Lately, activist investors are using the market’s decline as a competitive opportunity to establish large positions in equities that they believe are undervalued.

Here are some of the latest activist investments recently filed with the Security and Exchange Commission.

Stephens Investments Holdings has entered into an agreement with Cost Plus (CPWM), which will allow the investment vehicle to increase its ownership to 19.9% without triggering Cost Plus’s poison pill.

Cost Plus, which operates as a specialty retailer of casual home furnishings and entertaining products, has truly been caught in the crosshairs of both a slowing economy and the weakening housing market. On Jan. 12, Cost Plus management said that it would cut 18% of its staff, close 26 stores and exit eight media markets in an attempt to improve liquidity and to improve working capital on the company’s balance sheet.

In December, Cost Plus reported that its same-store sales data, a way to measure a retailer's year-over-year sales growth, declined 4.3% to $278.8 million dollars for the month, from $291.8 million in December 2007. CEO Barry Feld said: “While we continued to experience positive foot traffic trends in December, we were disappointed with our holiday sales results and larger-than-anticipated markdowns resulting from the tough economic climate and exceptionally poor weather conditions in certain geographic areas."

The company's balance sheet is pathetic, with a current market cap of $21 million, $3.5 million in cash and $240 million in debt. This equates to a total debt-to-equity ratio of 1.6; generally, whenever a total debt-to-equity ratio is above 1, a firm’s short-term solvency is in question.

In other news, DellaCamera Capital sent a letter to the board of Enzon (ENZN), reserving the right to nominate two individuals to the board at the 2009 annual meeting.

DellaCamera has been an active investor in Enzon for some time, recently demanding that the company take the following actions to increase shareholder value: engage Goldman Sachs to review strategic alternatives; authorize a $150 million share repurchase and implement an $80 million repurchase immediately; monetize $70 million of the company's royalty streams; and explore a split-off of the biotechnology subsidiary.


Deerfield Capital Management offered to buy NitroMed (NTMD) for 50 cents per share in cash to 65 cents per share in cash. NitroMed is the manufacturer of BiDil, an orally administered medication available only in the U.S. for the treatment of heart failure in self-identified African-American patients.

Recently, NitroMed sold BiDil and BiDil XR to JHP Pharmaceuticals, but Deerfeild’s current offer to buy all of NitroMed will likely derail such a deal.

American business man Ronald Burkle has acquired a 7% stake in shares of Whole Foods Market (WFMI), since Nov. 24, with an average price of $10.04 per share.

Currently, U.S. antitrust enforcers are asking a court to halt Whole Foods' integration of Wild Oats, claiming that this merger would create an unfair competitive monopoly in the space of natural and organic foods and supermarkets.

Posted on Jan. 13, 2009

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