Weekly Market Overview
The week is again full of news as private equity, executive compensation, and the mortgage crisis top the headlines. First, in the private equity world, Blackstone said that it would be the second private equity/hedge fund to go public. The move sparked much speculation that Carlyle and a number of other private equity giants would follow in what would be a new trend allowing the average investor to capitalize on the large profits reaped by these companies.

Executive compensation also topped the headlines as the SEC's new executive compensation disclosures rules have begun to go into effect. Not suprisingly, this has caused a few problems as investors are beginning to realize just how complex executive compensation really is to analyze. Instead of making things easier, many investors insist that things like negative income being reported (a result of the way stock options are valued) have investors even more confused than they were before. Meanwhile, those on the Hill are trying to get additional rights in place for investors to have a non-binding proxy vote on executive compensation on a regular basis. More on these stories over at ExecutiveInvestigator.com.

Finally, some are saying that the mortgage market is beginning to rebound after a brief hit on the economy. New Home Builders Confidence numbers, however, slipped for the first time in six months reflecting continuing concern about worsening credit in the subprime motrgage market. Fortunately, many are saying that the spillover into the regular mortgage markets is not likely to be as significant as first thought. However, this is still a story to keep an eye on.


Top 10 Stocks to Watch this Week
Fundamental Analysis
Our top five stocks to watch for fundamental investors are:

1. Cost-U-Less, Inc. (CULS) - There are two hedge funds currently involved with this stock, both calling for the company to put itself up for sale. One of the hedge funds has even said it would make an offer. If the two hedge funds are successful in lobbying management, the company should sell for at least $12 per share - a 40% gain. (More CULS articles...)
   
2. Temple Inland Inc. (TIN) - The company announced last week that it would be following Carl Icahn's advice and breaking up the company. Shares spiked over 14% on the news, up almost 30% since we first began coverage! We believe that the value unlocked in these transactions will exceed the premium seen today; however, it may take awhile for these actions to materialize.
   
3. Ceridian Corporation (CEN) - Bill Ackman propposed that Ceridian spin off its Comdata division since the two share almost no synergies. Moreover, he said that the segment was being held back by the parent company. This is another great spin off opportunity that would help both the parent company and the child company... and Bill Ackman definitely knows what he is doing! Meanwhile, those close to the situation say that investment bankers are trying to find buyers for both businesses - a move which is angering the two activist hedge funds. Last week, Ackman sued the company, demanding that they release letters between Board Directors that they believe contains evidence supporting their thesis that the company has been having problems. (More CEN articles...)
   
4. Applebees International Inc. (APPB) - The Breeden Partners recently filed a series of Schedule 13Ds suggesting that the company improve several defficiencies, including its excessive executive compensation. If these issues are appropriately addressed, it could help the company save millions and increase their share price significantly. (More APPB articles...)
   
5. Electro Scientific Industries (ESIO) - Nierenberg Investment Management first lobbied this company to take several actions to return shareholder value. Since then, they have been joined by another hedge fund. Combined, these two should have enough leverage to at least warrant a response by management. If they are successful, it could mean special dividends or other measures aimed at unlocking value. (More ESIO articles...)
   

Technical Analysis
Our top four stocks to watch for technical analysts are:

1. Helix Energy Solutions Group (HLX) - Intermediate-term bullish bottom triangle.
2. Hoku Scientific (HOKU) - Intermediate-term bullish continuation wedge.
3. Freeport-McMoRan Copper and Gold (FCX) - Long-term bullish continuation diamond.
4. PMC-Sierra (PMCS) - Intermediate-term bullish diamond bottom.

Stock of the Week : Take-Two Interactive Software (TTWO)
This stock first caught our interest earlier this month when several investors collectively holding 46% of the company's outstanding shares reached an agreement with the company to vote in a new slate of six directors. The investment group consists primarily of OppenheimerFunds, SAC, Tudor Investment, DE Shaw Valence and ZelnickMedia. The new nominees for the Board of Directors include former BMG Entertainment CEO Strauss Zelnick, former News Corp executive Benjamin Feder, Jon Moses, Michael Dornemann and Michael Sheresky. Many analysts and investors are predicting that the proposed management change would have a positive impact on the company, after it suffered losses for the past four quarters. But in a new twist to the story yesterday, the company announced that it would delay its annual meeting in order to evaluate the hedge funds' proposals as well as its own strategic alternatives, including a possible sale of the company.

Read More on SECInvestor.com…


Filing of the Week : Form 10-K
Most investors look to 10-K filings when looking for information about a company. These filings are classified as "Annual Report" filings that encompass a company's yearly financials and relevent information. They contain an overview of the company, how they did last year, a detailed overview of their financials, and management discussion and analysis. Newer 10-Ks may also contain executive compensation discussion and analysis. These filings are required reading before investing in any company!

You can easily track these SEC filings with e-mail and RSS alerts using SECFilings.com!


Tip of the Week : Peek into Hedge Fund Portfolios
Hedge funds are required to report their annual holdings in a Schedule 13F filing with the SEC. These filings give detailed insight into what companies the hedge fund is holding and how much they have at stake in each. It can be an important clue into which companies may be targetted next for buyouts, mergers, spin-offs, or other strategic transactions that can generate value for shareholders. Overall, these are filings that are definitely worth keeping an eye on!


Final Words
The economy seems to be turning to the upside lately with little volatility compared to last week. Good luck trading!