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. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

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

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards 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!