According to a freshly-submitted filing with the SEC, Carl Icahn of Icahn Capital LP, who has been calling for a breakup of American International Group Inc. (NYSE:AIG), believes that the alternative plan presented by the company’s CEO last week “was inadequate” and is in the process of “assembling a slate of directors to shake up the company”. Let us remind you that the activist investor urged the insurer to split into three separate companies last year, focusing on life, property-casualty and mortgage coverage insurance. The de-conglomeration plan might allow the insurer to avoid the government’s systemically important financial institution (SIFI) designation, which generally adds extra regulatory costs and lowers companies’ return on capital. Last week, American International Group Inc. (NYSE:AIG)’s CEO revealed plans “for a more patient approach of simplifying the company” by having an initial public offering of a 19.9% stake in the mortgage guaranty business United Guaranty Corporation, selling a broker-dealer operation called AIG Advisor Group to Lightyear Capital LLC and PSP Investments, and considering other possible divestitures. AIG also announced plans to reduce expenses by $1.6 billion within two years, but the activist investor clearly believes he has proposed a more efficient idea of how to unlock shareholder value.
Icahn, who owns 42.75 million shares of AIG, which account for 3.46% of the company’s outstanding shares, intends to provide a list of possible board member candidates by the end of next week. AIG shares are up by nearly 10% over the past one-year period despite having lost 9% thus far in 2016. Earlier this week, BMO Capital Markets downgraded the stock to ‘Market Perform’ from ‘Outperform’ and lowered its price target on it to $62 from $68, suggesting that the company’s freshly-announced strategic plan stipulates operational and profitability targets that might not be met. However, the financial hub’s analysts believe that a breakup of AIG “is not in shareholders’ best interests today”. Billionaire John Paulson of Paulson & Co owns 14.60 million shares of American International Group Inc. (NYSE:AIG) as of September 30.
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As revealed by a Schedule 13G filing, Andreas Halvorsen’s Viking Global acquired a new stake of 54.82 million shares of Encana Corporation (USA) (NYSE:ECA), which make up 6.5% of the company’s outstanding shares. This is yet another energy bet from the billionaire investor, who recently disclosed new stakes in Range Resources Corp. (NYSE:RRC), Southwestern Energy Company (NYSE:SWN), and Cabot Oil & Gas Corporation (NYSE:COG). Going back to Encana Corporation, the North American energy producer has seen its shares decline by 69% over the past 12 months. Several financial hubs recently issued new reports on the Canadian-based oil and gas company, which reflect the sustained low commodities price environment. BMO Capital Markets lowered its rating on the stock to ‘Market Perform’ from ‘Outperform’ back in December, citing depressed commodity prices. Earlier this month, Morgan Stanley downgraded Encana Corporation (USA) (NYSE:ECA) to ‘Equal Weight’ from ‘Overweight’, mainly due to the investment bank’s lower commodity outlook. Meanwhile, Encana anticipates that 95% of its 2016 capital will be invested in four core assets, which are expected to produce between 260,000 and 280,000 barrels of oil equivalent per day (BOE/d). These four assets account for at least 75% of the company’s total expected production. Encana had roughly 48,000 barrels per day of expected 2016 oil production hedged in mid-December, at an average price of $58.85 per bbl. A total of 27 hedge funds from our system had positions in the company at the end of the third quarter, accumulating nearly 8% of its outstanding shares. Todd J. Kantor’s Encompass Capital Advisors acquired a 5.24 million-share stake in Encana Corporation (USA) (NYSE:ECA) during the third quarter.
