48 companies targeted by 51 shareholder activists during May

This information was extracted from Hedge Fund Solutions' Catalyst Equity Research Report, a free in-depth weekly research on activist investments. Cut and past this link to subscribe to a free report http://www.hedgerelations.com/research.html


Ticker Company Investor
ABTL Autobytel Inc Trilogy Inc
ADF ACM Managed Dollar Income Fund Bulldog Investors
ARIA Ariad Pharmaceuticals Inc Biotechnology Value Fund
ASUR Asure Software Inc Red Oak Partners
ATGN AltiGen Wanger Investment Management
AVCA Advocat Inc Bristol Investment Fund
AXC Advanced Technology Acquisition Corp Bulldog Investors
BASI Bioanalytical Systems Thomas Harenburg
BBEP BreitBurn Energy Partners, L.P. Quicksilver Resources
BVF Biovail Corp Eugene Melnyk
CAV Cavalier Homes Inc GAMCO Investors
CAV Cavalier Homes Inc Legacy Housing
CITZ CFS Bancorp Financial Edge Fund
DITC Ditech Networks Inc Lamassu Holdings
DVD Dover Motorsports Inc. Marathon Capital
ELGX Endologix Inc Elliott Associates
FEP Franklin Electronic Publishers inc Saunders Acquisition Corp
GCS DWS Global Commodities Stock Fund Western Investment
HBRF.OB Highbury Financial Peerless Systems
HWK Hawk Corp GAMCO Investors
JOUT Johnson Outdoors Inc Dolphin Ltd
JTX Jackson Hewitt Tax Service Shamrock Activist Value Fund
JTX Jackson Hewitt Tax Service JTH Tax
KANA Kana Software KVO Capital Management
KONA Kona Grill Mill Road Capital
MATH.PK Mathstar, Inc Salvatore Muoio
MEG Media General Inc GAMCO Investors
MOVE Move Inc. Nierenberg Investment Management
NDD Neuberger Berman Dividend Advantage Fund Western Investment
ORCC Online Resources Corp Tennenbaum Capital Partners
PCBC Pacific Capital Bancorp Santa Ynez Band of Chumash Indians
PFBI Premier Financial Bancorp Hot Creek Capital
PLCE Children's Place Retail Stores Ezra Dabah
PRLS Peerless Systems Corp. Bandera Partners
PRSC Providence Sevice Corp 73114 Investments
PTSG.OB Petrosearch Energy Group Tiberius Capital
RPT Ramco-Gershenson Properties Trust Equity One
SKS Saks Incorporated P Schoenfeld
SNG Canadian Superior Energy Palo Alto Investors
SRO DWS Rreef Real Estate Fund II, Inc Bulldog Investors
SUMT SumTotal Systems Vista Equity Partners
TDS Telephone & Data Systems Southeastern Asset Management
TDS Telephone & Data Systems Inc. Weitz & Co
TOMO TomoTherapy Incorporated Avalon Capital
TUC Mac-Gray Corp Fairview Capital Investment Management
TXCC Transwitch Corp Brener International Group
TXI Texas Industries Shamrock Activist Value Fund
UAHC United American Healthcare Corp Strategic Turnaround Equity Partners
ULU Uluru Inc. Brencourt Advisors
VNDA Vanda Pharmaceuticals Tang Capital

Bank of America Hires 4 Guys Who Know What They are Doing

Bank of America (BAC) announced that four new guys were going on the board who knew what they were doing. That does sound good. Unfortunately it also sounds very new. The new board members are Donald E. Powell, a former chairman of the Federal Deposit Insurance Corporation; Susan Bies, a former member of the board of governors in the Federal Reserve System; D. Paul Jones Jr., a former CEO of Compass Bancshares, and William Boardman, a former executive at Bank One, which is now a part of JPMorgan Chase.(JPM)

What no one seems to be discussing is just what are the qualifications for becoming a board member in general and of a financial institution in particular. Everyone wants the grey hair wisdom. Few companies got it. Next question is what are the qualifications to keep your seat on the board. Everyone looks to the CEO but barely knows the board. Those guys are the ones truly in charge. There is too much back room closed door dynamics that shareholders cannot assess.

Top Ships - Are They a Going Concern

TOP Ships Inc. (Nasdaq: TOPS) announced operating results for the Q1 ended March 31, 2009. They claim to be making money as opposed to red ink this time last year. They proceed with some discussion on operations. But the question becomes are they a going concern. They are in breech of loan covenants. The business model is malfunctioning. Then they lay this comment out about how they will finance the future.

“The Company expects to rely upon operating cash flows, long-term borrowings and equity financings to implement its future growth plan.”

What company does not? When you have violated your financial covenants your credibility disappears. The question becomes is Top Ships a going concern? How would we know?

Ciena Two Way Communication

Ciena Corporation (NASDAQ:CIEN) released Q2 info and identified itself as schizophrenic. We all know that the business environment is difficult. But when you follow this quote you will realize that the management team wants to speak out of both sides of their mouth at the same time.

“Our fiscal second quarter was particularly challenging, reflecting the difficult macro and industry environment and continued delays in customer spending,” said Gary Smith, Ciena’s CEO and president. “While recent service providers’ public commentary about expected annual capital expenditures has given the industry reason to be more optimistic about the second half of the year, our customers continue to spend cautiously, and as a result, our visibility remains limited. However, based on our direct conversations with customers and supported by trends we are seeing currently in the business, including recently improved order flow, we expect to deliver sequential revenue growth in our fiscal third quarter.”

Talk about a statement that was drafted in anticipation of rear view observation at some point in the future.

Frank Stronach Plays it Cagey

Frank Stronach Chairman of Magna International (NYSE:MGA) and lead deal maker of the Opel purchase from General Motors was just interviewed on BNN news. They tried hard to get him to talk about the Opel deal but he refused to discuss it. Admitting that a memorandum of understanding has been signed and claiming that governments are twitchy he begged off all questions.

You keep hearing stories about China wanting involvement. You know Stronach has Russian partners but Frank does the talking. Are the Bear and the Dragon squaring off in a back room battle. Will the GM deal have a black swan component to it?

The China market is huge. Players are carving up tomorrows territories. In the mean time investors are focused on the short term mechanics of GM bankruptcy.

Hovnanian Calls Out for Government Support

Hovnanian Enterprises, Inc. (NYSE: HOV) reported results and as a home builder had no choice but to make the case that they are trying very hard in a difficult environment. They point with some optimism to the contract cancellation rate which is now tracking at 24% is a real improvement over previous quarters.

But when you listen to the executives cry out to the government you realize that they do not have enough control over their own business model. I know times are tough; but they are tough for everyone. investing is Darwinian and management teams that do not have control over their business model will face the obvious consequences. Read this quote

“...we remain concerned that the combination of the expiration of the $8,000 federal tax credit in November of this year, the depletion of the state funds allocated for the $10,000 California state tax credit for new home buyers and the potential increase in existing home listings due to another wave of foreclosures as the recent moratoriums on foreclosures have ended could have a dampening effect on our future contract pace. We are hopeful that our government will realize the importance of taking action to both increase the amount of the tax credit and extend its term."

Essentially they are looking for third party events to alter their cost structure. Not good.

Lionsgate Caution Flags

Lionsgate (NYSE:LGF) Reports Record Revenues of $1.47 Billion for Fiscal 2009, up 8% From Previous Year; Net Loss is $163.0 Million. I usually find it difficult to understand movie production houses. Its quite similar to wildcat exploration. You win some you lose some. But when revenues are up 8% and you still print red ink you have to look at the caution flags.

This is what I see.

Cash is down from $372 million to $138 million. The company points out correctly that This is prior to the sale of a 49% equity interest in TV Guide Network and TV Guide.com to global private equity investment fund One Equity Partners for $123 million in cash on May 28, 2009. They fail to point out what they did with that sizeable amount of cash.

Good will is up from $225 million to $379 million. Bank loans are up from zero to $225 million. These are all seriously bad problems in the hundreds of millions. Anyone show or movie will not solve this. So enough with the show biz and lets talk wealth creation.

Playboy Needs a New Playboy

Playboy Enterprises (NYSE:PLA) has chosen Scott N. Flanders, CEO of Freedom Communications, to lead the company founded by Hugh Hefner. It has been noted that Mr. Flanders had engineered the sale of Columbia House to the Blackstone Group, and speculated that his deal-making abilities may have played a role in Playboy’s decision to hire him.

So maybe yes maybe no. Is this company up for sale? No one seems to be bidding up the stock. Where are the arbs when you need them? The brand is tired and needs rejuvenation. Hefner knows it. So who will be the next playboy? The controversy may be similar to selecting a new Bond. Is George Clooney available? Does it have to be a white guy? Can Donald Trump resist the challenge?

If GM can survive well sort of, then what about Playboy?

GM Obama Says Board is Responsible

General Motors (NYSE:GM) President Obama eloquently pointed out that the government will stay out of GM’s hair except for the most fundamental decisions. The board will be responsible he says. Considering the track record the selection of board members will be critical. The AGM is set for Aug 4, 2009. How will the nominations work?

Frontline Reg FD Challenged

Frontline Limited (NYSE:FRO) reported quarterly results with a fairly skimpy press release issued through Marketwire on May 28, 2009 01:59 ET. They had an interesting way of describing comparable results essentially using the word equivalent instead of comparable. This creates confusion. Read this quote from their earnings release

“The Board of Frontline Ltd. (the "Company" or "Frontline") announces net income of $76.6 million for the first quarter of 2009, equivalent to earnings per share of $0.98 compared with net income of $51.6 million for the fourth quarter of 2008, equivalent to earnings per share of $0.66. Net operating income for the quarter was $111.0 million compared with $115.3 million in the fourth quarter of 2008.”

The release continues to deal with a few basic items. Then you go to the conference call transcript and learn about
1. Cash Break even rates on a daily basis
2. Details on cancellations in the newbuilding program
3. China has increased their rate of oil consumption which has impacted operations

All these points are critical but were left out of the press release. Therefore the press release is Reg FD challenged. But these guy’s operate from Hamilton Bermuda. Class action lawsuit; but how?