2 Stocks You Should Invest In From Icahn’s Wins: Herbalife Ltd. (HLF), Chesapeake Energy Corporation (CHK)

Page 1 of 3

ICAHN CAPITAL Carl IcahnFor now, it seems Bill Ackman is getting the better of fellow activist investor Carl Icahn. After the recent smackdown on CNBC between both billionaire investors over Herbalife Ltd. (NYSE:HLF), the stock observed a decline of ~20% in the last 20 days. I think the “zero target” that Ackman presented initially is impossible unless the government intervenes and shuts this company down. Icahn, on the other hand, won’t confirm if he owns any shares in Herbalife. According to the Wall Street Journal, he made a small position in this stock at the same time as Loeb. Looking from an investing perspective, I would not advise investing in Herbalife for now as the billionaires’ ego clashes are making it a battleground stock.

Speaking of Carl Icahn, this investor has shown active interest in oil and energy stocks. About 32% of his portfolio is dedicated to this sector. This year, he invested in Transocean Limited following his last year’s investment in Chesapeake Energy Corporation (NYSE:CHK) Corporation and CVR Energy, Inc. (NYSE:CVI) Incorporated. I have picked up three stocks in which Carl holds significant positions, and all three of them look strong with their long term fundamentals intact. Two of them belong to the basic materials sector, and the third is a company that provides internet subscription services. Let’s discuss them in detail:

Name of Company Percentage growth in stock price YTD (~) Carl Icahn’s Holding in Company’s Total Capital
Netflix, Inc. (NASDAQ:NFLX)
93.41% 10%
Chesapeake Energy Corporation (NYSE:CHK) 20.48% 9%
CVR Energy, Inc. (NYSE:CVI) 10.75% 82%

Source: Yahoo! Finance

Netflix, Inc. (NASDAQ:NFLX)

After posting a good 4Q12, strong guidance for 1Q13, and strong content deals, the stock price of Netflix has seen an upward trend. No one will be more pleased by this rise than Carl Icahn, who purchased his stake in this stock for only ~$321.4 million, a stake which is now valued at ~$970 million. In 4Q12 the company’s revenue rose by ~8% y/y and the total count of global subscribers reached ~33 million. Domestic streaming for the quarter led to an increase of ~2 million subscribers.

Netflix’s management expects that the company will continue to give a similar performance at least for the next two quarters. As per the guidance for 1Q 2013, the total number of domestic streaming subscribers is expected to be ~28.5 million, up from the current ~27.2 million. The targeted increase in the number of subscribers is achievable, considering the new content deals it recently entered into with Time Warner and Flavor Unit Entertainment. Time Warner has agreed to show some of the famous cartoon series on Netflix that include episodes of Green Lantern, Robot Chicken, etc. As per the deal, the content will be available on Netflix from this April onward. The deal will prove to be a boon for the company as Time Warner’s past success is well known, with its hit series like Ben 10, Johnny Bravo, etc. The company also entered into an agreement with Flavor Unit that gives it the rights to stream movies produced by Flavor Unit after they are released in theaters. It is to be noted that it is the same production house that produced hits like Beauty Shop, Bringing Down the House, etc.

Page 1 of 3
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!