What Is Carl Icahn’s Next Move?

Carl Icahn just declared victory in his battle with Blackstone over Dynegy group and is moving on to his ongoing tussle over movie producer, Lionsgate. But Icahn most likely has his next target already lined up. Just who is that likely to be?


Carl Icahn sure didn’t waste much time.

Fresh off from declaring victory when Dynegy called off its merger with Blackstone Group, the septuagenarian corporate raider quickly returned to his most thorny nemesis this year—Lionsgate Entertainment.

Icahn has announced that he has extended his tender offer to December 10, his fifth extension. He also said he will submit a slate of five directors to replace incumbent directors at the movie studio’s annual meeting, which has not yet been scheduled.

He also removed a provision whereby he would only buy stock if his stake could be raised above 50 percent. In addition, he dropped his demand that Lionsgate rescind the issuance of more than 16 million shares to shareholder Mark Rachesky, figuring by then that the New York State Supreme Court will already have ruled on the matter.

One thing is certain: Whatever happens, Icahn has another activist target sitting in the wings. Who is it? We can only speculate.

And the best place to look for candidates is at Icahn’s recent quarterly filing of stock holdings. In the filing, Icahn disclosed he took five new positions in the September quarter—Mattel, Masco, Cadence Design Systems, Dynegy and Commercial Metals.

A few of them are intriguing.

Dynegy, of course, has been played out for now.

Mattel, however, seemingly read the same filing. On the same day Icahn disclosed his holdings, the toy maker announced it increased its previously announced share repurchase program by an additional $500 million.

Interestingly, the action increases Icahn’s share of the remaining outstanding shares.

Mattel did not return a phone call seeking comment.

Cadence is another interesting potential target. Icahn owns nearly 2.9 million shares of the semiconductor design company, or slightly more than 1.1 percent of the total outstanding. Not a big stake yet, although Icahn does move in a hurry if he needs to.

Keep in mind, however, that throughout the year--including in the third quarter--Icahn has increased his stake in Cadence rival Mentor Graphics. Earlier in the year Mentor and Icahn met, according to a regulatory filing. And Mentor instituted a poison pill that is triggered if a person or group acquires or announces a tender offer for 15 percent or more of the company’s common stock.

Icahn currently owns a little less than 12 percent of Mentor.

Perhaps Icahn wants to merge the two companies? Keep in mind that in 2008 Mentor fended off a hostile takeover offer from Cadence.

Meanwhile, Icahn is by far the largest holder of Masco, which makes building materials and home improvement items such as cabinets. Good stock to own at the bottom of a housing cycle. Interestingly, its stock is up nearly 5 percent Wednesday on an overall strong day for the stock market.

Commercial Metals, the largest Texas-based steel recycler, is also up more than 4 percent on Wednesday.

So, while most observers are watching how the battle for Lionsgate finally plays out, I’m looking ahead to Icahn’s inevitable next move.