The Morning Brief: Carl Icahn Streams Paper Gains from Netflix; Morgan Stanley Cuts J.C. Penney EPS numbers

Was it perspicacious research on the part of Carl Icahn or just plain dumb luck? Maybe both. Shares of Netflix on Tuesday surged 24.44 percent to close at $216.99, after the company reported adding more than two million U.S. subscribers last quarter. At year-end Icahn owned more than 5.54 million shares of the video streaming company, making him the second largest holder. Icahn paid about $58 a share for his stake in late October. In November, Icahn was pushing the company to merge with a major technology company. Soon after Netflix adopted a shareholder rights plan to shore up the incumbent management’s defenses. Shares shot up in the first quarter this year, enabling the activist investor to nearly quadruple his money on paper.

Trading in Apple shares was halted briefly post-closing Wednesday, after the technology company reported profits and revenues above expectations. Apple said it will expand its stock buyback plan, which should placate Greenlight Capital’s David Einhorn somewhat. Einhorn has urged the company to distribute its enormous cash pile. His firm had more than 1.3 million shares at year-end, plus call options on the stock. Apple shares barely budged in after-hours trading. The stock closed Tuesday up nearly 2 percent, to $406.13.

More bad news for Pershing Square Capital Management’s William Ackman. Morgan Stanley Tuesday morning cut its price target on J.C. Penney Co. to $9, from $13, citing “disappointing store checks.” It also cut its first-quarter comparable sales and estimates for earnings per share. “While CEO [Myron] Ullman’s return has us modestly more constructive, JCP’s path to profitability remains uncertain,” the investment bank said in the note to clients. According to the Wall Street Journal , the troubled retailer has hired turnaround adviser AlixPartners to help manage cash flow. The stock dropped as low as $14.95 during the day and closed down 0.58 percent to $15.45 on an otherwise very strong day for the market.

Marc Lasry may not get the posting as Ambassador of France after all. The hedge fund manager, who founded $12 billion Avenue Capital with his lawyer sister Sonia, told clients he is remaining at the New York City firm. It is not clear what happened but the longtime Democratic fundraiser and donor, who once employed Chelsea Clinton, was hoping to be approved by August. According to a Reuters report, one sticking point would be how he will be able to disengage with Avenue without being forced to sell his stake.

Jana Partners’ Barry Rosenstein has told clients specialty chemicals maker Rockwood Holdings could be worth $80 a share, Bloomberg News reported Tuesday. The activist hedge fund manager, who oversees more than $5 billion, says the specialty chemicals maker could attract takeover offers from larger competitors after selling other units, the hedge fund told clients. “We believe an ROC made up of lithium and surface treatments could make a very attractive takeover candidate for large multinational chemical names” such as BASF SE, Albermale Corp. and Soc. Quimica y Minera de Chile SA, Jana said in the letter. The stock closed up more than 1 percent, to $64.05.

Stephen Mandel Jr.’s Lone Pine Capital lifted its position in cloud-computing company Workday to more than 3.5 million shares, or 9.35 percent of outstanding shares, from roughly 980,000 shares at year-end. Shares of the enterprise cloud-based applications provider rose Tuesday by 2.22 percent, to $59.44. Lone Pine said the position is passive.

Steven Cohen’s SAC Capital Advisors has disclosed a 5.4 percent passive stake in Celldex Therapeutics, a biopharmaceutical company. Celldex stock climbed nearly 4 percent, to $13.52 on the news.

Related