Gemara

65b (R. Ila'i): If one stole a lamb or calf, and it grew up and became a ram or ox, this is a Shinuy (change), and he acquires it (but he owes its value). If he slaughters or sells it, he slaughters or sells his own animal.

Question (R. Chanina - Beraisa): If one stole a lamb or calf, and it grew up and became a ram or ox, he pays Kefel, four or five like at the time of the theft.

If he acquires it through Shinuy, he slaughters or sells his own animal!

Counter-question: (R. Ilai): If he does not acquire, why does he pay like the time of the theft? He should pay like now!

Answer (R. Chanina): He does not, because he stole a lamb, not a ram!

Question (R. Zeira): He should acquire through Shinuy ha'Shem (the stolen item has a new name)!

Answer (Rava): Also a one-day old ox is called an ox - "an ox... that will be born."

Answer (to Question 2 - Rav Sheshes): The Beraisa is like Beis Shamai, who say that one does not acquire through a change.

66b (Rava): Physical change acquires, e.g. he stole wood, and now it is Kelim. Also Shinuy ha'Shem acquires. It was a hide, and now it is called a table-cover!

Question (Mishnah): One who built a stolen beam into his house can return its value to the owner. This is an enactment to help thieves repent.

The beam is now called 'roof', yet he acquires only due to the enactment!

Answer (Rav Yosef): It is still called a beam, even after it is built into the roof.

(R. Zeira): Shinuy ha'Shem that can be reversed is not considered a Shinuy.

Inference: A Shinuy ha'Shem that cannot be reversed is a Shinuy!

Question (Mishnah): If a pipe was affixed and then hollowed out (for water to flow through it into a Mikveh), it does not disqualify the Mikveh. (Before it was called a piece of wood, and now it is a pipe, yet this does not make it a Kli to disqualify!)

Answer: The law that Mayim She'uvim disqualifies a Mikveh is mid'Rabanan. (Chachamim were lenient about it.)

96a (Rav Papa): If one stole a date tree and cut it down, even if he plants it in his property, he did not acquire it. Initially it was called a date tree, and also now! If he stole a date tree and made logs, he did not acquire them, for they are called date logs. If he stole logs and made beams, he acquired them.

96b (Mishnah): The general rule is, all thieves pay like at the time of the theft.

This includes R. Ila'a's case. If one stole a lamb or calf and it became a ram or ox, he acquires it through Shinuy. If he slaughters or sells it, it is his own animal.

Rishonim

Rif and Rosh (34a and 9:4): The Mishnah teaches like R. Ila'i, that if one stole a lamb and it became a ram, he acquires it to be exempt from four or five.

Rambam (Hilchos Gezeilah 2:14): If one stole a lamb or calf, and it grew up and became a ram or ox, this is a Shinuy. He acquires it and pays like at the time of the theft, even if the owner did not despair.

Rambam (Hilchos Tzitzis 1:11): One cannot make Tzitzis from stolen wool.

Nimukei Yosef (Hilchos Tzitzis (after Menachos) 12b DH Kesherah): Stolen threads are Pasul, because it must be "of yours". However, if one stole wool and made strings, they are Kosher, for he acquired through despair and Shinuy ha'Guf. L'Chatchilah it is forbidden, due to "Sonei Gezel b'Olah."

Rosh (7:2): Despair with Shinuy Reshus or with a small Shinuy ha'Shem acquires mid'Oraisa. A proper Shinuy ha'Shem, e.g. a calf became an ox, acquires mid'Oraisa (without despair).

Poskim

Shulchan Aruch (OC 11:6): If one made Tzitzis from stolen wool, they are Pasul, for it says "they will make for themselves" - from theirs.

Bi'ur Halachah (DH v'Davka): After they are tied, the strings that hang straight after the windings are called Gedil. He should acquire through Shinuy ha'Shem, even though it is reversible! Perhaps he does not, because they are called Gedil strings.

Rema: This is only if he stole strings.

Mishnah Berurah (28): Even if there was despair and he twined the strings, he does not acquire, for their name did not change.

Rema: If he stole wool and made strings, they are Kosher. However, l'Chatchilah one may not make them.

Beis Yosef (DH Oso'ah): The Rambam disqualifies Tzitzis from stolen wool. Perhaps he discusses before despair. Alternatively, he discusses even after despair. He does not acquire through Shinuy, for it is reversible.

Question (Drishah 2): The Tur (CM 361) says that Shinuy ha'Shem acquires with despair, even if it is reversible! He does not say that the Rambam disagrees! Rather, the Rambam and Tur discuss before despair.

Taz (5): The Nimukei Yosef discusses Shinuy ha'Guf, i.e. Shinuy ha'Shem. Initially it was wool, and now it is strings. This resolves the difficulty from CM 361, which says that despair does not acquire without Shinuy Reshus.

Gra (22): The Nimukei Yosef says that Mitzvah ha'Ba'ah b'Aveirah applies here. However, Sukah 30a connotes that it does not apply when he acquires through Shinuy ha'Shem! It is b'Di'eved only due to the Berachah.

Mishnah Berurah (30): The Taz holds that he is Yotzei with despair and Shinuy ha'Shem. The Magen Avraham and Gra hold that he acquires through Shinuy Ma'aseh, without despair. If one bought stolen strings, before despair he was not Yotzei. If the owner despaired after he bought, some say that he was Yotzei. If one bought stolen strings after despair, he was Yotzei. The Magen Avraham permits blessing, for he did not steal them. Others are stringent.

Bi'ur Halachah (DH ul'Inyan): Sha'arei Teshuvah (5) explains that according to the Magen Avraham, if there was despair with Shinuy ha'Shem, one may bless. The same applies to despair with Shinuy Reshus or Shinuy Ma'aseh. The Chavos Ya'ir, Gra and Taz disagree.

Igros Moshe (OC 3:65): The Magen Avraham says that even after Shinuy Ma'aseh, the old ownership lapsed only because the item is not here, so the theft is despised regarding Berachah. After despair, the old ownership lapsed properly, and one may bless. A full Shinuy ha'Shem properly uproots the old ownership, but it does not suffice for Berachah without despair. The Eliyahu Rabah says that since Shinuy Ma'aseh does not permit blessing, and despair by itself does not, even together they do not. Perhaps this is even if the Isur is not intact, e.g. a loaf was kneaded with forbidden water or baked in a forbidden oven.