Weekly Market Overview

Stocks close down today erasing earlier highs and indicating a continued negative sentiment with the economy. The two biggests catalysts to the decline were housing data statistics showing unsold homes hitting a 16-year high in July and news that Home Depot cut the price of its whole-sale supply business indicating a weaker credit market. The weaker credit market has also been blamed for countless sales being called off or prices reduced and even a spin-off that was cancelled. Meanwhile, the housing situation continues to get more grim as speculators are still left holding the bag on inventory. Some are pointing to hope, however, in the form of insiders in the financial industry that are purchasing more of their own shares than ever before. This leads many to believe that the road to recovery may be long, but at least we are probably bottoming out.

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. Tyco Electronics (TEL) - After recently spinning off from Tyco this stock is down almost 10%, but is starting to catch the attention of value investors. The company is trading well below its peers with strong cash flows. It is also a victim of the spin-off effect, which has made it an even greater value to opportunistic investors. We believe that this company will outperform in the long-term. (Read More)
2. Capital Southwest (CSWC) - Activist investor Ned Sherwood came out with an analysis on this company showing a $200/share valuation. The only thing holding shares back are practices by the company that can easily be changed if they so desire. Unfortunately, the company seems resistant to change now, but this is definitely a stock to watch incase they change their mind. (Read More)
3. United Online (UNTD) - Classmates.com is one of the fastest growing social networking websites on the Internet and this company plans to spin it off real soon. Investors should keep an eye on this development as spin-offs not only represent great investment opportunities, but the social networking space is red hot with names like Facebook and Myspace in the news constantly. (Read More)
4. Brinks Company (BCO) - Activist hedge funds Pirate Capital and MMI Investments are still fighting the company to unlock value through a divesture of several key businesses. Given the difficult credit market, some are now questioning whether or not this is possible. However, if credit markets improve and they hedge funds are successful during the next annual meeting, this stock could soar. (Read More)
5. Ceridian Corp. (CEN) - This activist target has agreed to bend to the pressure of the hedge funds and is definitely a company to watch ahead of its annual meeting where it will fight to retain its incumbant board members. If Pershing Square is successful in installing its own board members, we could see significant share appreciation. (Read More)
   

Technical Analysis

1. Activision Inc. (ATVI) - Intermediate term bullish continuation diamond.
2. Baker Hughes Inc. (BHI) - Long term bullish continuation diamond.
3. Dendreon Corp. (DNDN) - Intermediate term bullish symmetrical continuation triangle.
4. Petrohawk Energy Corp. (HK) - Intermediate term bullish continuation diamond.
5. Acme Packet Inc. (APKT) - Long term bullish head and shoulders bottom.
   

H&R Block (NYSE:HRB) shareholders are gearing up for this years September 6th board meeting where they will be faced with a decision whether or not to vote for incumbent board members or a new slate of three directors proposed by ex-SEC head Richard Breeden's hedge fund, Breeden Capital Partners. Shareholders are hoping that these new directors can implement a series of changes designed to jump the company's stagnant share price. (Read More)

Article of the Week : Credit Crunch Threatens Activist Investors

Activist investors have worked to unlock value for shareholders in hundreds of companies over the past few years by holding a sword to the throats of board members and executives. The results have been spectacular with one study reporting that activism targets between 2001 and 2005 outperformed the overall market by more than 7 percent in the short term. Unfortunately, this shareholder revolution may be coming to an end as the credit crunch puts a hold on many common activist strategies. (Read More)

Final Words

The market remains optimistic despite questionable yields and other economic data. While this is good news for investors in the short term, be sure to use caution and only invest prudently.

Weekly Market Overview

Stocks closed up today after a late day bounce. Increasing strains in the credit market coupled with a Fed that is apparently open to rate cuts eased investor concerns as short term Treasury bills rallied late in the day. The Fed funds rate is currently trading well below the target of 5.25% at just 5.06% - meaning that all the liquidity concerns that have been causing downward pressure are being eased by Fed injections. In the end, many believe that the markets are still in trouble, but for now it seems that the Fed as eased concerns in the short-term. Whether or how long this will last depends on many factors, so investors should be aware that risks exist!

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. Brinks Company (BCO) – The Brink’s Company remains on our watchlist since both MMI and Pirate Capital still hold significant stakes in the company. The company recently announced higher than expected earnings along with a dividend increase. Pirate Capital recently announced that it has determined that the majority of investors would support at least the consideration of a breakup. They also
   
2. Ceridian Corporation (CEN) – Bill Ackman’s activist play also continues to hold appeal with us since the breakup could unlock substantial value. We have not seen an announcement of an official date, but as of March 13th, Pershing Square is still engaged in a proxy contest with the company’s board of directors. Recently, Pershing Square lost its battle to obtain questionable letters, but vowed to continue pursuing its objectives. However, news came out today stating that one potential buyer of Ceridian was able to obtain $3.5 billion in debt financing, which is great news for shareholders holding out for a buyout. Meanwhile, shareholders recently won a lawsuit against the company that may level the competitive bidding landscape, paving the way for an increased bid.
   
3. Hexcel Corporation (HXL) – OSS Capital demanded today that the company engage an investment bank to explore strategic alternatives. The company’s shares are worth $14 per share above the current market price if priced at its peers’ levels. All we are waiting on is the support of the board of directors! Meanwhile, the company has received several analyst upgrades and sits near its 52-week high.
   
4. Applebees International (APPB) – Breeden Capital Management first approached Applebees several months ago suggesting that the company put itself up for sale. Three weeks ago, the company announced that it had received several takeover offers and would review the bids before taking final offers. Recently, the company also agreed to yield two board seats to activist investor Breeden Partners. The company finally announced a sale today at $2.1 billion - a 4% premium to Friday's close and a substantial increase from when we first mentioned the stock.
   
5. Universal Power Group (UPG) – 3V Capital Management announced last week that they weren’t pleased with the company’s valuation. They recommended several changes that they hope would enhance shareholder value. We are still waiting on more details and a response from the company, but this was definitely a stock worth following!

Technical Analysis

1. Hudson City Bank Corp. (HCBK) - Intermediate term bullish head and shoulders bottom.
2. Investools Inc. (SWIM) - Intermediate term bullish continuation wedge.
3. Ebay inc. (EBAY) - Intermediate term bullish continuation diamond.
4. Medarex Inc. (MEDX) - Long term bullish continuation diamond.
5. Neustar (NSR) - Long term bullish continuation diamond.
   

Gyrodyne Corporation (NDAQ:GYRO) directors may face some competition at the company's next annual meeting. Full Value Partners announced in a Schedule 13D/A filing their intention to solicit proxies in an attempt to takeover the company's board during the next annual meeting. The hedge fund said that it plans to eliminate the company's poison pill and work to unlock value in the company if successful. (Read More)

Tip of the Week : Understanding Subprime Mortgages

Subprime mortgages have been causing quite the stir in Wall Street, but what are these types of mortgages and how might the failure in this relatively small sector of mortgages affect the larger economy? (Read More)

Final Words

The market remains optimistic despite questionable yields and other economic data. While this is good news for investors in the short term, be sure to use caution and only invest prudently.

Weekly Market Overview

Stocks closed down slightly today erasing earlier gains after Goldman Sachs revealed that it had injected $3 billion into some of its hedge funds hurt by the credit markets. Many analysts say that it will be difficult to predict when the crisis will end given the unanticipated consequences of the subprime collapse. Overseas, central banks around the world continued to add liquidity to the credit markets in order to ease concerns and volatility. Whether or not we will see a quick turnaround from this crisis remains to be seen; however, investors should at least keep a close eye on credit and subprime developments as problems continue to rise.

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. Brinks Company (BCO) – The Brink’s Company remains on our watchlist since both MMI and Pirate Capital still hold significant stakes in the company. The company recently announced higher than expected earnings along with a dividend increase. Pirate Capital recently announced that it has determined that the majority of investors would support at least the consideration of a breakup. They also
   
2. Ceridian Corporation (CEN) – Bill Ackman’s activist play also continues to hold appeal with us since the breakup could unlock substantial value. We have not seen an announcement of an official date, but as of March 13th, Pershing Square is still engaged in a proxy contest with the company’s board of directors. Recently, Pershing Square lost its battle to obtain questionable letters, but vowed to continue pursuing its objectives. However, news came out today stating that one potential buyer of Ceridian was able to obtain $3.5 billion in debt financing, which is great news for shareholders holding out for a buyout. Meanwhile, shareholders recently won a lawsuit against the company that may level the competitive bidding landscape, paving the way for an increased bid.
   
3. Hexcel Corporation (HXL) – OSS Capital demanded today that the company engage an investment bank to explore strategic alternatives. The company’s shares are worth $14 per share above the current market price if priced at its peers’ levels. All we are waiting on is the support of the board of directors! Meanwhile, the company has received several analyst upgrades and sits near its 52-week high.
   
4. Applebees International (APPB) – Breeden Capital Management first approached Applebees several months ago suggesting that the company put itself up for sale. Three weeks ago, the company announced that it had received several takeover offers and would review the bids before taking final offers. Recently, the company also agreed to yield two board seats to activist investor Breeden Partners. The company finally announced a sale today at $2.1 billion - a 4% premium to Friday's close and a substantial increase from when we first mentioned the stock.
   
5. Universal Power Group (UPG) – 3V Capital Management announced last week that they weren’t pleased with the company’s valuation. They recommended several changes that they hope would enhance shareholder value. We are still waiting on more details and a response from the company, but this was definitely a stock worth following!

Technical Analysis

1. Hudson City Bank Corp. (HCBK) - Intermediate term bullish head and shoulders bottom.
2. Investools Inc. (SWIM) - Intermediate term bullish continuation wedge.
3. Ebay inc. (EBAY) - Intermediate term bullish continuation diamond.
4. Medarex Inc. (MEDX) - Long term bullish continuation diamond.
5. Neustar (NSR) - Long term bullish continuation diamond.
   

Brink's Company (NYSE:BCO) shares moved down marginally today after Thomas Hudson's Pirate Capital disclosed a 4.5 percent stake and issued a letter to the board of directors. In the letter, the activist hedge fund revealed a DF King & Co. survey of Brink's shareholders showing widespread support for its proposed breakup of the company. (Read More)

Tip of the Week : Understanding Subprime Mortgages

Subprime mortgages have been causing quite the stir in Wall Street, but what are these types of mortgages and how might the failure in this relatively small sector of mortgages affect the larger economy? (Read More)

Final Words

The market remains optimistic despite questionable yields and other economic data. While this is good news for investors in the short term, be sure to use caution and only invest prudently.

Weekly Market Overview

Stocks rallied to close up over 280 points for its best day since 2003 in a further show of volatility among concerns about credit markets and bad home loans. Leading the indexes was the financial sector as shares in AIG, Citigroup and JP Morgan each rose over 3% on the day. Another catalyst appeared to be a comment from a managing director at Standard & Poor who said the market had overreacted to its decision Friday to lower its ratings outlook on Bear Stearns. Perhaps it is just the first round of bargain hunters, but many more are joining the crowd that believes troubles are not as bad as the market has priced.

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. Brinks Company (BCO) – The Brink’s Company remains on our watchlist since both MMI and Pirate Capital still hold significant stakes in the company. The company recently announced higher than expected earnings along with a dividend increase. We are still waiting to hear about the activist situation.
   
2. Ceridian Corporation (CEN) – Bill Ackman’s activist play also continues to hold appeal with us since the breakup could unlock substantial value. We have not seen an announcement of an official date, but as of March 13th, Pershing Square is still engaged in a proxy contest with the company’s board of directors. Recently, Pershing Square lost its battle to obtain questionable letters, but vowed to continue pursuing its objectives. However, news came out today stating that one potential buyer of Ceridian was able to obtain $3.5 billion in debt financing, which is great news for shareholders holding out for a buyout. Meanwhile, shareholders recently won a lawsuit against the company that may level the competitive bidding landscape, paving the way for an increased bid.
   
3. Hexcel Corporation (HXL) – OSS Capital demanded today that the company engage an investment bank to explore strategic alternatives. The company’s shares are worth $14 per share above the current market price if priced at its peers’ levels. All we are waiting on is the support of the board of directors! Meanwhile, the company has received several analyst upgrades and sits near its 52-week high.
   
4. Applebees International (APPB) – Breeden Capital Management first approached Applebees several months ago suggesting that the company put itself up for sale. Three weeks ago, the company announced that it had received several takeover offers and would review the bids before taking final offers. Recently, the company also agreed to yield two board seats to activist investor Breeden Partners. The company finally announced a sale today at $2.1 billion - a 4% premium to Friday's close and a substantial increase from when we first mentioned the stock.
   
5. Universal Power Group (UPG) – 3V Capital Management announced last week that they weren’t pleased with the company’s valuation. They recommended several changes that they hope would enhance shareholder value. We are still waiting on more details and a response from the company, but this was definitely a stock worth following!

Technical Analysis

1. Hudson City Bank Corp. (HCBK) - Intermediate term bullish head and shoulders bottom.
2. Investools Inc. (SWIM) - Intermediate term bullish continuation wedge.
3. Ebay inc. (EBAY) - Intermediate term bullish continuation diamond.
4. Medarex Inc. (MEDX) - Long term bullish continuation diamond.
5. Neustar (NSR) - Long term bullish continuation diamond.
   

Temple-Inland (NYSE:TIN) shares moved up $0.86, or 1.6%, to $54.76 today after the company announced that it would sell its timberland holdings for $2.4 billion and distribute the money to shareholders via a special dividend. The move comes amid an Icahn-led restructuring of the company that many shareholders are hoping can help it unlock value. (Read More)

Tip of the Week : Know Your Peers - Pirate Capital

Pirate Capital is one of the most well-known activist hedge funds in today's marketplace. Learn more about their management and strategies they use to unlock value in their investments! (Read More)

Final Words

The market remains optimistic despite questionable yields and other economic data. While this is good news for investors in the short term, be sure to use caution and only invest prudently.