Dell Inc. (DELL), Netflix, Inc. (NFLX) & Herbalife Ltd. (HLF): How Carl Icahn Plans to Deliver Some Alpha

Back when Ackman first touted his short thesis on Herbalife Ltd. (NYSE:HLF), Icahn called the company the “mother of all short squeezes.” After the stock’s move upward and revealing a position that includes owning 16.5% of Herbalife, Icahn is now proclaiming that the daughter of all short squeezes is now beginning in Herbalife.

The stock is trading for less than 14 times earnings and has a 0.8 PEG ratio. Icahn notes that he’s still in the stock, and actually bought more. He goes as far as to make the point that he has spoke to a multi-level marketing legal expert who believes that Ackman’s several-hundred-page report on Herbalife Ltd. (NYSE:HLF) is baseless.

Bottom line

Icahn believes that Dell Inc. (NASDAQ:DELL) is a “no brainer” investment. I like the stock given Icahn’s track record but the risk of the stock falling remains, assuming shareholders reject Michael Dell’s offer and Icahn doesn’t immediately step up with a valid offer.

Netflix, Inc. (NASDAQ:NFLX) has defied gravity with its 170% year-to-date stock price growth. But I find it difficult for the company to grow into the lofty valuation it’s trading at. Other “high” growth tech company Amazon.com, Inc. (NASDAQ:AMZN) only trades at 2.2 times sales and an EV/EBTIDA multiple of 50 times.

Meanwhile, the billionaire has also fared well with his bet against fellow billionaire Bill Ackman in Herbalife Ltd. (NYSE:HLF). While I wouldn’t suggest shorting the stock, I don’t see the stock as a viable long-term investment opportunity.

The article How Carl Icahn Plans to Deliver Some Alpha originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall Hargrave owns shares of Dell Inc. (NASDAQ:DELL). The Motley Fool recommends Netflix, Inc. (NASDAQ:NFLX). The Motley Fool owns shares of Netflix, Inc. (NASDAQ:NFLX) and has the following options: long January 2014 $50 calls on Herbalife Ltd. (NYSE:HLF). Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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