Carl Icahn Ramps Up Take-Two Interactive Stake (TTWO) ~ market folly

Friday, December 18, 2009

Carl Icahn Ramps Up Take-Two Interactive Stake (TTWO)

Well known investor and 'corporate raider' Carl Icahn has filed a 13D with the SEC for his hedge fund Icahn Partners. In it, Icahn discloses a 11.28% ownership stake in Take-Two Interactive Software (TTWO). The filing was made due to activity on December 17th, 2009 and they now own 9,158,479 shares (including underlying call options).

Direct from the SEC filing, here is a breakdown of the prices at which Icahn bought shares and calls on TTWO through his various investment funds:

(click to enlarge)

(click to enlarge)

The majority of their purchase was common stock, however they also purchased 783,479 shares through call options that expire December 16th, 2011 and they have sold European-style put options for the same amount of shares with the same expiry. This is not a new position for Icahn because as of September 30th (per his latest 13F filing), he owned 2,007,445 shares. This means that in the last three months, Icahn has purchased an additional 7,151,034 shares, a 356% increase over their previous stake.

Icahn has filed a 13D which signifies his activist intentions with his stake. And, given Icahn's rabblerousing ways, we'd expect nothing less. His filing claims that he feels shares are undervalued and that he might seek to talk with management. Many analysts believe that Icahn's entrance into such a name means that TTWO will most likely become an acquisition target again as it had previously been subject to advances from fellow gaming firms like Electronic Arts (ERTS).

Carl Icahn runs hedge fund Icahn Partners and focuses on activist investing where he seeks to implement change at various companies. We've covered his movements in-depth here on the blog and in October he laid out the idea to short real estate. In addition, we've also detailed some of his portfolio activity. For investing insight from Carl Icahn, check out his guest lecture at Yale.

Taken from Google Finance, Take Two Interactive is "a global publisher, developer and distributor of interactive entertainment software, hardware and accessories. The Company operates in two segments: publishing and distribution. The publishing segment consists of Rockstar Games, 2K Games, 2K Sports and 2K Play publishing labels. The Company develops, markets and publishes software titles for gaming and entertainment hardware platforms, including Sony’s PLAYSTATION3 (PS3) and PlayStation2 (PS2) computer entertainment systems; Sony’s PSP (PlayStationPortable) (PSP) system; Microsoft’s Xbox 360 (Xbox 360) video game and entertainment system; Nintendo’s Wii (Wii) and DS (DS) systems, and for the personal computers (PC) and Games for Windows. The Company’s distribution segment, which includes its Jack of All Games subsidiary, distributes its products, as well as software, hardware and accessories produced by others to retail outlets in North America."

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