased by approximately 6.9% per year versus the S&P 500'scompound annual return of 9.7% over the same period. Heely's went public in December 2006 at a price of $21.00, and it closed yesterday at $8.76. Given thatCSWC does not have a track record of creating value in its publicly traded securities, the Company should have sold such securities as soon as was possible and/or distributed them to its shareholders who could then have made their own investment decisions.

In summary, it is clear that the Board and senior management are not working to narrow the gap between CSWC's intrinsic value and its stock price but, instead, have adopted policies and practices which result in the significant and continued understatement of CSWC's intrinsic value. These practices are clearly not in the best interest of CSWC's stockholders.

We would expect the Board and the Company's new CEO to immediately change these policies and practices, including:

- the method of valuing its portfolio securities;

- the policy of retaining realized gains; and

- the holding on to investments after they are public and have matured.

Given our discussions with management and our review of publicly available information, however, we have little faith that the Board and the Company's new CEO are prepared to make the necessary changes. Absent such changes, we believe that a complete liquidation of the Company is the best way to realize the Company's full value for stockholders.

Accordingly, we believe that management should make the necessary changes we recommend or that the Board should adopt a formal plan of complete liquidation for CSWC under which all of its assets would be sold and the proceeds distributed to stockholders. We would be happy to meet with the Board and management to discuss our views on maximizing shareholder value for CSWC's stockholders; however, we can no longer tolerate inaction. We therefore must reserve all rights to take any and all actions we deem appropriate if the Board and new CEO are unwilling to do what is necessary and proper for its stockholders. We look forward to a positive response and hope further actions on our part will be unnecessary.

Sincerely,

Ned L. Sherwood

Labels: , ,

Biglari's Lion Fund Discloses 5.8% Stake in Steak n Shake (SNS), Nominates Two To Board of Directors

In a 13D filing after the close on Steak n Shake Co. (NYSE: SNS), Sardar Biglari's Lion Fund disclosed a 5.8% stake (1,659,445 shares) in the company and disclosed a recent meeting with the Chairman and management, during which Biglari requested representation on the Board of Directors.

On August 16, 2007, the Lion Fund delivered a letter to the company nominating Sardar Biglari and Philip L. Cooley for election to the Board of Directors at the Issuer's 2008 annual meeting of shareholders.

Labels: ,

Thursday, August 16, 2007

Credit Squeeze Making Activists Back Off Merger Opposition

In an amended 13D filing on Acxiom Corp. (Nasdaq: ACXM), large holder MMI Investments said it has determined not to solicit proxies in opposition of the Proposed Merger of the company with Silver Lake and ValueAct Capital, for cash consideration of $27.10 per share. MMI said it has reassessed the Proposed Merger in view of the substantial and unanticipated deterioration in conditions within the equity and debt markets.

Acxiom is currently selling at $22.40, well below the $27.10 acquisition price.

MMI Investments said it reserves the right to pursue its nominations for election as directors at the Issuer's 2007 Annual Meeting of Shareholders if the Proposed Merger is not consummated.

William Ackman's Pershing Square Capital made a similar move related to his opposition of the takeover of Ceridian Corporation (NYSE: CEN) by Thomas H. Lee Partners, L.P. and Fidelity National Financial. On Friday, Pershing Square said it would support the deal citing concerns in the credit markets.

Ceridian is trading at $31.68, well below the deal price of $36.

Pershing Square said it would continue to pursue its previously announced proxy contest to replace the board, citing on-going concerns regarding credit and broader markets as well as the buyout group's walk-away right if it chooses to pay a $165 million break-up fee.

Labels: , , , , , , ,

Wednesday, August 15, 2007

Large Charter Comm (CHTR) Holder Paul Allen Amends Purpose of Transaction Section of 13D

In an amended 13D filing on Charter Communications, Inc. (Nasdaq: CHTR), 51.7% holder Paul Allen disclosed an amendment of Item 4 "Purpose of Transaction" in his 13D filing. The amendment suggests Allen may pursue or propose a recapitalization or other possible restructuring transactions designed to reduce the company's leverage or a going private transaction.

From the filing:

"Prior to the effectiveness of the Issuer’s initial public offering, Mr. Allen acquired control of CII and caused CII to form the Issuer for the purpose of effecting the public offering. Subsequent to that time, the Reporting Persons have directly or indirectly acquired beneficial ownership of securities of the Issuer and its subsidiaries from time to time for purposes of investment, and to provide financing to the Issuer. The Reporting Persons will continue to review the performance of their investments in the Issuer and its affiliates and to consider or explore alternatives with respect thereto. Mr. Allen, through direct ownership of the Issuer’s securities, through membership interests of Charter Holdco owned by Vulcan or CCI, or otherwise, may from time to time acquire or dispose of beneficial ownership of additional securities of the Issuer or its affiliates in open market transactions, private transactions or transactions with the Issuer or it affiliates, pursue or propose recapitalization or other possible restructuring transactions designed to reduce the Issuer’s leverage (which could include, without limitation, exchanges designed to reduce the Issuer’s leverage including debt to equity exchanges), going private transactions resulting in Mr. Allen acquiring beneficial ownership of all or substantially all of the common stock of the Issuer or other extraordinary corporate transactions, such as mergers or reorganization or sales of material assets, with regard to the Issuer or its affiliates. Any alternatives that the Reporting Persons may pursue could depend upon a variety of factors, including, without limitation, current and anticipated future trading prices for the Issuer’s securities, the financial condition, results of operations and prospects of the Issuer, and general economic, financial market and industry conditions."

Labels: , ,

Summary of Loeb's Third Point LLC 13F

Daniel Loeb's Third Point LLC issued their latest 13F for the quarter ended June 30, 2007:

New Stakes:
Abraxas Petroleum Corp. (AMEX: ABP) 1,207,572 shares, Aeroflex Inc. (Nasdaq: ARXX) 1,260,000 shares, Apartment Investment & Management Co. (NYSE: AIV) 755,000 shares, Applera Corp-Applied Biosystems Group (NYSE: ABI) 200,000 shares, Atmel Corp. (Nasdaq: ATML) 24,400,000 shares, BEA Systems Inc. (Nasdaq: BEAS) 9,650,000 shares, BioFuel Energy Corp. (Nasdaq: BIOF) 1,250,000 shares, CIT Group Inc. (NYSE: CIT) 750,000 shares, Citadel Broadcasting Corporation (NYSE: CDL) 4,396,163 shares, Clear Channel Communications Inc. (NYSE: CCU) 2,750,000 shares, Cypress Bioscience Inc. (Nasdaq: CYPB) 100,000 shares, Dillard's Inc. (NYSE: DDS) 1,000,000 shares, Dominion Resources Inc. (NYSE: D) 400,000 shares, Douglas Emmett Inc (NYSE: DEI) 2,750,000 shares, Greenlight Capital Re, Ltd. (Nasdaq: GLRE) 800,000 shares, Herbalife Ltd. (NYSE: HLF) 1,000,000 shares, Home Solutions of America Inc. (Nasdaq: HSOA) 100,000 share PUT, ICICI Bank Ltd. (NYSE: IBN) 1,110,000 shares, Invesco Plc (NYSE: IVZ) 850,000 shares, Linn Energy, LLC (Nasdaq: LINE) 1,733,331 shares, Medis Technologies Ltd. (Nasdaq: MDTL) 100,000 shares, NuStar GP Holdings LLC (NYSE: NSH) 2,000,000 units, OM Group Inc. (NYSE: OMG) 2,050,000 shares, Post Properties Inc. (NYSE: PPS) 165,000 shares, T. Rowe Price Group, Inc. (Nasdaq: TROW) 100,000 shares PUT, Symantec Corporation (Nasdaq: SYMC) 500,000 shares, UBS AG (NYSE: UBS) 150,000 shares, United Therapeutics Corp. (Nasdaq: UTHR) 250,000 shares, Vantage Energy Services, Inc. (AMEX: VTG) 1,875,000 shares, Veeco Instruments Inc. (Nasdaq: VECO) 1,425,000 shares, Victory Acquisition Corp. (AMEX: VRY) 2,200,000 shares, Willbros Group Inc. (NYSE: WG) 1,500,000 shares
Raised Stakes: Acadia Pharmaceuticals Inc. (Nasdaq: ACAD) from 350,000 shares to 475,000 shares, Alkermes, Inc. (Nasdaq: ALKS) from 750,000 shares to 2,835,000 shares, ATP Oil & Gas Corp. (Nasdaq: ATPG) from 2,000,000 shares to 2,500,000 shares, Eddie Bauer Holdings, Inc. (Nasdaq: EBHI) from 1,200,000 shares to 1,425,000 shares, Bausch & Lomb Inc. (NYSE: BOL) from 300,000 shares to 1,605,000 shares, Candela Corp. (Nasdaq: CLZR) from 1,275,000 shares to 2,120,000 shares, Charming Shoppes Inc. (Nasdaq: CHRS) from 2,2000,000 shares to 5,250,000 shares, CSX (NYSE: CSX) from 1,300,000 shares to 2,000,000 shares, CV Therapeutics, Inc. (Nasdaq: CVTX) from 1,350,000 shares to 5,900,000 shares, Cypress Semiconductor Corporation (NYSE: CY) from 750,000 shares to 5,300,000 shares, DAIMLERCHRYSLER (NYSE: DAI) from 322,000 shares to 447,000 shares, DepoMed Inc. (Nasdaq: DEPO) from 325,000 shares to 4,735,000 shares, Flamel Technologies SA (Nasdaq: FLML) from 225,000 shares to 920,000 shares, Freedom Acquisition Holdings Inc. (NYSE: FRH) from 1,500,000 shares to 2,700,000 shares, Granite Construction Inc. (NYSE: GVA) from 1,350,000 shares to 3,500,000 shares, Infineon Technologies AG (NYSE: IFX) from 1,800,000 shares to 2,600,000 shares, Nabi Biopharmaceuticals (Nasdaq: NABI) from 5,750,000 shares to 6,890,000 shares, Norfolk Southern Corp. (NYSE: NSC) from 1,250,000 shares to 1,350,000 shares, Northern Orion Resources Inc. (AMEX: NTO) from 7,600,000 shares to 8,600,000 shares, NYSE Euronext, Inc. (NYSE: NYX) from 1,650,000 shares to 4,849,700 shares, PDL BioPharma Inc. (Nasdaq: PDLI) from 8,450,000 shares to 11,400,000 shares, Questar Corp. (NYSE: STR) from 325,000 shares to 3,500,000 shares, Synovus Financial Corp. (NYSE: SNV) from 5,500,000 shares to 7,375,000 shares, Tronox Inc. (NYSE: TRX) from 450,000 shares to 2,500,000 shares, Union Pacific Corp. (NYSE: UNP) from 500,000 shares to 700,000 shares
Lowered Stakes:
Acorda Therapeutics, Inc. (Nasdaq: ACOR) from 2,290,000 shares to 1,000,000 shares, AEP Industries Inc. (Nasdaq: AEPI) from 1,000,000 to 0, Alexion Pharmaceuticals, Inc. (Nasdaq: ALXN) from 400,000 shares to 0, BearingPoint (NYSE: BE) from 3,000,000 to 0, Bristol-Myers Squibb Co. (NYSE: BMY) 200,000 to 0, Cephalon Inc. (Nasdaq: CEPH) from 375,000 shares to 200,000 shares, Clearwire Corporation (Nasdaq: CLWR) 150,000 shares to 0, Embarq Corp. (NYSE: EQ) from 325,000 shares to 225,000 shares, Euroseas, Ltd. (ESEA) from 262,212 shares to 0, FMC Corp. (NYSE: FMC) from 700,000 shares to 0, FEI Co. (Nasdaq: FEIC) from 2,130,000 shares to 1,950,000 shares, General Motors Corporation (NYSE: GM) from 1,000,000 to 0, ICO GLOBAL COMM CL A (Nasdaq: ICOG) from 4,500,000 shares to 2,245,000 shares, Invitrogen Corp. (Nasdaq: IVGN) from 800,000 shares to 750,000 shares, Koninklijke Philips Electronics NV (NYSE: PHG) from 685,000 shares to 400,000 shares, Leap Wireless International Inc. (Nasdaq: LEAP) from 750,000 shares to 575,000 shares, Martin Marietta Materials Inc. (NYSE: MLM) from 2,575,000 shares to 550,000 shares, Mastercard Incorporated (NYSE: MA) from 1,900,000 shares to 1,600,000 shares, MDS, Inc. (NYSE: MDZ) from 1,350,00 shares to 0, Molex Inc. (Nasdaq: MOLX) 475,000 shares to 181,700 shares, Motorola Inc. (NYSE: MOT) 3,000,000 shares to 0, Neurochem Inc. (Nasdaq: NRMX) from 250,000 to 0, Neurocrine Biosciences Inc. (Nasdaq: NBIX) from 1,215,000 shares to 0, Onyx Pharmaceuticals Inc. (Nasdaq: ONXX) from 1,080,000 shares to 500,000 shares, Plains Exploration & Production Company (NYSE: PXP) from 2,000,000 shares to 0, QIMONDA AG (NYSE: QI) from 400,000 shares to 0 ,QUALCOMM (Nasdaq: QCOM) from 500,000 shares to 0, Ryerson Inc. (NYSE: RYI) from 1,975,000 shares to 0, SAIC, Inc. (NYSE: SAI) from 300,000 shares to 0, Sears Holdings Corporation (Nasdaq: SHLD) from 500,000 shares to 0, SunPower Corporation (Nasdaq: SPWR) from 559,800 shares to 336,800 shares, Talisman Energy Inc. (NYSE: TLM) from 3,750,000 shares to 1,000,000 shares, Temple-Inland Inc. (NYSE: TIN) from 300,000 shares to 0, Tronox Inc. (NYSE: TRX) from 900,000 shares to 0, Verigy, Ltd. (Nasdaq: VRGY) 900,000 shares to 800,000 shares
Maintained Stakes:
Ariad Pharmaceuticals Inc. (Nasdaq: ARIA), Burlington Northern Santa Fe Corp. (NYSE: BNI), CBS CORP CL B (NYSE: CBS), Chipotle Mexican Grill, Inc. (NYSE: CMG), Coleman Cable, Inc. (Nasdaq: CCIX), Core-Mark Holding Company, Inc. (Nasdaq: CORE), Dade Behring Holdings Inc. (Nasdaq: DADE), EXCO Resources Inc. (NYSE: XCO), Flow International Corp. (Nasdaq: FLOW), Harrah's Entertainment Inc. (NYSE: ET), IHOP Corp. (NYSE: IHP), Kansas City Southern (NYSE: KSU), Ligand Pharmaceuticals Inc. (Nasdaq: LGND), Loral Space & Communications, Inc. (Nasdaq: LORL), Massey Energy Co. (NYSE: MEE), Pogo Producing Co. (NYSE: PPP)

Labels: ,

Tuesday, August 14, 2007

Summary of Berkshire Hathaway's 13F

Warren Buffett's Berkshire Hathaway released its latest 13F for the quarter ended June 30, 2007. Below is a summary comparing the filing to the last 13F for the quarter ended March 31, 2007.

New Stakes:
Bank of America (NYSE: BAC) 8,700,000 shares, Dow Jones (NYSE: DJ) 2,781,800 shares


Raised Stakes:
Burlington Northern Santa Fe Corp. (NYSE: BNI), Johnson & Johnson (NYSE: JNJ), Nike Inc. (NYSE: NKE) from 4,000,000 shares to 8,000,000 shares, Proctor & Gamble (NYSE: PG), Sanofi-Aventis (NYSE: SNY), US Bancorp (NYSE: USB), Wells Fargo & Co. (NYSE: WFC), WellPoint Inc. (NYSE: WLP) from 979,700 shares to 4,200,000 shares
Lowered Stakes:
Ameriprise Financial (NYSE: AMP), Block H & R (NYSE: HRB) from 1,246,800 shares to 0, Pier 1 Imports (NYSE: PIR) from 1,483,400 shares to 0, Tyco International Ltd. (NYSE: TYC) from 10,000,000 shares to 6,310,200, Western Union Co. (NYSE: WU) from 9,868,000 shares to 3,200,000 shares
Maintained Stakes:
American Express (NYSE: AXP), American Standard (NYSE: ASD), Anheuser Busch (NYSE: BUD), Coca Cola (NYSE: KO), Comcast (Nasdaq: CMCSA), Comdisco Holding Co. Inc. (OTCBB: CDCO), ConocoPhillips (NYSE: COP), Costco Wholesale Corp. (Nasdaq: COST), First Data Corp. (NYSE: FDC), Gannett Co., Inc. (NYSE: GCI), General Electric (NYSE: GE), Home Depot (NYSE: HD), Ingersoll-Rand Co. Ltd. (NYSE: IR), Iron Mountain Inc. (NYSE: IRM), Lowe's Companies Inc. (NYSE: LOW), M&T Bank Corp. (NYSE: MTB), Moody's Corp. (NYSE: MCO), PetroChina Co. Ltd. (NYSE: PTR), SunTrust Banks Inc. (NYSE: STI), Torchmark Corp. (NYSE: TMK), USG Corp. (NYSE: USG), United Parcel Service, Inc. (NYSE: UPS), Wal-Mart (NYSE: WMT), Washington Post Co. (NYSE: WPO), Wesco Financial Corp. (NYSE: WSC).
UPDATE - Berkshire's has confidential treatment related to his stakes in Norfolk Southern Corp. (NYSE: NSC) and Union Pacific (NYSE: UNP). In last quarter's 13F Buffet showed a 6,362,800 share stake in NSC and 10,513,100 shares stake in UNP.

Labels: ,

Summary of Icahn Management's 13F

Carl Icahn's Icahn Management's released its latest 13F for the quarter ended June 30, 2007. Below is a summary:

New Positions:
Alcan, Inc. (NYSE: AL) 1,176,000 shares, Alcoa (NYSE: AA) 3,520,000 shares, BEA Systems Inc. (Nasdaq: BEAS) 7,944,293 shares, Biogen Idec Inc. (Nasdaq: BIIB) 2,740,000 shares, Clear Channel Communications Inc. (NYSE: CCU) 1,466,640 shares, Enzon Pharmaceuticals Inc. (Nasdaq: ENZN) 1,740,001 shares, Global Payments Inc. (NYSE: GPN) 1,008,779 shares, Kraft Foods Inc. (NYSE: KFT) 3,920,000 shares, Lincoln National Corp. (NYSE: LNC) 646,400 shares, Macy's, Inc. (NYSE: M) 2,368,560 shares, MeadWestvaco Corporation (NYSE: MWV) 3,781,120 shares, Rowan Companies Inc. (NYSE: RDC) 3,239,600 shares
Raised Positions:
Anadarko Petroleum Corp. (NYSE: APC) from 3,105,520 shares to 4,520,294 shares, CSX Corp. (NYSE: CSX) from 2,675,680 to 2,920,000 shares, Motorola Inc. (NYSE: MOT) from 9,360,000 shares to 55,290,640 shares, Regeneron Pharmaceuticals Inc. (Nasdaq: REGN) from 173,304 shares to 2,270,024 shares, Temple-Inland Inc. (NYSE: TIN) from 5,761,552 shares to 6,046,992 shares, Unum Group (NYSE: UNM) from 2,457,440 shares to 4,020,960 shares
Lowered Positions:
Pride International Inc. (NYSE: PDE) from 4,588,000 shares to 4,527,245 shares

Maintained Positions:
Adventrx Pharmaceuticals Inc. (AMEX: ANX), Blockbuster Inc. (NYSE: BBI), Cyberonics Inc. (Nasdaq: CYBX), Lear Corp. (NYSE: LEA), Lions Gate Entertainment Corp. (NYSE: LGF), Quest Resource Corp. (Nasdaq: QRCP), Talisman Energy Inc. (NYSE: TLM), Telik Inc. (Nasdaq: TELK), Time Warner Inc. (NYSE: TWX), WCI Communities Inc. (NYSE: WCI), Williams Companies Inc. (NYSE: WMB)

Labels: ,

Large Midwest Air (MEH) Holder Pequot Capital Has "Significant Concerns" About Private Equity Buyout

In a 13D filing after the close on Midwest Air Group Inc. (AMEX: MEH), 8.8% holder Pequot Capital Management disclosed a letter the company noting that they have significant concerns regarding the decision of the Board of Directors to pursue an $16 per share all-cash proposal from a private equity firm and its consortium. Pequot said it is not convinced that this taxable, all-cash indication of interest is superior to the enhanced cash and stock offer that the Issuer indicated was made by Airtran Holdings, Inc. (NYSE: AAI) this past weekend.

In the letter Pequot's Steve Pigott said, "After speaking with management this afternoon, we still have serious concerns with the Board’s decision and strongly encourage them to re-evaluate their position. Given that shareholders owning approximately 63% of Midwest’s outstanding common stock recently expressed their approval of the Airtran offer, we think the Board should keep both its mind and its options open with respect to a potential combination with Airtran."

A Copy of the Letter:

Dear Ms. Solberg and Messrs. Skinner, Erickson, Payne, Jr., Sonnentag, Albertine, Kalmbach, Treitel and Hoeksema:

Asf August 13, 2007, Pequot Capital Management, Inc. beneficially owns 2,184,200 shares, or approximately 8.8%, of the outstanding common stock of Midwest Air Group Inc. (“Midwest”). According to public filings, we believe we are Midwest’s largest shareholder.

We have significant concerns with this Board’s decision to pursue an all-cash proposal from a private equity firm and its consortium. We are not convinced that this taxable, all-cash indication of interest is superior to the enhanced cash and stock offer that you indicated was made by Airtran this past weekend. In addition, we fail to see how TPG and Northwest will be able to match the job creation and growth opportunities promised by Airtran for the benefit of Midwest’s employees, suppliers, customers and communities.

Due to the large number of synergies available in a Midwest/Airtran transaction (which may not be replicated by a private equity buyer), we believe there is significantly more upside in Airtran’s cash and stock offer than in a nominally higher all-cash deal. Specifically, we believe that, upon reaching a deal with Midwest, Airtran’s stock price would increase significantly in response to both the available synergies and the earnings accretion that such a combination would provide. Given that the Board previously focused on, among other items in its Schedule 14d-9, the proper sharing of synergies, we fail to understand why the Board now favors a deal that provides no synergies at all to its shareholders.

It is important to note that an increase in Airtran’s stock price would benefit all Midwest shareholders. In fact, we believe an announced deal with Midwest would cause the value of the Airtran offer to exceed, in a very short time, the $16 indication of interest you have currently deemed to be superior. We believe this to be the case even without taking into account the tax-free nature of the Airtran stock being offered in the deal. Despite the volatile markets cited in the TPG letter, Airtran shares rallied 14% after it was announced that Midwest had entered into a confidentiality agreement with Airtran. Taking into account Midwest’s recent operating difficulties and the recent market environment, we feel very comfortable with Airtran as a buyer. The same may not be said for a financial buyer, which would lack Airtran’s strategic rationale and typically provide greater risks to closing. We note your conclusion that the TPG indication of interest provides greater certainty than Airtran’s previously outstanding exchange offer. Consequently, we would look very skeptically at any provisions that would reduce the certainty of closing - including, but not limited to, any inability of Midwest to require specific performance from the buyers to close the transaction and any allocation of the regulatory risks to Midwest.

After speaking with management this afternoon, we still have serious concerns with the Board’s decision and strongly encourage them to re-evaluate their position. Given that shareholders owning approximately 63% of Midwest’s outstanding common stock recently expressed their approval of the Airtran offer, we think the Board should keep both its mind and its options open with respect to a potential combination with Airtran.

Respectfully,

Steve Pigott

Labels: , , , ,

MMI Investments Files Under Hart Scott Rodino Antitrust Act To Boost Stake in Unisys (UIS) Above 10%

In an amended 13D filing after the close on Unisys Corp. (NYSE: UIS), 9.7% holder MMI Investments disclosed that on August 13th they filed under the Hart Scott Rodino Antitrust Improvements Act of 1976 to acquire more than 10% of the common stock. MMI said it does not plan to purchase more than 14.9% of the stock.

From the filing:

"In order to retain its flexibility to determine to increase MMI Investments’ holdings of Common Stock to more than 10% of the outstanding Common Stock of the Issuer, MMI Investments on August 13, 2007 notified the Issuer of its intention to file and filed a Notification and Report Form under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act") and request early termination of the waiting period pursuant to the HSR Act. Upon such filing, the filing of the Issuer’s responsive filing, and the expiration or early termination of the waiting period, the Reporting Persons would be permitted under the HSR Act to purchase additional shares of Common Stock such that the Reporting Persons could hold up to $500 million (subject to adjustment from time to time in accordance with the HSR Act, with the current threshold being $597.9 million) in total market value of Common Stock at the time of such purchase. However, MMI Investments does not currently intend to purchase Common Stock of the Issuer if, as a result of the purchase, it would own more than 14.9% of the outstanding Common Stock (which would have represented a market value of approximately $404 million based on the number of shares outstanding at June 30, 2007 and the closing price on August 13, 2007)."

Labels: , ,

Large H&R Block (HRB) Holder Harris Associates To Vote In Favor of Breeden Partners Board Nominees

In a 13D filing after the close on H&R Block, Inc. (NYSE: HRB), 6.76% holder Harris Associates L.P. said, "After carefully considering the positions expressed by both parties and based on its investment analysis, it is HALP's present intention to vote the shares held on behalf of its clients in favor of the nominees of Breeden Partners. HALP believes that the election of the Breeden Partners nominees is most likely to improve shareholder returns and is in the best interests of shareholders."

Labels: , , , ,

Monday, August 13, 2007

Commerce Energy Group (EGR) Holder Zeff Suggests Board Nominee, Resignation of Perkins, Sale of Co

In a 13D filing on Commerce Energy Group Inc. (AMEX: EGR), 10.7% holder Daniel Zeff / Zeff Capital disclosed a letter to Chairman Robert Perkins, identifying certain discussions he has had with the Company and third parties, and suggested certain actions, including submitting a nominee to serve as a director on the Board, calling for the resignation of Robert Perkins from the Board and urging careful consideration of a sale of the Company.

In the letter Zeff said, "Steve Boss, the company's CEO, Charles Bayless, a director, and Lawrence Clayton, the company's former CFO, have made it clear to me in personal conversations that Universal Energy's recent expression of interest to acquire the company in a cash buyout for $2.50-$2.75 was reasonable and should be explored. It is also clear that there are other potential acquirers of our company and that all reasonable offers should be explored."

A Copy of the Letter:

Dear Mr. Perkins,

Why have you not responded to my letter regarding the cash takeover offer for our company?

Steve Boss, the company's CEO, Charles Bayless, a director, and Lawrence Clayton, the company's former CFO, have made it clear to me in personal conversations that Universal Energy's recent expression of interest to acquire the company in a cash buyout for $2.50-$2.75 was reasonable and should be explored. It is also clear that there are other potential acquirers of our company and that all reasonable offers should be explored.

Without explanation of the company's rejection or consideration of Universal's offer and other potential offers, I must assume that you are shirking your fiduciary responsibilities. The Board has an obligation to carefully investigate, evaluate and respond to the expression of interest in light of the company's other alternatives. Before your former CFO left the company, I am told that Mr. Clayton wrote to the Board that he believes you are acting against shareholder interests by not exploring a sale at this time.

Commerce Energy's Board appears to be split on the issue of exploring a sale, and with an even six members, the Board is ineffectual. It has become apparent to me that you, and Directors Gary Hessenauer and Mark Juergensen are improperly delaying and obstructing the process of exploring reasonable offers for the company that could create shareholder value.

You continue to hide behind your legal counsel and your "processes and strategies in place" to avoid thorough consideration of a sale of the company and, more egregiously, to advance your own interests. Those interests appear to include a potential replacement of the CEO with Mr. Hessenauer. Mr. Hessenauer was apparently involved in the last CEO search (that resulted in Mr. Boss' hiring) and was outside of the top ten candidates considered.

The Board must take action now to break this deadlock and to move forward with a sale of the company, by removing yourself and other directors acting against shareholders, and by adding a new member to the Board. I here by re-submit Mr. Andrew Dailey as a nominee for the Board. I previously submitted his name for nomination to CEO, Steve Boss.

Commerce Energy's shareholders do not have the luxury of time and must consider takeover offers now, before the planned August 17 Board meeting and before any potentially damaging new management changes take place. Mr.Hessenauer offered to hold a special meeting for me with the independent Board members (which includes all members except Steve Boss) at the end of August. I demand that you respond publicly now and with your current CEO involved.

Bob, your actions appear to be personally motivated or simply irrational, particularly in light of your minor personal holdings in Commerce Energy and the Board's meager 2% position in the stock. Why are you not acting on behalf of the real owners of this company? Zeff Capital Partners owns 10.7%of the stock and yet you refuse to respond to our inquiries or act in our best interests. It has also become clear that you do not fully understand how customer attrition will be affected by operational changes (i.e. firings) that you may seek at the company. So, not only will your actions damage EGR'ss hareholders, but our employees and our customers as well. Bob, this is not the right job for you and I ask again that you remove yourself from the Board of Directors of Commerce Energy Group.

Whether you are removed from the Board or an additional seat is added,Commerce Energy's directors must act in the shareholders' best interests and move forward with a sale of the company.

Sincerely,
Daniel Zeff

Labels: , , ,

Pirate Capital To Brink's (BCO) CEO: Quit Flying Around in the Corporate Jet and Split-Up The Damn Company

In a 13D filing after the close Friday on Brink's Company (NYSE: BCO), Pirate Capital disclosed a letter to Chairman and CEO Michael T. Dan, reporting the results of a survey of the 100 largest shareholders indicating they support the separation of the company into two publicly traded companies through a tax-free split-up.

In the letter Pirate Capital's Thomas R. Hudson said, "While a sale of the company, as opposed to a tax-free split-up, could be more lucrative to you under your change in control agreement with Brink's, potentially enriching you with millions of dollars, I believe the survey is conclusive as to the large shareholder preference for a split-up. Based on the survey (excluding quantitative/indexed shareholders that could not take part), DF King concluded that a majority of the shareholders surveyed supported a tax-free split-up."

Hudson also said, "I think it is reasonable to assume that if you, as Chief Executive Officer and Chairman of the Board of Brink's, do not now pursue such a strategy with the board, that other shareholders may consider voting you off the board at the 2008 annual meeting. Maybe if you spent less time driving around in company provided cars, flying around in corporate aircraft, or golfing at the corporate golf course, and instead focused on listening to the owners of the company (the shareholders), you would be able to move the company strategically in the direction apparently favored by shareholders."

Hudson is a member of Brink's Board of Directors.

A Copy of the Letter:

Dear Michael:

Pirate Capital LLC, at considerable expense, hired D.F. King & Co., Inc. ("DFKing") to conduct a survey (based on best available public information) of the100 largest shareholders of The Brink's Company ("Brink's") to determine the extent of shareholder interest in having Brink's separated into two publicly traded companies through a tax-free split-up. While a sale of the company, as opposed to a tax-free split-up, could be more lucrative to you under your change in control agreement with Brink's, potentially enriching you with millions of dollars, I believe the survey is conclusive as to the large shareholder preference for a split-up. Based on the survey (excluding quantitative/indexed shareholders that could not take part), DF King concluded that a majority of the shareholders surveyed supported a tax-free split-up. A summary of the survey provided by DF King is attached as Appendix A. I think it is reasonable to assume that if you, as Chief Executive Officer and Chairman of the Board of Brink's, do not now pursue such a strategy with the board, that other shareholders may consider voting you off the board at the 2008 annual meeting.Maybe if you spent less time driving around in company provided cars, flying around in corporate aircraft, or golfing at the corporate golf course, and instead focused on listening to the owners of the company (the shareholders),you would be able to move the company strategically in the direction apparently favored by shareholders.

Brink's latest earnings release and your public comments stating that you "live inside the house," and suggesting that you had superior knowledge as to why only the status quo was an appropriate course of action for Brink's at this time(without giving any meaningful proof of that) is insulting to all shareholders.The shareholders of Brink's deserve to know why you (and/or the board) do not support a split-up of the company at this time given the shareholder analyses provided to you showing that such a split could significantly increase Brink's' share price.

You have publicly stated the board utilized the services of multiple advisors to reach the conclusion not to split the company at this time. Given that this outcome is inconsistent with the calls from the shareholder base to split the company, I believe that you should immediately release the advisor analyses to your shareholders (via a public filing) along with any presentations that may have been made to the board by these advisors. If there is any information that is truly sensitive to Brink's from a competitive standpoint, that information could easily be redacted. If the board, as you have publicly stated, truly analyzed multiple options for Brink's (which certainly would have included a split of the company), then publicly release the range of values (both trading and acquisition values if applicable) these advisors concluded would be possible for Brink's to achieve as two publicly traded entities. What are you afraid of Michael? If you and/or the board have decided the company should maintain the status quo then I believe you have an obligation to the shareholders (owners) of Brink's to tell them why (in detail, with supporting presentations) you wish to continue operating Brink's as a single entity and not pursue a simple split-up of the company to eliminate the conglomerate discount the company now suffers from.

These are not rhetorical questions Michael. I and the rest of the shareholder base deserve answers.

Respectfully,
Thomas R. Hudson Jr.
Manager

Labels: , , ,