In a new filing with the SEC, Icahn Capital LP, run by Carl Icahn, revealed a 9.99% stake in Hologic Inc. (NASDAQ:HOLX), which contains 28.15 million shares. Carl Icahn decreased his activist stake in the medical tool company by unloading 6 million shares at $40.47 per unit. Moreover, the investor mentioned the sale of shares on his Twitter page and expressed his appreciation and support for the company and its CEO Steve MacMillan.
Carl Icahn, the private equity investor and CEO of Icahn Capital LP, is indubitably one of the greatest investors in the history. Icahn Capital LP is a diversified holding company that engages in a wide range of business segments. However, our main focus remains on Carl Icahn’s hedge fund, Icahn Partners, founded in late 2004. Carl Icahn founded his hedge fund with the purpose of leveraging his investment philosophy and has been successful in doing so thus far. By mid-2007, the fund generated a gross annual compounded return of 40%, which yielded an annualized return of 28% net-of-fees for investors. Expectedly, Carl Icahn’s hedge fund, like the majority of hedge funds in the industry, reported a loss in the financial crisis of 2008, but managed to get back on track in the subsequent years. Nevertheless, at the beginning of 2011 Carl Icahn announced his decision to return the money to all his limited partners after re-evaluating his stance on managing other people’s wealth. The latest 13F filing disclosed that the equity portfolio managed by Carl Icahn is worth at $32.05 billion, while his top ten holdings account for 90.09% of the entire portfolio.
Following activist funds like Icahn Capital is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Icahn Capital can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activists’ hedge funds has been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 32 months since our small-cap strategy was launched it has returned over 144% and beaten the S&P 500 ETF (SPY) by more than 84 percentage points (read more details). Soon, we’ll be releasing a new quarterly newsletter written by former activist hedge fund analyst Michael Bland that tracks ten or so activist campaigns at any given time.
Hologic Inc. (NASDAQ:HOLX) is a leading developer, manufacturer and supplier of diagnostic products, medical imaging systems and surgical products. Its core business focuses on diagnostics, breast health, GYN surgical, and skeletal health. The shares of Hologic are currently trading at an all-time high, skyrocketing by over 54% since the beginning of the current year, and Carl Icahn has definitely played an important role in the company’s exceptional performance.
1/ 2 Trimmed our position but remain a huge supporter of Steve MacMillan and the @Hologic ($HOLX) team.
— Carl Icahn (@Carl_C_Icahn) August 4, 2015
Hologic has undergone a massive overhaul since Carl Icahn acquired an activist stake in the company back in November 2013. The company had been performing extremely poorly when Carl Icahn initiated his position in Hologic. The healthcare-focused company had experienced two years of accounting losses, failed to generate any significant gains for shareholders and involved in weak and destructive acquisitions. For instance, Hologic acquired the molecular diagnostics company Gen-Probe in 2012 for $3.7 billion, which resulted in a $1.1 billion write-down within a year. In 2014, Carl Icahn managed to appoint two members on the Board of the company and also pushed out most of the company’s management, with several key management positions at the company being replaced last year. Eventually, the management overhauls were very effective, as the company managed to deliver a positive net income for only the second time since 2007. It seems that the management overhauls at Hologic are completed and the company continues to deliver strong financial performance.
2/2 Happy we were instrumental in bringing Steve in, and think he’s done a great job.
— Carl Icahn (@Carl_C_Icahn) August 4, 2015
Just a few days ago, Hologic has announced the financial results for the third quarter of the fiscal year 2015 that ended June 27, which have not disappointed the investors. The company posted revenue of $693.9 million, up by 9.7% year-over-year on a reported basis. By the same token, the company’s GAAP earnings per share (EPS) advanced by an annual 150% to $0.10. Indeed, the third quarter financial results of Hologic reflect the positive changes that have taken place at the company over the last years. Steve MacMillan, the Chairman, President and Chief Executive Officer at Hologic, suggested that these financial results demonstrate the significant progress achieved by Hologic in building a company that can grow on both the top and bottom lines. Another hedge fund that has been bullish on Hologic Inc. (NASDAQ:HOLX) since 2013 is Raplh V. Whitworth’s Relational Investors, holding an ownership stake of 12.97 million shares.