What We're Reading ~ 6/10/15

Focus on the key variables of an investment [Base Hit Investing]

Bias from overconfidence [Farnam Street]

Robert Shiller: things are overvalued [Zero Hedge]

The most important concepts in behavioral economics [StockTwits]

A pitch on Charter/Time Warner Cable [Value Venture]

A look at Precision Castparts [Jnvestor]

Why did John Malone invest in Lions Gate? [Punch Card]

On the looming rental crisis in the US [SoberLook]

Weak consumer spending: the canary in the bear market coal mine [Mauldin]

How Tesla will change the world [Wait But Why]

The state of Chinese social media in 2015 [AdAge]

Why China is blowing an equity bubble [FT]

Xiaomi, China's new phone giant, takes aim at world [WSJ]

Coal woes are spreading but it still has fans [Economist]

Caesars: a private equity gamble in Vegas gone wrong [Fortune]

On the truly exceptional business [Value Investing World]

Japan's economy grows faster than estimated [Bloomberg]

Apple is the new king of bonds [Bloomberg]

What Twitter can be [lowercase capital]

Protections for late investors can inflate start-up valuations [NYTimes]

Mark Cuban Discloses Lions Gate Entertainment (LGF) Stake; Carl Icahn Raises His Bid

If you thought the Lions Gate Entertainment (LGF) situation couldn't get anymore interesting, leave it to Mark Cuban to possibly throw a wrench in Carl Icahn's plans. The billionaire owner of the NBA's Dallas Mavericks recently filed a 13D with the SEC revealing a 5.4% ownership stake in Lions Gate Entertainment (LGF) with 6,369,315 shares. In total, Cuban purchased $27,897,430 worth of LGF.

Additionally, in the fine print, we see that Cuban "has sold to counterparties the right to put to him 2,000,000 shares of common stock at a price of $7.50 per share, if exercised prior to or on January 22, 2011." If those puts were to be exercised, Cuban's stake in LGF would then rise to 7.1%. Since he has sold puts (instead of buying them), this is not a hedge to his position, but rather a bullish wager. Below is a breakdown of Cuban's purchases as he started buying in late March and continued into early April:

(click to enlarge)

While Cuban has only disclosed he purchased for "investment purposes," keep in mind that a 13D filing signals an activist stake so Cuban could possibly have something up his sleeve here. And speaking of activism, you'll remember that corporate raider Carl Icahn has been trying to acquire Lions Gate Entertainment and initially bid $6 per share for the company. Well, late yesterday Icahn raised his offer for LGF to $7 per share and has insisted that management be replaced. Shares were up over 8% after hours yesterday on the news. You can read Icahn's letter to shareholders here.

So, who knows if we'll have a battle of billionaires here, but Cuban could feasibly just be playing the arbitrage in Icahn's possible takeover. The fact that Cuban filed a 13D certainly gives him the option to get involved though. Additionally, you'll recall that Cuban has a history of investing in various companies in the movie industry. As such, we'll continue to watch the developments here. In the mean time, you can view the latest portfolio moves from Icahn, as well as read Icahn's investor letter.

Taken from Google Finance, Lions Gate Entertainment is "the studio with a presence in production and distributions of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered content. The Company released approximately 18 to 20 motion pictures theatrically per year, which include films it develops and produces in-house, as well as films that it acquires from third parties."

Carl Icahn Gets Aggressive With Lions Gate Entertainment (LGF) Offer

Late last week, corporate raider and everyone's favorite rabblerouser Carl Icahn said he was seeking to acquire all of Lions Gate Entertainment (LGF). This is a much more aggressive move for Icahn as he previously was seeking to acquire only 29.9% of the company.

Icahn currently owns almost 19% of the company and he is offering $6 a share, contingent upon his acquiring 50.1% of the company at least. Additionally, the company would have to remove its poison pill. If he is successful, it seems very clear that Icahn will start his campaign of change by replacing management. Shares are already trading around his $6 offer price, so it will be interesting to see if he is successful with yet another acquisition.

In terms of other recent action out of Icahn's camp, we recently noted he exercised warrants on Tropicana Entertainment and we've posted up Icahn's investor letter as well. Taken from Google Finance, Lions Gate Entertainment is "the studio with a presence in production and distributions of motion pictures, television programming, home entertainment, family entertainment, video-on-demand and digitally delivered content. The Company released approximately 18 to 20 motion pictures theatrically per year, which include films it develops and produces in-house, as well as films that it acquires from third parties."

To see the rest of his investments, head to our coverage of Carl Icahn's portfolio.

Carl Icahn: Activism Update & Investor Letter

Recently we've seen some updates in regards to Carl Icahn's portfolio. The hedge fund manager and activist investor is seeking four seats on Genzyme's (GENZ) board (one for himself and three for associates). Icahn is up to his usual rabblerousing ways and is seeking to institute change at the company. It seems likely he would pressure the company to sell itself entirely or part of its businesses. After all, shares are the lowest they've been over the last half decade. Genzyme was his fourth largest disclosed holding when we looked at Icahn's investments. This news shouldn't really be startling by any means. In typical Icahn fashion, he is assembling a platform to institute change and generate shareholder return.

Additionally, we saw a few weeks ago that Icahn said he wanted to raise his stake in Lions Gate Entertainment (LGF) to nearly 30% of the company. He has put forth the offer and would need over 13 million more shares in order to do so.

All of this recent activity comes after good news regarding his Motorola (MOT) position. The company plans to split itself up and, as Icahn detailed in his recent investor letter, he thinks MOT shares have much further upside as value becomes unlocked.

Courtesy of the fine folks at Dealbreaker who originally posted this up, you'll find below Icahn Partners' annual investor letter:



You can directly download the .pdf here.

We'll have to watch the developments with GENZ and LGF as Icahn positions himself for his next big moves. For more insight from prominent hedge fund managers, we highly recommend checking out the following resources we've posted up: Paolo Pellegrini's PSQR Capital annual letter, the latest letter from Perry Partners, hedge fund Conatus Capital's letter, global macro fund Woodbine Capital's commentary, plus many more.