Carl Icahn’s Icahn Capital LP acquired a new position of around 10.5 million Common Shares in Manitowoc Company Inc (NYSE:MTW) on Monday. This new holding represents 7.77% of the company’s outstanding stock and is of activist nature, meaning the investment firm will now have a voice in management discussions. According to Icahn, shares of Manitowoc are undervalued at the moment, thus meaning new management decisions could unleash new shareholder value. Although discussions are yet to follow, the firm has stated its intention to push for the separation of Manitowoc’s Crane and Foodservice into separate entities.
Icahn Capital LP is a privately owned investment company based in New York, which boasts an equity portfolio valued at around $33.6 billion. Carl Icahn’s firm is notorious for its activist positions and large acquisitions. The new position acquired in Manitowoc Company Inc (NYSE:MTW) is a clear example of this business model. Icahn saw an opportunity when the company’s share prices plummeted and now holds a significant stake, which will allow his firm to steer management in the right direction. Although the firm’s equity portfolio is highly diversified, the technology, basic materials, services, and financial sectors constitute its largest holdings.
Manitowoc Company Inc (NYSE:MTW) is a $3.04 billion market cap designer and manufacturer of cranes, and foodservice equipment. The Cranes and Related Products segment offers lattice-boom cranes, while Foodservice Equipment sector provides cooking and warming equipment, refrigerators, beverage dispensers, and other similar products. The company caters primarily to commercial and institutional foodservice operators, including fast food chains, hotels, supermarkets, schools, and hospitals. Manitowoc Company has a long history, dating back to 1853, when the Wisconsin-based company was founded. Hence, although the stock might have taken a hit throughout 2014, when share prices dropped around 50%, there is reason to believe the trend will be reversed. In fact, following Icahn Capital’s announcement of its newly acquired position in the company, the price of Manitowoc stock rose significantly.
Following the latest 13D filing, Icahn Capital LP has turned into the third largest institutional shareholder of Manitowoc Company Inc (NYSE:MTW), suggesting other investment firms have been bullish regarding this stock for some time now. Ralph V. Whitworth’s Relational Investors for example, disclosed a stake of more than 11 million shares last quarter. Despite a 4% reduction in its exposure, the investment fund continues to be the company’s second-largest institutional shareholder. On the other hand, James Dinan’s York Capital Management has remained confident in Manitowoc’s potential, as demonstrated by the 39% increase in its stake as of last quarter, which now amounts to almost 9 million shares. Hence, despite the recent difficulties, the company continues to enjoy considerable backing, and might even profit from Icahn Capital’s activist stake.
Disclosure: Pablo Erbar holds no positions in any stocks or funds mentioned