Billionaire Carl Icahn Is Becoming An Active Activist: Dell Inc. (DELL), Herbalife Ltd. (HLF), Transocean LTD (RIG)

Page 1 of 2
It seems everywhere we look, Carl Icahn is nipping at some company’s heels, getting ready to bite. He is  the ultimate alpha investor. 60 Minutes profiled him in August 2008 and called his effect on a company’s share price the “Icahn Lift.” The premise behind it is that Icahn boosts the value of a company’s share price for other investors when he buys stock in that particular company (check out all of Icahn’s stock picks).
Icahn started his style of investing in the 1970′s and 80′s. The press originally called him a “Greenmailer” as companies would just pay him off to go away. In other words they paid a premium for his shares to leave the company alone. In the late 1980′s and 90′s, Icahn became known as a “Corporate Raider” after he bought entire companies using cash and debt. Today he’s known as an “Activist Investor.” But as Icahn told 60 Minutes, he’s been doing the same thing all along, which is identify an undervalued company and use his deep pockets to angle for change in the company’s strategy and boost the stock price. When Icahn wins, other investors win as well because investors are investing right alongside him. Let’s take a look at where Icahn is currently investing.
Dell Inc. (NASDAQ:DELL)
Dell Inc. (NASDAQ:DELL)

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.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
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

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

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!