Why Lexmark, Mentor Graphics, and Renren Jumped Today

Wall Street ended the third quarter on a positive note on Friday, as investors took heart that concerns about the health of the global financial system appeared to be somewhat overblown in Thursday's losses. With today's gains of about three-quarters of a percent, the SPDR S&P 500 (NYSEMKT: SPY) ETF finished the quarter up almost 4%, and the popular iShares MSCI Emerging Markets (NYSEMKT: EEM) ETF gained 9% for the quarter. Some of today's winners made single-day advances that were that large, and among the best performers on the day were Lexmark (NYSE: LXK), Mentor Graphics (NASDAQ: MENT), and Renren (NYSE: RENN).

Image source: Lexmark.

Lexmark is heading for the finish line

Lexmark jumped 14% after the technology company got approval from the Committee on Foreign Investment in the United States for its proposed acquisition by Chinese consortium Apex. In order to help improve the odds of having the deal go through, Lexmark agreed to keep its headquarters in Kentucky, and CEO Paul Rooke said he believes that "as part of the consortium, Lexmark will be able to reach the next level of growth and innovation [...] faster than we could achieve on our own." In particular, Lexmark has high hopes for making a bigger impact on the Asia-Pacific region, and given how important that part of the world is from a competitive standpoint, investors were right to celebrate the step forward.

Mentor Graphics gets hedge fund attention

Mentor Graphics gained 7% in the wake of news that hedge fund investor Elliott Management had taken a more than 8% stake in the design-services company, more than doubling its previous position in the stock. Elliott Management has a reputation for taking an activist's role in the companies in which it invests, and Mentor shareholders hope that its larger position will give it more clout in trying to persuade company management to adopt more investor-friendly measures going forward. With Elliott having said that it has started talking with Mentor's leadership team to look for strategic opportunities to boost corporate efficiency and grow the overall business, Mentor shareholders will want to watch closely to see what comes next.

Renren breaks itself up

Finally, Renren climbed 8%. The Chinese internet company said it would spin off its social video platform woxiu.com into a separate entity, along with a host of minority stakes in other privately held companies. Renren said it had identified the risk that the company could be deemed to be an investment company because of its numerous investments in companies outside its consolidated group, and to avoid that, creating the new company and distributing rights that would be convertible into shares was the best solution. The spinoff shouldn't have any tax consequences, but one potential complication is that Renren doesn't plan to register the newly spun-off company's shares, or list them on a stock exchange, instead essentially remaining private. That could be a nuisance for ordinary investors, but institutional shareholders were happy enough with the mood to bid up share prices today.

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