The most recent look at activist filings for the week produced a thin list, which may have been a result of the arrival of the holiday season. However, with markets sitting at a two-year high, valuations could likely be creating slim pickings in activist land.

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Looking for Change
Hedge fund MMI Investments is taking a very active role in the affairs of EMS Technologies (Nasdaq:ELMG), of which it owns a 7.7% stake. EMS is a $300 million designer and manufacturer of wireless communication products for industries such as defense, aviation and other commercial interests. Shares trade for $20 but MMI feels the company is deeply undervalued. In a letter MMI wrote to management, they argue that "despite poor financial and stock price performance...[EMS] remains a highly valuable franchise with assets that should be monetized through a sale of the company at a value substantially higher than its present stock price."

MMI has pursued any further active roles at this point. It's possible that if the stock remains a laggard and management doesn't act to effect change, the fund will pursue other channels such as seeking board representation. I think its safe to say that based on MMI's conviction of where the shares should be trading in relation to today's share price, MMI won't sit still. (For more, see Activist Hedge Funds: Follow The Trail To Profit.)

A Concentrated Bet
Avista Capital Partners recently reported that it has increased its stake in energy services company Geokinetics (NYSE:GOK) and now owns over 38% of the company. In addition, Geo-Services of Norway disclosed ownership of 15% of Geokinetics, leaving over 50% of the company in the hands of two investment groups. No details of plans were given by either of these groups. Currently, Geokinetics seems to be busy fending off its debt issues as the company's debt is more than twice its current market cap. Just as recently as December 14, the company announced a waiver to its financial covenants and an amendment to its revolving credit facility. Clearly the company is under tight watch with respect to its finances.

Value investor Mario Gabelli Gamco Investors continued to increase its ownership in both Cincinnati Bell (NYSE:CBB) and Baldor Electric (NYSE:BEZ). Gamco now owns 8.3% of CBB paying around $2.50 for its most recent purchases. Cincinnati Bell recently announced that it is being added to the S&P 600 SmallCap index. Gamco is better known for its hands-off approach and sticking to buying stakes in companies it feels offer value, so these two names may be worth a closer look. (For more, see This Week's Activist Filings)

The Bottom Line
With valuations becoming less and less attractive, it appears that temporarily impaired or distressed companies are showing up more in 13D filings. Those situations may not be the best plays for individual investors unless you have a long window of time at your disposal and can handle the volatility as well as a risk of an unsuccessful outcome. (For more, see Hedge Funds: Strategies.)

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