Can Carl Icahn Perform a Hat Trick with Transocean (RIG)? – Herbalife Ltd. (HLF), CVR Energy, Inc. (CVI)

Page 1 of 2

Herbalife Ltd. (NYSE:HLF)Personal care products company Herbalife Ltd. (NYSE:HLF) made headlines the other day after the company’s board approved two of billionaire investor Carl Icahn’s designees to its board.

The size of the board will increase to 11 from 9 to accommodate Icahn’s nominees. Icahn has also been given the option of boosting his stake to 25 percent from the current 13.6 percent. The stock moved up as a result, but the real winner here is Icahn, whose interest in the company placed it in a winning position against arch rival Bill Ackman.

Ackman, manager of the hedge fund Pershing Square Capital Management, has an exceptionally large short position in Herbalife. By some accounts, Pershing Square made a $1 billion bet on the fall in Herbalife Ltd. (NYSE:HLF) shares. Ackman has even gone so far as to have labeled Herbalife a pyramid scheme.

However, Herbalife’s stock has gone up more than 11 percent so far this week, effectively nullifying Ackman’s short position. While Ackman must be busy calculating his fund’s loss, Icahn took the opportunity to rub some salt on the bruised ego. “[Bill Ackman] has given us the opportunity to buy a company at a discount…and for that, I thank him,” said Icahn in an interview.

Herbalife Ltd. (NYSE:HLF) is not exactly a company with exceptional growth attributes, though it remains a profitable entity at what it does. Icahn’s investment follows on the heels of fellow hedge fund investor Daniel Loeb’s decision of cutting his exposure to the company.

Loeb’s fund had an 8.2 percent stake in the company on Jan. 9. However, there is a big difference in the investment approaches as Loeb remains largely content as a passive investor. Icahn, on the other hand, is a difficult-to-please activist investor who, after setting his eyes on a company, pushes for major overhauls to unlock shareholder value. In the process, he seems to have made more enemies than friends.

While Herbalife’s rally has largely played out, Icahn has positions in several other companies that have  yet to unfold. Transocean LTD (NYSE:RIG) is one such company in which Icahn has an interest in. Icahn Enterprises reported in January that Icahn and his affiliates had acquired a 1.5 percent stake in the deep water driller and were seeking to expand the stake to more than 3 percent.

Icahn’s intention of buying the stake is not clear, but it is expected to be substantially different from the objectives seen in Herbalife. The company’s shares currently trades at a substantial discount to its April 2010 levels when it used to trade around $85. Transocean was the rig contractor of the ill-fated oil well in the Gulf of Mexico which experienced the massive spill that nearly wiped out all the profits from its balance sheet for two years. Earlier in January, the company agreed to pay $1.4 billion in penalties for its role in the maritime disaster.

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 Click to see monthly returns in table format!

Lists

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

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!