While Investors Ponder, Icahn Keeps Buying

While experts debate whether or not there will be a double-dip recession, billionaire Carl Icahn keeps adding to his positions.


Carl Icahn, a billionaire investor and chairman of Icahn Enterprises LP, looks on during the New York Financial Writers Association dinner in New York on June 10, 2008. Photographer: Jeremy Bales/Bloomberg


While small investors continue to prefer bonds, CDs and money market funds offering puny interest rates and the pros sit around debating whether or not we will have a double-dip recession, billionaire Carl Icahn keeps adding to his positions and putting even more pressure on management.

This week, Icahn upped his stake in Motorola to nearly 10.4 percent after buying another 11.5 million shares for $7.50 a pop on Wednesday and Thursday, according to the Wall Street Journal.

Apparently he is very excited about Motorola’s plan to divide itself into two separate companies and the growth prospects for its smart phones.

In addition on Tuesday, Icahn reported that over the course of the month, he exercised call options for more than 8.2 million shares of Mentor Graphics, lifting his stake to 14.98 percent.

The current stake — he initially moved into the stock in the second quarter — is obviously deliberate since back in June Mentor announced it adopted a Shareholder Rights Plan that is exercisable if anyone owned at least 15 percent of the tech company.


Meanwhile, in recent days we learned that Icahn increased its bet on the energy sector in the second quarter. According to a quarterly filing, his hedge fund, Icahn Capital, took new positions in Anadarko Petroleum, a major player in the exploration and production of oil and gas; NRG Energy, a wholesale power generation company, and the ADRs of Ensco, an offshore contract driller. He also increased his stake in Chesapeake Energy, a natural gas producer.

On the other hand, in the second quarter, he completely bailed out on one position — Blockbuster — which is preparing to file for bankruptcy, according to a report in Friday’s Los Angeles Times.

Meanwhile, another new holding in the second quarter — Hain Celestial — received favorable mention from a Barclays analyst on Friday after the company Wednesday night reported fiscal fourth quarter operating earnings that beat both the consensus and Barclays estimate.

In a note to clients, Andrew Lazar also noted that Hain’s improved top-line results come at a time when the rest of the industry has suffered from stagnant volumes and continued pressure on price/mix, citing “a price conscious consumer and a highly promotional competitive environment.”

As a result, Lazar raised his 2011 EPS estimate from $1.14 to $1.31 per share, the high end of management’s guidance range, and lifted his price target from $18 to $23.

Obviously, Icahn still has his touch.

Stephen Taub

Stephen Taub

Stephen Taub , who has covered the hedge fund industry for 30 years, is a contributing editor to Institutional Investor and Absolute Return-Alpha magazines.