Carl Icahn Buys Dell Technologies Tracking Stock, Opposes Merger, Sends Letter

Activist investor Carl Icahn today unveiled a new 8.3% ownership stake in Dell Technologies tracking stock (DVMT) with over 16.5 million shares.  He opposes the DVMT merger and released a very detailed lettering outlining his thesis and thoughts (all emphasis his):


Icahn's Letter to DVMT Shareholders

"Fellow DVMT Stockholders:

Over the decades I’ve spent much of my time searching for undervalued companies.  We are very proud of our record.  In fact, an investment in Icahn Enterprises depositary units made at the beginning of 2000 (when Icahn Enterprises began to fully embrace the activist strategy) has increased by approximately 1,514%, or an annualized return of 16%, through October 11, 2018 (assuming reinvestment of dividends).  We have also made hundreds of billions of dollars for stockholders in companies in which we have been activist investors.  However, we freely admit that many of the companies we have invested in were identified to us by stockholders who sought our assistance against mediocre management who were attempting to profit at stockholder expense.  As you know, even the worst management and boards in this country are extremely difficult to dislodge.

A few months ago, several large holders of Dell Technologies Inc.’s tracking stock (“DVMT” or the “Tracker”) contacted me to express their concerns regarding, and their opposition to, Michael Dell’s and Silver Lake’s machinations and activities related to the Tracker, as well as stressing that the Tracker was, and is, deeply undervalued.  (Five years ago, I vehemently fought Michael Dell who many stockholders believed was severely underpaying for the company in a going-private transaction).  After researching the current situation, I quickly realized that while we have unearthed many undervalued opportunities in the past, very few companies compare to the current opportunity and the massive undervaluation of DVMT — which exists in plain sight for all to see.

We Don't Say This Lightly: 

Over The Past Few Months We Have Acquired Beneficial Ownership Of Over 16.5 Million, or 8.3%, DVMT Shares.

We Will Vote AGAINST.

And Will File A Proxy Statement To Solicit Your Vote AGAINST, Dell's Proposed DVMT Merger!

The Dell Tracker currently sells for approximately $92 per share but is worth on a pure mathematical basis approximately $144 per share[1].  In my opinion, this massive distortion exists because (i) as a result of the 2013 going-private transaction, we believe the market does not trust Michael Dell or Silver Lake; (ii) the Tracker has basically zero governance rights and is trapped within a capital structure that has some of the worst corporate governance in America (at Dell, the Certificate of Incorporation even requires that the CEO has to agree to replace the CEO!), however, investor fear of this poor governance is overdone and we believe strong activism combined with litigation, if necessary, can mitigate the governance risks; and (iii) for the better part of the past year, Dell and Silver Lake worked to destroy the value of the Tracker by (1) raising the possibility of a Dell IPO, (2) floating the idea of a merger with VMware and (3) threatening a forced conversion of the Tracker into Dell common stock, among other tactics. These scare tactics are reminiscent of the tactics Machiavelli advised the Borgia rulers to use centuries ago.

The Facts

Several years ago, I believe Dell and Silver Lake realized that Dell Technologies was simply a highly-leveraged hardware company facing great secular challenges and would never enjoy the growth and success of Apple and Microsoft. Therefore, they levered up dramatically to purchase EMC Corporation (“EMC”), a better positioned hybrid hardware and software company, whose crown jewel was its 82% ownership interest in VMware, Inc. (“VMware” or “VMW”).  But, to purchase EMC, Dell needed $10 billion more than its bankers could possibly arrange, and they also needed to convince EMC stockholders that Dell’s offer was worth accepting.  They accomplished this by engineering the DVMT Tracker that they said would allow EMC stockholders to continue to participate in VMware’s upside.

Because a tracking stock is unusual and rarely included as merger consideration, Dell and its bankers had to convince EMC stockholders that the Tracker would efficiently “track” the economic value of VMware shares.  To that end, one of Dell’s bankers at the time delivered a fairness opinion that assumed the Tracker would trade at a range of +/- 5% to VMware shares; while another banker assumed the Tracker would not trade at more than a 0-10% discount to VMware shares.[2]  Dell sold EMC stockholders the Tracker assuming, at most, no more than a 10% discount, yet today, Dell and some of those same bankers are now soliciting your vote to agree to exchange your DVMT shares at a 36% discount![3]

It seems clear that Dell has long-planned to repurchase the Tracker at bargain basement prices.  For two years, Dell management have publicly boasted about Dell’s “…opportunistic opportunities in the market to take advantage of the discount between the two securities”[4] and have repurchased over 23 million DVMT shares at substantial discounts.  This plan significantly benefits Michael Dell and Silver Lake, but at a huge cost to the DVMT stockholders.  Why hasn’t the Dell Board been exercising its fiduciary duties owed to the DVMT stockholders, as opposed to just the controlling stockholders?  Make no mistake, if the current “opportunistic” deal succeeds, 100% of the discount, approximately $11 billion, will be an economic windfall mostly attributable to Michael Dell and his Silver Lake partners.  It is clear to me that Dell and Silver Lake have followed Machiavelli’s advice to the letter:  It is better to be respected than loved, but better still to be feared than respected.

Creating the Fear

In January 2018, Dell commenced its fear campaign by telling stockholders that Dell was evaluating potential business combinations between Dell and VMware, Inc.  DVMT stockholders and the market generally feared that this meant a possible reverse-merger with VMware which would result in a significant multiple contraction for the combined companies which would mean a much lower combined company stock price for the former VMware stockholders.  This obviously would also result in a lower value for the DVMT stock.  For good reason, these disclosures sowed fear and uncertainty that resulted in a precipitous fall in price for both VMW shares and DVMT shares.  In a two-week period both stocks dropped over 25%.  It is very hard to believe that Michael Dell and Silver Lake did not fully anticipate this drop and we believe this was a carefully calculated (and successful) attempt to frighten VMW and DVMT stockholders.  It appears to us that VMW management and the VMW independent board members wanted no part of a merger with Dell.  Instead, they agreed to dividend $9 billion to Dell to obtain some relief from, and at least postpone, a merger with Dell.  Once the threat of a merger was effectively off the table, VMW and DVMT shares recovered a good part of their lost value and the discount narrowed modestly, but it continues to persist.

But, Michael Dell’s and Silver Lake’s ultimate objective was, and still is, to purchase the Tracker at a large discount and they would not be deterred.  They therefore successfully struck a deal with Dell’s independent directors to exchange DVMT shares for cash and Dell stock, at a ridiculously low valuation.  Instead of paying the mathematical value of $144 per share for the Tracker, they are currently offering to pay what we estimate is only $94 per share.[5]  Although I know and respect one of the Dell independent directors, by agreeing to this deal, I can only conclude the independent directors must have been misinformed by advisors working for Dell and Silver Lake or by Michael Dell and Silver Lake themselves.  Otherwise, it is unquestionable, in my opinion, that the independent directors breached their fiduciary duties to the DVMT stockholders.  How else can one explain an agreement that so obviously transfers $11 billion in value to the controlling stockholders at the expense of the minority stockholders?  The one thing these independent directors did get right, however, was to condition the deal on DVMT stockholder approval.  I believe the Dell independent directors must take their fiduciary duties to the DVMT stockholders seriously.  Any future transactions proposed by the controlling stockholders must always be assumed to be at the expense of the DVMT stockholders and the independent directors must always demand robust protections for the DVMT stockholders. The Board’s fiduciary duty to all stockholders demands nothing less, especially after this fiasco!

Dell now appears to be realizing that DVMT stockholders are uniformly and stubbornly against the proposed DVMT merger and is now moving into the next phase of its fear-mongering campaign.  By using the scare tactic of disclosing that they have met with investment bankers to explore a potential IPO of Dell’s Class C common stock, Dell is effectively telling its public stockholders that if we, the DVMT stockholders, do not approve their proposed DVMT merger, they will invoke a draconian provision in their Charter and force us to convert our DVMT shares into Dell stock following a Dell IPO.  Fortunately, in my opinion, their threat to “cram down” a forced IPO conversion is another empty one, if we stand together.  

An Empty and Ridiculous IPO Threat 

We believe that a Dell IPO would face significant challenges and trade very poorly given the possibility of the issuance of a tsunami of stock in connection with a forced conversion.  I believe Dell’s IPO valuation would be severely penalized with: 1) a larger than average IPO discount for its abominable corporate governance, 2) a conglomerate discount for the myriad of partially owned assets and complex structure and 3) a large and incalculable discount for the up to $20 billion of backflowing shares that could hit the market following a forced conversion of DVMT stock.  It would also be one of the most closely watched and scrutinized IPOs in history – the spotlight’s glare would be blinding!  In short, we are not intimidated by Dell’s threat of a forced IPO conversion, and ultimately, we ask ourselves: “Who would ever buy Dell stock knowing that a tsunami of stock may hit the market?” And, given these chaotic dynamics and uncertainties, as well my and other DVMT stockholders strong opposition to a forced IPO conversion, can you imagine the required disclosures or the roadshow?  Could you even find an investment bank willing to risk its reputation (not to mention the potential liability) with a Dell IPO under such circumstances?  

Even in the almost impossible event that Dell overcomes these massive execution challenges of the IPO “cram down,” we believe applicable law will suffocate Dell’s ability to achieve the draconian outcome they so desire.  The Delaware courts are clear that controlling stockholder transactions must be reviewed under the stringent entire fairness standard, not business judgment, unless certain procedural safeguards are satisfied.  If Dell invokes the forced IPO conversion, we believe the Board must treat such a transaction as a conflicted controlling stockholder transaction and obtain protections for the DVMT stockholders, otherwise the Board’s decisions will be reviewed under the entire fairness standard.  Particularly because a forced IPO conversion would result in irreparable harm to DVMT stockholders, we also believe that any transaction that fails to include minority stockholder safeguards will be exposed to an injunction and/or substantial damages.

Importantly, against the backdrop of DVMT stockholders rejecting the proposed DVMT merger transaction, it will be very difficult not to conclude that the forced IPO conversion was pursued in retaliation against DVMT stockholders. Given the fact that in one recent discussion, a very reputable stockholder told us that Goldman Sachs, one of Dell’s advisors, has been telling stockholders that (and I paraphrase) “…the IPO could be for a small number of shares and who knows how that will trade…”, Dell’s and Silver Lake’s current vote solicitation activities already appear to be tainted by coercion.  In my view, this is obviously another threat to take advantage of DVMT stockholders who do not understand that an IPO is nearly impossible!  Dell, Silver Lake and Goldman Sachs should all absolutely understand that Delaware jurisprudence has developed to protect minority stockholders from coercive controlling stockholders, and I strongly believe, as do my lawyers, that the Delaware courts will protect DVMT stockholders from Dell’s and Silver Lake’s coercive actions. Even if we fail to obtain an injunction, we believe we would have valid claims for substantial damages, which Dell would have to defend under entire fairness, for many years, which is not something either Dell or the Board will want to do.  Suffice it to say, we believe it is obvious that the threat of a forced IPO conversion is empty, no matter what they say.

Continuing the "Status Quo" - Another Empty Threat

Another threat Dell has made is that they will do nothing and will continue with the “status quo”.  But this is ridiculous!  Time is Dell’s enemy and our friend!  As time goes on, we expect Dell’s very cyclical business to be basically stagnant or to decline, while VMware’s business should continue to grow and become more profitable.  This dynamic will largely put our 50% economic ownership in VMware out of their reach.  We therefore believe that Dell purchasing the Tracker is a “must have” for Dell.  Today Dell, ex-VMware, is a mundane highly-levered hardware company that will only face greater disruption and competition.  The combination of high leverage and the cyclicality of Dell’s business means that it is possible that Dell’s cash flow may be severely impaired by any downturn in its business, making it very important for them to get control of VMware’s more stable recurring cash flow.  Dell has over $46 billion in gross debt, and its recent debt paydown has substantially relied on cash generation from asset sales and working capital, instead of operating income.  To continue paying down debt, we believe that Dell has a more pressing need for VMware’s cash flow than management would have you believe.

It is our strong opinion that capturing the discount is only the first step in Dell’s grand expropriation of value.  As astute technology investors, we believe that Michael Dell and Silver Lake perceive that VMware is right at the beginning of a multi-year inflection point.  As its fast-growing network and cloud solutions gain scale, we believe VMware is likely to experience the business nirvana of both accelerating growth and expanding margins.  We believe this could result in over $12 per share of free-cash flow generation in a few years, and a stock price of potentially over $250 per share.[6]  Clearly Michael Dell and Silver Lake take us for fools if they think that we would exchange this future value potential for only $94 per share.

THE Next Steps

We believe Dell’s next step will be to modestly increase the deal price in an attempt to receive voting commitments from those willing to sell at a discount, just not as large as the current 36% discount.  We strongly believe that DVMT stockholders should not consider accepting any discount, but if they do, in no event should that discount be greater than the 0 to 10% discount that was assumed when the DVMT Tracker was first issued.  Even then, note, I merely say “consider.”

Despite the numerous arguments I have made to explain why DVMT stockholders should not accept Dell’s proposed deal, or for that matter, even a new deal unless it contains a very, very substantial increase, I understand that some DVMT stockholders may want to exit their investment and accept an improved offer.  For that reason, and in preparation for the possible announcement of an improved offer, I am considering several options.  I believe that if Dell does raise the offer, it will be important to provide liquidity to the DVMT stockholders that want to sell, while also protecting the DVMT stockholders that do not want to sell from being forced out in a merger.  In my opinion the best way to balance these competing interests would be to offer a competing partial bid that provides partial liquidity without forcing a merger.  As such, I intend to continue evaluating this idea and determine whether other interested parties, including financing sources, may want to participate in, or finance, a transaction of this nature.

VOTE AGAINST THE PROPOSED DVMT MERGER!

In conclusion, I firmly believe Dell and Silver Lake are trying to capture $11 billion of value that rightly belongs to us, the DVMT stockholders.  As such, I intend to do everything in my power to STOP this proposed DVMT merger. In my opinion, it is better to have peace than war, but be assured, I still enjoy a good fight for the right reasons, and in the current situation, I do not see peace arriving quickly!  Stay tuned!

Sincerely,

Carl C. Icahn"



[1] Based on DVMT share price of $91.74 and VMware stock price of $141.49, as of October 11, 2018.  Assumes Class V Common Stock interest in 61.1% of the 331 million VMW shares attributable to the Class V Group, per Dell Technologies Inc.’s Form S-4/A, filed with the Securities and Exchange Commission, on October 4, 2018.

[2] As disclosed in the EMC Definitive Proxy Statement, dated June 6, 2016.

[3] Based on the value of 199 million outstanding DVMT shares, at $91.74 per share, compared to the value of 61.1% of Class V Group’s interest in 331 million VMware shares, at $141.29 per share.

[4] Dell Chief Financial Officer comments made during Dell’s earnings call on March 30, 2017.

[5] Based on a 5.0x multiple of FY2019E “Core Dell” EBITDA of $7 billion and market prices as of October 11, 2018 for VMware, Pivotal and SecureWorks. Assumes DVMT shares exchanged for $9 billion of cash and 1.3665 subject to proration.

[6] Cash flow projections based on Bank of America Merrill Lynch report, dated July 16, 2018.  FCF valuation multiple based on comparable company analysis, including MSFT, RHT and CTXS.

Carl Icahn Files 13D on Newell Brands

Carl Icahn has filed an amended 13D with the SEC regarding his stake in Newell Brands (NWL).  Per the filing, Icahn now owns 6.96% of the company with 33.79 million shares (including shares underlying forward contracts).  The filing notes they've now formed a group with Brett Icahn and include his ownership stake.

The forward contracts have a forward price of $23 per share and expiration of January 28th, 2020 and includes exposure to just over 3.01 million shares.  The rest of Carl Icahn's position is common stock.  Brett Icahn owns 500,000 NWL shares.

The filing notes that Icahn started buying on January 25th and was buying as recently as March 16th.

In a previous CNBC interview, Icahn noted that, "I believe Newell itself is undervalued and that's why I bought it."  He said he originally bought NWL around $25

We've highlighted previously that activist firm Starboard Value has also been involved in Newell Brands.

Carl Icahn Reveals Newell Brands Stake

Per an interview with CNBC today, activist investor Carl Icahn reveals he has taken a stake in Newell Brands (NWL).  "I believe Newell itself is undervalued and that's why I bought it" Icahn noted.

He says he bought NWL around $25 and has a less than 5% stake in the company, though Icahn feels he has one of the largest positions in the company.

Another activist investor, Jeff Smith's Starboard Value is also involved in the company and has joined Jarden executive Martin Franklin in trying to replace the entire board.

Newell merged with Jarden and the Starboard contingent feels that the Newell management team has not managed the integration well.  The company features prominent consumer brands such as Rubbermaid, Elmer's glue, and more.

NWL was featured in the investment thesis summary section of  the Q3 2017 issue of our Hedge Fund Wisdom newsletter if you're looking to catch-up on the company's background.

Carl Icahn's Herbalife Ownership Increases Due To Company Buyback

Activist investor Carl Icahn has filed an amended 13D regarding his position in Herbalife (HLF).  Per the filing, Icahn now owns 26.22% of the company.  This is up from his previous ownership stake of 24%, but it's not due to him buying more shares.  He still retains the same amount as he previously did: 22.87 million shares.

Herbalife recently announced results from its self-tender offer to buy around $600 million of its own stock.  It accepted over 6.73 million shares at $68 per share.

Sellers of stock received a contingent value right (CVR) for each share tendered that provides a right to payment should the company be taken private in the next two years.  After the tender completes, HLF will have around 87 million shares outstanding.

As a result, Icahn's ownership percentage increased without him doing anything.

And as we've highlighted previously,  Bill Ackman continues to be short Herbalife as well.

Per Google Finance, Herbalife Ltd. is "a global nutrition company. The Company develops and sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, as well as personal care products. Its operating segments are based on geographical operations in six regions: North America; Mexico; South and Central America; Europe, the Middle East, and Africa (EMEA); Asia Pacific, and China. The Company categorizes its products into five groups: weight management, targeted nutrition, energy, sports and fitness, outer nutrition, and literature, promotional and other. As of December 31, 2016, it marketed and sold approximately 140 products encompassing over 4,700 stock keeping units (SKUs) globally. Its product categories include meal replacement; protein shakes; drink mixes; dietary and nutritional supplements containing herbs, vitamins, minerals and other natural ingredients; facial skin care; body care; hair care products; sales tools, and educational materials."

Carl Icahn Goes Activist on Hertz

Activist investor Carl Icahn has filed a 13D on shares of Hertz Global Holdings (HTZ).  Per the filing, Icahn now owns 8.48% of the company with 38.8 million shares. 

This is a newly disclosed position for Icahn .  The filing was made due to activity on August 12th and it notes that Icahn intends to have discussions with management relating to "shareholder value, accounting issues, operational failures, underperformance relative to its peers and (their) lack of confidence in management."

Icahn was out buying HTZ shares in late June and sporadically throughout July.  He really ramped up his purchases in mid-August though and did a lot of buying on August 20th specifically.  This is the date that shares dropped from $31 to $28 on news of revised guidance.

Icahn primarily purchased call options and sold put options referencing an aggregate of over 35.97 million shares at June 2016 strikes.

HTZ is somewhat of a hedge fund hotel.  As of the end of the second quarter, HTZ's largest shareholders included:  Glenview Capital, SRS Investment Management, Fir Tree, York Capital, Highfields Capital, D.E. Shaw, JANA Partners, Third Point, and many more.  Just recently, Fir Tree urged the board to replace the Hertz CEO.

Per Google Finance, Hertz is "a holding company. The Hertz Corporation (Hertz) is its operating company and a direct wholly owned subsidiary of Hertz Investors, Inc., which is wholly owned by Hertz Holdings. Its business operates in two segments: rental and leasing of cars, crossovers and light trucks (car rental), and rental of industrial, construction and material handling equipment (equipment rental). In its equipment rental business segment, it rents equipment through approximately 340 branches in the United States, Canada, France, Spain, Italy, China and Saudi Arabia, as well as through its international licensees."

Carl Icahn Takes Family Dollar Stake, Company Adopts Poison Pill

Activist investor Carl Icahn has taken a 9.39% stake in Family Dollar (FDO) per a filing with the SEC.  After disclosing his stake, shares jumped over 14%.

It seems Icahn's plan here is to get the company sold.  While private equity firms or Dollar General (DG) could be logical suitors, Family Dollar announced that they've adopted a shareholder rights plan.

Icahn is looking to talk to FDO's board so we'll see what comes of his activism.  While dollar stores have been popular plays among hedge funds, many long/short managers have preferred shares of DG (such as Lone Pine, Tiger Global, Glenview, Senator, Corvex and more). 

That said, Family Dollar's largest shareholder list as of the end of Q1 included Nelson Peltz's Trian Fund as well as Paulson & Co.

Carl Icahn Pushes For eBay To Spinoff PayPal; Buys More Apple

Activist investor Carl Icahn has been busy yet again.  Firstly, he has disclosed a new position in eBay (EBAY) and he's pushing for the company to spin-off its fast growing PayPal segment.

This is not a new idea.  Plenty of analysts, sell-siders, and portfolio managers have voiced this sentiment before.  However, this might be the first time that a prominent activist has gotten involved and actually tried to make it happen.


Icahn's New eBay Stake

Icahn only owns 0.82% of the company and it looks like his activist push might already be dead on arrival.

Yesterday during eBay's earnings presentation, the company had one specific slide that highlighted why eBay and PayPal should remain together (seen here).

Then today, eBay's Chairman Pierre Omidyar (who owns 8% of the company) tweeted that he and the board were "fully aligned" that eBay and PayPal are best together.  Marc Andreessen tweeted the same.

As such, if Icahn wants to truly push for change, he'll perhaps need to drastically ramp up his ownership stake.  But as some investors have pointed out, perhaps his campaign has been more about awareness than activism.

Talking to Bloomberg, Icahn said he wants to get the word out to shareholders and if he can maybe get 51% of the shareholders to vote that they want it to happen, then maybe the board will take notice.  He did, however, acknowledge that it would be "difficult to convince management." He's also nominated two of his employees to eBay's board.

The video of Icahn's interview is embedded below:




Icahn Buys More Apple

The corporate activist also disclosed activity in another position of his.  This time, he took to Twitter to disclose that he had purchased $500 million more shares of Apple.  Icahn now owns over $3 billion worth of AAPL.

Icahn says that, "We feel (Apple's) board is doing great disservice to shareholders by not having markedly increased its buyback.  In-depth letter to follow soon."

Carl Icahn's Letter to Apple's Tim Cook

Activist Carl Icahn today launched a new website, Shareholders Square Table and included a release of the letter he sent to Apple (AAPL) CEO Tim Cook.  Icahn has been quite busy as yesterday we highlighted he sold half of his Netflix stake and he's also now disclosed that he's increased his Apple stake from 3.8 million shares up to 4.7 million shares.

Icahn says he thinks Apple should buy back $150 billion of stock.  He loves what Cook is doing operationally and his only 'beef' with the company is regarding the size of their buyback as he argues a more sizable buyback will boost EPS and share prices.


Icahn's Letter to Apple's Tim Cook

"Dear Tim: 

It was a pleasure meeting you for dinner at the end of September. When we met, my affiliates and I owned 3,875,063 shares of Apple. As of this morning, we owned 4,730,739 shares of Apple, an increase of 22% in position size, reflecting our belief the market continues to dramatically undervalue the company, even when taking into account the recent market appreciation, which in turn makes our proposal unchanged with respect to a $150 Billion buyback. We were pleased to hear at our dinner that you appreciated our input and that you would speak to us again in three weeks to continue the dialogue. In anticipation of doing so soon, we aim to reiterate in this letter the point of view already expressed to you directly with the hope of effectively summarizing it for the company’s board of directors and our fellow shareholders. 

From our perspective, Apple is the world’s greatest consumer product innovator and has one of the strongest and most respected brand names in history. We consider Apple to be our most compelling investment. I first informed my followers on Twitter on August 13, 2013 of my “large position.” I also expressed to you my opinion that “a larger buyback should be done now.” At that time, we owned 3,448,663 shares and the stock price was $467. Since then we have purchased an incremental 1,282,076 shares (bringing the total value of my position to $2.5 Billion) and we currently intend to buy more. 

We want to be very clear that we could not be more supportive of you, the existing management team, the culture at Apple and the innovative spirit it engenders. The criticism we have as shareholders has nothing to do with your management leadership or operational strategy. Our criticism relates to one thing only: the size and timeframe of Apple’s buyback program. It is obvious to us that it should be much bigger and immediate. 

When we met, you agreed with us that the shares are undervalued. In our view, irrational undervaluation as dramatic as this is often a short term anomaly. The timing for a larger buyback is still ripe, but the opportunity will not last forever. While the board’s actions to date ($60 billion share repurchase over three years) may seem like a large buyback, it is simply not large enough given that Apple currently holds $147 billion of cash on its balance sheet, and that it will generate $51 billion of EBIT next year (Wall Street consensus forecast). 

The S&P 500 trades at roughly 14x forward earnings. After backing off net cash, Apple trades at just 9x (not factoring into account that the company has a significantly lower cash tax rate than the rate Wall Street analysts use). This discount (cash adjusted) becomes even more compelling given our confidence that Apple will grow earnings per share at a rate well in excess of the S&P 500 for the foreseeable future. With such an enormous valuation gap and such a massive amount of cash on the balance sheet, we find it difficult to imagine why the board would not move more aggressively to buy back stock by immediately announcing a $150 Billion tender offer (financed with debt or a mix of debt and cash on the balance sheet). 

While this would certainly be unprecedented because of its size, it is actually appropriate and manageable relative to the size and financial strength of your company. Apple generates more than enough cash flow to service this amount of debt and has $147 billion of cash in the bank. As we proposed at our dinner, if the company decided to borrow the full $150 billion at a 3% interest rate to commence a tender at $525 per share, the result would be an immediate 33% boost to earnings per share, translating into a 33% increase in the value of the shares, which significantly assumes no multiple expansion. Longer term (in three years) if you execute this buyback as proposed, we expect the share price to appreciate to $1,250, assuming the market rewards EBIT growth of 7.5% per year with a more normal market multiple of 11x EBIT. 

It is our belief that a company’s board has a responsibility to recognize opportunities to increase shareholder value, which includes allocating capital to execute large and well-timed buybacks. Apple’s Board of Directors does not currently include an individual with a track record as an investment professional. In my opinion, any further delay in executing the buyback we hereby propose will reflect this lack of expertise on the board. My firm’s success and my expertise as an investor would be difficult for anyone to argue. Per my investment thesis, commencing this buyback immediately would ultimately result in further stock appreciation of 140% for the shareholders who choose not to sell into the proposed tender offer. Furthermore, to invalidate any possible criticism that I would not stand by this thesis in terms of its long term benefit to shareholders, I hereby agree to withhold my shares from the proposed $150 Billion tender offer. There is nothing short term about my intentions here. 

Sincerely, 

Carl Icahn
Chairman, Icahn Enterprises (IEP)"

Carl Icahn Sells Over Half of Netflix Stake

Carl Icahn's firm Icahn Enterprises has sold half of its stake in high-flying Netflix (NFLX).  Per an amended 13D filing, Icahn now owns 4.5% of NFLX with 2,665,557 shares, marking a 62% reduction in his position size since the second quarter.

Icahn was selling NFLX shares in mid-October and as recently as October 22nd.  Most of his sales were around $341, while some sales were in the low $300's.  Icahn originally invested at $58.

While Carl's son Brett won in a previous decision to hold onto NFLX shares a while ago, Carl overruled him this time around, basically saying you have to harvest some gains when you're up over 400% in a year.

Keep in mind also, that now that Icahn has sold down below the 5% threshold, he doesn't have to report his activity in the name, allowing him to continue to sell-down his stake without disclosing it if he so chooses.


Icahn's Thesis on Netflix

Included in the filing, Brett Icahn and David Schechter outline their thought process regarding their position and NFLX thesis, so it's worth reading:

"Our cost basis in Netflix is $58 per share. Despite its notable appreciation in just over one year to $323 per share, for the reasons set forth below, we believe the company remains significantly undervalued. As a subscription service priced at only $7.99 per month, we believe Netflix is one of the great consumer bargains of our time. We find it difficult to understand why a household would not subscribe to the service, considering the low monthly price, the robust content aggregation (which includes an increasing mix of premium and award-winning original series) and the dramatically superior user experience from both an interface and overall technology perspective. Netflix’s predominately fixed content cost (variable primarily to the extent management chooses to further improve the service) gives the business model massive operational leverage. Our recognition of this operational leverage, combined with our expectations for both domestic and international subscriber growth with modest price increases over time, has been and continues to be the core of our investment thesis. 

With respect to Netflix’s opportunity in the United States, Reed Hastings’ estimated range for a total domestic market size of 60 million to 90 million domestic subscribers implies that Netflix will add 30 million new domestic subscribers, using the low end of that range. While the timeframe is debatable, we share Reed’s confidence in the overall size of this market, and we note that Netflix is currently adding six million net subscriber additions per year. Furthermore, at just $7.99 per month, we think Netflix has pricing power – and while we do not expect price increases for the next two years we think it is reasonable to anticipate that the company could ultimately raise prices to $9.99 per month over the course of the next five years (this equates to a very modest annualized increase of roughly 4.6%). Together, we expect these new subscriber additions and price increases would raise domestic streaming revenues by $4.3 billion annually. Even if the company decides to increase spending on cost of revenues (largely content) by $1 billion annually (a 55% increase) in order to seek to achieve this growth by further improving the user experience, the operating leverage would still be impressive, adding $3.3 billion to domestic contribution profit.    

While the domestic growth story alone is compelling, we believe the international opportunity is even larger in the long term. We strongly support the company’s strategy to reinvest its domestic profits into international growth and recognize that its rapidly improving domestic operating profit implies an accelerated pace for future international expansion, with large new markets launched in 2014 and beyond. There are large portions of the world in which Netflix has yet to launch, and the company is still in the early innings of the international game, including the markets already launched. Because Netflix launches its product in each territory with a robust service, it must spend on the completion of this product, and the marketing of it, in advance of signing up new subscribers, which is why we expect the international segment to continue losing money in the near term. However, as these international markets mature, we expect that the aggregate international operating profits will actually exceed the domestic. 

Given this opportunity set and the company’s management team, which we view as exceedingly competent, we believe Netflix’s valuation is still relatively low. In our experience, there are few companies at any given time in history that represent the pure life blood of a colossal secular growth category, and even fewer where the CEO of that company instills deserved confidence among the company’s investors by repeatedly exhibiting both vision and the ability to execute on that vision. We are proud to have identified Netflix as such a company and believe that it is well positioned for greatness. 

Carl Icahn stated: 

While I basically agree with David and Brett’s assessment above and have often held positions for many years, as a hardened veteran of seven bear markets I have learned that when you are lucky and/or smart enough to have made a total return of 457% in only 14 months it is time to take some of the chips off the table. I want to thank Reed Hastings, Ted Sarandos and the rest of the Netflix team for a job well done. And last but not least, I wish to thank Kevin Spacey. I also want to thank David and Brett. The Sargon Portfolio which David and Brett co-manage and I supervise, has generated 37% annualized returns since its inception on April 1, 2010 through September 30, 2013 and currently manages in excess of $4.8 billion for Icahn Enterprises and my own capital.  Icahn Enterprises has assets of approximately $29 billion."


For more on this investor, we've highlighted some of Carl Icahn's recent portfolio activity here.

Carl Icahn To Sell WebMD Shares to Company

Activist investor Carl Icahn will do some selling instead of buying this time around.  In an amended 13D filed with the SEC today, Icahn has said that his investment vehicles will sell 5,527,433 shares of WebMD (WBMD) back to the company for $32.08 per share.

Previously, Icahn owned 12% of WebMD (WBMD).  The transaction will close today (Monday October 21st).

For more activity from this activist, we recently highlighted Icahn's new Talisman Energy stake.

Carl Icahn Reveals Talisman Energy Position, Gains Board Seats at Nuance Communications

Carl Icahn has been busy with positions in Talisman Energy (TLM) and Nuance Communications (NUAN).  The breakdown is below:


Icahn's New Talisman Energy Stake

Icahn simultaneously tweeted and filed a 13D with the SEC, disclosing a 5.97% ownership stake in Talisman Energy (TLM).  He owns 61,554,602 shares and this is a brand new position for him.

On Twitter, Icahn noted that he, "may have conversations with mgmt re strategic alternatives, board seats, etc."

So if you aren't already, follow @Carl_C_Icahn on Twitter, and don't forget to follow @MarketFolly if you haven't already.

Per Google Finance, Talisman Energy is "an oil and gas producers, through a combination of exploration, development and acquisitions. The Company's business activities include exploration, development, production, transportation and marketing of crude oil, natural gas and natural gas liquids. Talisman's three main operating areas are North America, the North Sea and Southeast Asia."


Icahn Gains Board Seats at Nuance Communications

Icahn has reached an agreement with Nuance Communications (NUAN) to gain 2 board seats.  Carl Icahn's son Brett Icahn will become a director, along with David Schecter.

Per Google Finance, Nuance Communications is "a provider of voice and language solutions for businesses and consumers globally. The Company's solutions are used in healthcare, mobile, consumer, enterprise customer service, and imaging markets. The Company offers accuracy, natural language understanding capability, domain knowledge and implementation capabilities. The Company's solutions are based on the Company's voice and language platform and are used by businesses for tasks and services, such as requesting information from a phone-based self-service solution, dictating medical records, searching the mobile Web by voice, entering a destination into a navigation system, or working with portable document format (PDF) documents."

Carl Icahn Discloses Apple Stake, Wants Bigger Buyback

Carl Icahn of Icahn Enterprises announced yesterday that he has taken a stake in Apple (AAPL).  Additionally, he noted that he has talked with CEO Tim Cook about expanding the company's buyback now and that they plan to speak again in the future.  Icahn says AAPL shares are extremely undervalued. 

What's interesting about all this is that Icahn actually announced this via Twitter, becoming the first major investor to unveil a new stake via that medium.  If you don't already, you can follow @Carl_C_Icahn here.  And while you're at it, make sure to follow @marketfolly too.

After revealing the position, he talked to various media outlets where his numbers and expectations for the company varied a bit.  He told the Dow Jones that he sees AAPL trading around $625 with a boosted buyback.  Later, he told Reuters he sees a $700 price target with 10% earnings growth.

Icahn's not alone in his desire for a sizable buyback from Apple.  Greenlight Capital's David Einhorn also pushed the company to return cash to shareholders.  Apple announced a plan, but it's clear some investors still want more given AAPL's large cash pile.

Carl Icahn on Activism, Herbalife & More: Delivering Alpha Conference

At the Delivering Alpha Conference, activist investor Carl Icahn sat down to talk about activist investing and some of his holdings like Herbalife (HLF), Dell (DELL), Netflix (NFLX) and more.

Icahn had the audience in the palm of his hand, talking stocks and making people laugh almost as if he was a stand up comedian.


On Dell (DELL)

On activism: Icahn said good targets are companies that are badly managed. 

Icahn said he wouldn't comment on Dell (DELL) because of the SEC.  Jim Chanos has been short.  Icahn says he's never seen a board as dysfunctional as Dell's.  He argues that Jim Chanos misses the fact that you can put a good board and CEO in and institute change with accountability.  He even went on to say that he has a better record than Chanos.


On Netflix (NFLX)

He thought about selling some, but his son threatened to leave if he did, so that talked him out of it.  He likes Reed Hastings and says it's hard not to like someone who helps make you $100 million in a month or so.


On Herbalife (HLF)

Icahn is still in Herbalife (HLF) and hasn't sold a share.  He said, "I never would have looked at Herbalife if Ackman hadn't come out with that report." 

He thinks HLF's CEO is a good CEO and believes very strongly in the product.

While Icahn vs. Ackman has been well documented, Icahn says he no longer dislikes Ackman because he's made him money on HLF.  And of Ackman's large HLF short position, Icahn says: "It's stupid to take that big of a position anyways."

He also pimped his Twitter account, saying he was going to tweet insights about stocks he was allowed to talk about and he seems to want to boost his follower count so give him a follow: @Carl_C_Icahn


For more from the Delivering Alpha Conference, head to:

- John Paulson on gold, real estate & merger arbitrage

- Nelson Peltz on PepsiCo & Mondelez 

- Best Ideas Panel with Mark Kingdon, Chris Hohn, Jim Chanos & Lee Cooperman

- Larry Robbins on healthcare

Carl Icahn Jumps Into Dell; Proposes Changes at Transocean

David Faber over at CNBC reports that according to "trading sources," Carl Icahn has taken around a 6% stake in Dell (DELL).  Additionally, according to recent SEC filings, he's proposing some changes at Transocean (RIG) as well.


Icahn Jumps into Dell

Dell of course has an offer on the table to go private from founder Michael Dell and private equity firm Silver Lake that has seen opposition from some of its largest shareholders, including Southeastern Asset Management.

Icahn is reportedly expected to oppose the deal and has apparently built up a stake close to 100 million shares.   It seems that he favors a leveraged recapitalization.

Here's the letter Icahn sent to the special committee of Dell's board:

"We are substantial holders of Dell Inc. shares. Having reviewed the Going Private Transaction, we believe that it is not in the best interests of Dell shareholders and substantially undervalues the company. 

Rather than engage in the Going Private Transaction, we propose that Dell announce that in the event that the Going Private Transaction is voted down by shareholders, Dell will immediately declare and pay a special dividend of $9 per share comprised of proceeds from the following sources: (1) $4.26 per share, or $7.4 Billion, from available cash as proposed in the Going Private Transaction, (2) $1.73 per share, or $3 Billion, from factoring existing commercial and consumer receivables as proposed in the Going Private Transaction, and (3) $4.26, or $5.25 Billion in new debt. 

We believe that such a transaction is superior to the Going Private Transaction because we value the pro forma “stub” at $13.81 per share using a discounted cash flow valuation methodology based on a consensus of analyst forecasts. The “stub” value of $13.81 combined with our proposed $9.00 special dividend gives Dell shareholders a total value of $22.81 per share, representing a 67% premium to the $13.65 per share price proposed in the Going Private Transaction. We have spent a great deal of time and effort in determining the $22.81 per share value and would be pleased to meet with you to share our analysis and to understand why you disagree, if you do. 

We hope that this Board will agree to adopt our proposal by publicly announcing that the Board is committed to implement our proposal if the Going Private Transaction is voted down by Dell shareholders. This would avoid a proxy fight. 

However, if this Board will not promise to implement our proposal in the event that the Dell shareholders vote down the Going Private Transaction, then we request that the Board announce that it will combine the vote on the Going Private Transaction with an annual meeting to elect a new board of directors. We then intend to run a slate of directors that, if elected, will implement our proposal for a leveraged recapitalization and $9 per share dividend at Dell, as set forth above. In that way shareholders will have a real choice between the Going Private Transaction and our proposal. To assure shareholders of the availability of sufficient funds for the prompt payment of the dividend, if our slate of directors is elected, Icahn Enterprises would provide a $2 billion bridge loan and I would personally provide a $3.25 billion bridge loan to Dell, each on commercially reasonable terms, if that bridge financing is necessary. 

Like the “go shop” period provided in the Going Private Transaction, your fiduciary duties as directors require you to call the annual meeting as contemplated above in order to provide shareholders with a true alternative to the Going Private Transaction. As you know, last year’s annual meeting was held on July 13, 2012 (and indeed for the past 20 years Dell’s annual meetings have been held in this time frame) and so it would be appropriate to hold the 2013 annual meeting together with the meeting for the Going Private Transaction, which you have disclosed will be held in June or early July. 

If you fail to agree promptly to combine the vote on the Going Private Transaction with the vote on the annual meeting, we anticipate years of litigation will follow challenging the transaction and the actions of those directors that participated in it. The Going Private Transaction is a related party transaction with the largest shareholder of the company and advantaging existing management as well, and as such it will be subject to intense judicial review and potential challenges by shareholders and strike suitors. But you have the opportunity to avoid this situation by following the fair and reasonable path set forth in this letter. 

Our proposal provides Dell shareholders with substantial cash of $9 per share and the ability to continue as owners of Dell, a stock that we expect to be worth approximately $13.81 per share following the dividend. We believe, as apparently does Michael Dell and his partner Silver Lake, that the future of Dell is bright. We see no reason that the future value of Dell should not accrue to ALL the existing Dell shareholders – not just Michael Dell.  As mentioned in today’s phone call, we look forward to hearing from you tomorrow to discuss this matter without the need for us to bring this to the public arena.  Very truly yours, Icahn Enterprises L.P.  By: Carl C. Icahn Chairman of the Board"


Icahn Proposes Dividend & New Directors at Transocean

Icahn also has revealed a stake in Transocean (RIG) earlier this year with 20,154,035 shares back on January 29th.  He just recently filed an amended 13D with the SEC to show that he will propose a $4 dividend per share to be paid in 4 equal installments, to elect 3 new directors, and to propose a repeal of the company's staggered board.

Icahn writes,

"I am proposing the $4 dividend because I believe that a high dividend payout ratio is the only way that Transocean will consistently employ a disciplined and sensible approach to capital allocation. Over the past several years, in my opinion, the Company has conducted ill-advised mergers, employed unsuccessful development strategies and squandered the substantial cash flow generated by the business. Now, it appears to me, the Board and management would like to take the Company’s substantial cash flow and use it to achieve three goals: the massive repayment of the company’s low coupon debt, the aggressive new build growth locked up with low return contracts, and the payment of a meager dividend to shareholders. 

I believe that the inability of Transocean to grow and pay down debt is a function of poor capital allocation which has driven the share price to below net asset value. Once the capital allocation problem has been solved, in my opinion, Transocean will have access to yield hungry investors to finance growth and acquisitions on attractive terms. 

I believe that to permanently repair the failed capital allocation strategy, shareholders of this Company must replace the directors who have been the architects of this failed strategy, including the Chairman. The directors that I have chosen have substantial experience in the creation and issuance of non-traditional yield structures, driving shareholder returns through capital allocation, and managing and growing large corporations both internationally and in the energy sector.  If these nominees are elected, which I expect they will be, I truly believe it will serve shareholders well."



Corporate raider and general rabblerouser Carl Icahn is absolutely everywhere these days.  It's almost as if he sees a situation escalating and jumps in to take it up a notch.  He's submitting SEC filings practically every few days (not an exaggeration).

He's jumped into Herbalife (HLF) and is a long versus Bill Ackman's HLF short, Icahn's proposing changes at Transocean (RIG), and now he's jumped into the Dell (DELL) ring as well.  We'll have to wait and see what his next target will be.

Carl Icahn Files Amended 13D on Greenbrier: American Railcar Makes Bid

Carl Icahn just filed an amended 13D with the SEC on Greenbrier Companies (GBX).  Per the filing, another company Icahn is involved with, American Railcar (ARII), made a $20 per share in cash offer for Greenbrier (GBX). 

Icahn just recently established his new position in Greenbrier.  The Q3 issue of our Hedge Fund Wisdom newsletter drew attention to this last month and postulated that he had plans for the two companies (as both are involved in railroad freight car equipment). 

And now we see that ARII (with Icahn as its top investor) has made a bid for GBX.  Shares of GBX are now trading at a slight premium to this offer.

Carl Icahn Files 13D on Motricity (MOTR)

Corporate activist Carl Icahn has filed a 13D with the SEC regarding shares of Motricity (MOTR).  Per the filing, Icahn now owns a 30.73% ownership stake in the company with 17,466,277 shares.

This marks a 158% increase in the amount of shares he owns since the end of Q2 as detailed on his previous 13F filing with the SEC.  The new 13D was filed per activity on October 11th.


Breakdown of Icahn's Position

The purpose of the transaction is disclosed in the filing quoted below:

"On October 11, 2012, certain of the Reporting Persons were issued an aggregate of 44,098,926 units (the "Units") by the Issuer by exercising subscription rights to purchase Units, which subscription rights were distributed by the Issuer, for no consideration, in a rights offering to all of the Issuer 's stockholders on July 23, 2012 (the "Rights Offering").

Each Unit consisted of 0.02599 shares of the Issuer’s 13% Redeemable Series J Non-Convertible Preferred Stock (the "Series J Preferred Stock") and 0.21987 warrants, each warrant entitling the holder to purchase one share of the Issuer 's common stock at an exercise price $0.65 per share. The exercise price per Unit was $0.65. Therefore, in the Rights Offering, such Reporting Persons paid an aggregate cash exercise price of $28,664,301.90 to the Issuer and received an aggregate of 1,146,131 shares of Series J Preferred Stock and warrants to purchase an aggregate of 9,696,030 shares of the Issuer’s common stock."


And Icahn's ownership stake is further broken down in an additional section of the filing that further explains the securities his investment entities own:


"In connection with the Rights Offering, the Reporting Persons were issued an aggregate of 1,146,131 shares of Series J Preferred Stock.  See item 4 above.  The Series J Preferred Stock is not convertible into Shares or any other series or class of capital stock of the Issuer.  The shares of Series J Preferred Stock generally do not vote with the Shares but have limited rights to vote as a separate class on any amendment to its terms and to certain transactions in which the shares of Series J Preferred Stock would receive or be exchanged for consideration other than cash or similar securities.  The Series J Preferred Stock also has the right to 40 votes per share and vote together as a single class with the Shares on the certain measures to protect the Issuer’s net operating losses and a change of the Issuer’s name, in each case, brought before the Issuer’s stockholders for a vote by April 9, 2013.

On a quarterly basis, the Issuer’s board of directors may at its sole discretion, cause a dividend with respect to the Series J Preferred Stock to be paid in cash to the holders (i) until October 11, 2017 in an amount equal to 3.25% of the liquidation preference, as in effect at such time (initially $25 per share) and (ii) thereafter in an amount equal to 3.5% of the liquidation preference, as in effect at such time. If the dividend is not paid in cash, the liquidation preference will be adjusted and increased quarterly by the amount of such dividend.  The Issuer may, at its option, at any time, redeem the shares of Series J Preferred Stock at a redemption price equal to 100% of the liquidation preference per share in effect at such time (initially $25 per share). The Series J Preferred Stock is also redeemable at the option of the holders, if the Issuer undergoes a Change in Control (as defined in the certificate of designations governing the Series J Preferred Stock)."


About Motricity

Per Google Finance, Motricity is "a provider of mobile data solutions and services that enable wireless carriers to deliver mobile data services to their subscribers. It provides a suite of hosted, managed service offerings, including mobile Web portal, storefront, messaging, and billing support and settlement, which enable wireless carriers to deliver customized, carrier-branded mobile data services to their wireless subscribers."

Carl Icahn was one of the top 25 highest earning hedge fund managers of 2011.

What Carl Icahn Sees in WebMD: Stock of the Week

We're proud to announce a new series here on MarketFolly.com: stock of the week. This series aims to provide a quick summary of what hedge fund managers and well known investors might see in a particular company.

These posts are written by Tsachy Mishal who is the Portfolio Manager at TAM Capital Management. He provides background on the situation, as well as what he likes and dislikes about the company. Here's his take on what Carl Icahn sees in WebMD (WBMD):


Carl Icahn is so well known for putting fear in the heart of corporate boards and entrenched managements everywhere, that his amazing record as an investor is often overshadowed. When I saw WebMD trading at a 52 week low I was eager to take a look as Carl Icahn bought 11.64% of the company at significantly higher prices.

WebMD is the most visited health related website in the US by both patients and doctors. People visit the site in order to learn more about drugs, illnesses, and general health issues. WebMD largely makes its money off of advertising. WebMD has stumbled recently as pharmaceutical companies have cut ad spending. Pharmaceutical companies are facing a patent cliff which is a double whammy for ad spending. There are fewer drugs to advertise and companies are looking to offset lost revenue with lower costs.

WebMD has a market cap of $1.4 billion and $320 million in net cash for an enterprise value of $1.08 billion. In 2011 WebMD produced $558 million in revenue and $116 million in free cash flow. In 2012 revenue is expected to fall to $507 million and free cash flow is expected to fall to $65 million.

What I like:

- WebMD trades at a little over 9 times 2011 free cash flows. If they could turn around their revenue decline and cut costs, the stock would be very attractively priced.

- Carl Icahn seems to be influencing the company as the recent tender offer is straight out of his playbook.

- There is a tender offer for $150 million worth of shares. Tender offers tend to have a positive short term effect on stock prices.


What I don't like:

- WebMD trades at 16 times forward free cash flow, which seems high for a stumbling company.

- Stock option expense is nearly $40 million a year, which is a very large portion of free cash flow and earnings.

- Content creation on the internet does not have any barriers to entry.

- There do not seem to be any potential acquirers as the company unsuccessfully tried to sell itself recently.

I must admit to scratching my head when first looking at the company, trying to figure out what Carl Icahn sees. Then, I realized that just a few months ago there were expectations for growing revenue and free cash flow. I'm not certain that Carl Icahn would have gotten himself into this situation had he known he was looking at a revenue and free cash flow decline. However, as owner of 11.6% of the company, it's difficult for him to turn back. WebMD is now a turnaround situation and with Carl Icahn calling the shots I wouldn't bet against them. That said, I'm not interested in betting alongside Carl Icahn in WebMD.


That concludes the first entry in MarketFolly's new series: stock of the week. The above was written by Tsachy Mishal, Portfolio Manager at TAM Capital Management.

Carl Icahn Talks Raised Clorox (CLX) Bid, Potential Breakup

Legendary investor and 'corporate raider' Carl Icahn recently made a bid for Clorox (CLX). After being rejected by the company, just yesterday he raised his bid to $80 per share, more than the current trading price of $74.

He sat down to chat with Bloomberg TV about his thought process. Icahn thinks that shares aren't trading up to his offer because the company still has yet to say they're for sale. Icahn also made it clear he wants to avoid a proxy fight.

If he was successful in a purchase, he would consider splitting it up, possibly keeping one of the divisions (though he refused to mention which). As far as antitrust concerns go, Icahn says that he doesn't think it would be a problem for CLX to be acquired by another company. At $80 per share, he thinks CLX is great value and that a large buyer looking for synergies could pay $100 per share.

That last point is why many investors seem to think that Icahn's 'bid' is merely posturing to ignite a bid from another company. The scenario plays on. As far as other recent investment ideas from Icahn, at the Ira Sohn Conference he pitched his own company: Icahn Enterprises (IEP).

Embedded below is Icahn's interview with Bloomberg TV (email readers come to the site to view):



Bloomberg TV also recently profiled Scion Capital's Michael Burry which we recommend watching as well.

Carl Icahn Acquires More Tropicana Entertainment

Corporate Raider Carl Icahn recently filed a Form 4 with the SEC regarding shares of Tropicana Entertainment (TROP). In the disclosure, we see that Icahn, through his various investment vehicles acquired 206,267 shares at a price of $16 per share on April 16th, 2010. This brings his total ownership in Tropicana (through all vehicles) to 12,870,446 shares. Last month, we detailed how Icahn exercised warrants on Tropicana.

Icahn of course graced the updated Forbes' billionaire list and is known for his activism at companies in an attempt to generate shareholder value. Other recent notable activity out of Icahn's camp includes raising his bid for Lions Gate Entertainment (LGF) and acquiring even more Take Two Interactive (TTWO) shares. He's been quite busy as of late and we'll continue to keep you posted on developments.

Taken from Tropicana Entertainment's website, they are "a privately held company that, along with its affiliates, owns or operates 9 casinos and resorts in Indiana, Louisiana, Mississippi, Nevada, and New Jersey."

You can view all our prior Carl Icahn coverage here.

Carl Icahn Continues Acquiring Take Two Interactive (TTWO) Shares

Yet again, Carl Icahn has bought more shares of Take Two Interactive (TTWO). In a Form 4 filed with the SEC, we see that Icahn's various investment vehicles purchased 168,700 shares of TTWO at $9.98 per share. The transaction took place on April 1st, 2010 and he now collectively owns 11,789,226 shares through his mix of investment funds and partnerships. This comes after we recently covered how Icahn has been adding TTWO shares repeatedly as he looks to shake-up things at the company to increase shareholder value.

The legendary rabblerouser and corporate activist has been quite active in the investment arena lately as he recently dumped his Blockbuster (BBI) shares and has been seeking to acquire Lions Gate Entertainment (LGF). You can read some of his investment theses and insight in Icahn's investor letter if you're interested in learning more. In the mean time, we'll continue to watch if he can institute change at TTWO and will monitor the SEC filings for the next time he purchases shares. Because if his rate of buying is any indication, it doesn't look like he's done yet.

Taken from Google Finance, Take Two Interactive is "a global publisher, developer and distributor of interactive entertainment software, hardware and accessories. The Company’s publishing business 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."

For more from hedge fund Icahn Partners, check out Carl Icahn's portfolio.