Billionaire Carl Icahn Dumps Greenbrier Companies (GBX)

ICAHN CAPITAL LPGreenbrier Companies Inc (NYSE:GBX) announced per a 13D that billionaire Carl Icahn sold off over 65% of his stake, dropping his ownership of the rail car company from 9.9% to 3.4%. The selloff comes after Greenbrier rejected Icahn’s latest offer to pay $22 per share for the company, compared to its $15.60 trading range. Shares fell around 15% last week on the news that Greenbrier rejected the offer (check out Carl Icahn’s newest stock picks).

Icahn had offered to merge American Railcar – which he owns over 50% of – with Greenbrier. Icahn’s previous 13D filing announced an offer to buy Greenbrier for $20 per share, but the activist investor upped it to $22 after his initial bid was declined. Merger talks have been on-and-off for about five years now, with Icahn dropping his last major effort in 2008. Raymond James recently downgraded Greenbrier following the announcement that Icahn had decided to sell off his stake.

As a whole, the railcar industry should bode well in the interim as a rise in coal consumption provides a supportive tailwind. This should help Greenbrier as well, despite Icahn’s exit. Greenbrier trades as one of the cheapest rail stocks in the industry on a P/E (9x) and P/CF (4x) basis. One other positive is the ‘growth at a reasonable price’ opportunity the company’s stock presents. Greenbrier trades at a PEG of 0.7 given its 12.5% 5-year expected earnings growth rate.

Comparing Greenbrier to Icahn’s American Railcar, Greenbrier is much cheaper. Both companies trade with a market cap between $425-$675 million, but American Railcar sports a 1x sales multiple, while Greenbrier is at a mere 0.3x. Greenbrier has a 3.2 beta but is down over 35% year to date. Assuming Greenbrier trades in line with American Railcar on a P/S basis, the stock could triple in value as long run growth stabilizes.

But what about the company’s competitors?

FreightCar America, Inc. (NASDAQ:RAIL) and Westinghouse Air Brake Technologies Corp (NYSE:WAB) are two of Greenbrier’s key competitors. FreightCar trades at a forward P/E of 19x and Westinghouse is at 15x year-ahead EPS, compared to Greenbrier’s 7x. FreightCar focuses on aluminum-bodied railcars and has the lowest return on equity (13.7%) of the bunch. Westinghouse, meanwhile, trades on the high-end at 18x trailing earnings and 15x cash flow. FreightCar has billionaire Jim Simons as one of its big name investors (check out Jim Simons’ top bets).

Oshkosh Corporation (NYSE:OSK) is another company that Icahn is looking to dump. Oshkosh appears cheap on a P/E basis at 12x earnings, compared to Terex (23x), but we believe investors might be able to find better value in Icahn’s other major auto manufacturer play: Navistar. Billionaire Ken Griffin was backing Icahn last quarter with a 150% increase in his stake (check out Ken Griffin’s newest picks).

With Icahn dumping a significant portion of Oshkosh and Greenbrier, there are rumors that he’s thinking of getting into Hewlett-Packard Company (NYSE:HPQ). The computer company is up 15% over the past month on the back of speculation over Icahn’s interest. For the time being, we believe that Dell might be a better tech investment than HP, given the latter’s near-stagnant 5-year EPS growth. Interestingly, Billionaire Ray Dalio – founder of Bridgewater Associates – did up his stake in HP almost 20% last quarter (check out Ray Dalio’s key bets).

To recap: Greenbrier is still a solid bet despite Icahn’s exit. The downward pressure over the last week might give investors a solid buying opportunity, and bulls should look toward the company’s solid expected EPS growth and attractive sales valuation. For more of Carl Icahn, check out some recent coverage below:

Carl Icahn is getting out of Oshkosh, should you?

Icahn protégé cashes out of Ralcorp

Carl Icahn and MHR set their sights on Navistar

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
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

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!