Dell Inc. (NASDAQ:DELL) founder Michael Dell is attempting to take the company he founded private in a leveraged buyout at $13.65 a share. Many shareholders have opposed this move and have voiced their displeasure, but to no avail. Now they have a key ally in their fight in the form of Carl Icahn. In an interview with Bloomberg, Icahn said “I simply think that Dell Inc. (NASDAQ:DELL) is paying too little for the company and I’d like to note that other investors have said that before me.” Icahn has threatened years of litigation if Dell Inc. (NASDAQ:DELL) succeeds in taking the company private at what Icahn sees as too cheap of a price. Considering that the company has $7.35 per share in cash on its balance sheet, a buyout price of $13.65 is valuing the company’s core business at just $6.30 a share. I’d have to agree with Icahn on this one (see more about other Dell opposition).
Herbalife Ltd. (NYSE:HLF)
Carl Icahn is going up against hedge fund manager Bill Ackman over Herbalife. Ackman has publicly stated that Herbalife Ltd. (NYSE:HLF) is a pyramid scheme and that he has shorted $1 billion of the company’s shares. The stock traded as low as $24.24 after Ackman came public with his claims. The company’s share price has been climbing steadily higher and Icahn accumulated his position between $35 and $38. The stock popped from $38 to $46 after Icahn’s stake was disclosed. The company is currently trading at $41.50. Icahn recently upped his stake to 15.55% by buying an additional 2 million shares (read more on Icahn v. Ackman).
In looking at the company’s business and financials, one sees a very profitable company. The company has been in business since 1980. In looking at one of Ackman’s main points that the company is a pyramid scheme, a pyramid scheme doesn’t go overlooked for over 30 years. And the company’s business is highly profitable. Herbalife Ltd. (NYSE:HLF) has a PEG ratio of 0.59 and an operating margin of 16.24%. The financials argue in favor of Icahn.
Transocean LTD (NYSE:RIG)
Icahn is using his various tactics to angle for change at Transocean LTD (NYSE:RIG). Icahn wants a $4 dividend declared, and the company’s board and chairman replaced. Before Icahn got involved, the stock was trading at $44 per share last December. Once his stake was disclosed in January, the stock shot to a 52-week high of $59.50. The company is currently trading at $53.13. From a valuation standpoint, Transocean LTD (NYSE:RIG) does look extremely undervalued. The company has a current PEG ratio, or Price/Earnings divided by annual earnings per share growth, of 0.52. Transocean LTD (NYSE:RIG) has an operating margin of 18.32% and a current book value per share of $43.50. Icahn added Transocean LTD (NYSE:RIG) to his portfolio during the fourth quarter, making it his tenth largest position.