Even After Dell Inc. (DELL) Stalemate, Icahn Is Still A Success

Chesapeake Energy Corporation (NYSE:CHK), May 2012. A vicious circle drove Chesapeake’s stock price below $16 in May 2012: low natural gas prices following an aggressive buildout of the company’s production; resulting concerns that the company might not be able to generate sufficient cash flow; governance concerns; and worries that the company would have to sell assets at fire-sale prices. Icahn stepped in, CEO Aubrey McClendon was driven out earlier this year, and currently Chesapeake is up 67% since just before the 13D was filed.
Netflix, Inc. (NASDAQ:NFLX), October 2012. Icahn and his team got on the Netflix roller coaster at just the right time, filing a 13D for the company on Halloween 2012. The stock has since more than tripled in price, to nearly $300 per share. This hasn’t been primarily due to Icahn’s activist moves in the stock; rather, markets have become more optimistic about the company’s prospects as it has stabilized its subscriber base, has been recording increases in revenue, and its original programming is proving competitive in quality with many network and premium TV options.
Greenbrier Companies Inc (NYSE:GBX), November 2012. The $650 million market cap provider of freight cars was trading below $14 in early November. Icahn’s intent had been to merge the company with peer American Railcar, which has been another of his holdings. After Greenbrier rejected the offer, Icahn exited the company, though it looks like this was at prices in the $18-19 range. The stock fell following his sales but has since recovered on its own, to about $24.
Herbalife Ltd. (NYSE:HLF), February 2013. Billionaire Bill Ackman of Pershing Square gave a public presentation last December calling the health and weight loss products company a pyramid scheme, arguing that distributors would eventually abandon the company and it might even see domestic operations shut down. The stock price plunged as a result. Icahn challenged Ackman in a highly charged argument on CNBC, and filed a 13D for the company on February 14th. Herbalife is currently up 75% since the filing- and has nearly doubled year to date- as financials continue to improve and there has been no sign of significant regulatory action.

In conclusion, out of these eight buys we have two where Icahn has underperformed the market (Navistar and WebMD), two where he has successfully pushed for change and earned large profits (Chesapeake and CVR), two where he has earned at least a small profit despite modest or no accomplishments from an activist point of view (Dell Inc. (NASDAQ:DELL) and Greenbrier), and two where he has made money even though there has not been much change at the company (Herbalife and Netflix). This demonstrates that, at least recently, Icahn has a very high “slugging percentage” in getting big returns from stocks where he files a 13D, and shows that investors are well served to closely monitor his filings.

Disclosure: I own no shares of any stocks mentioned in this article.