This content is from: Portfolio

Morning Brief: Icahn Concedes to Starboard's Demands Over Newell Brands

In the battle of the activist investors, Jeffrey Smith wins a round against Carl Icahn.

Score this one for Starboard Value in the battle of the activist titans. Newell Brands announced on Monday that it worked out a deal with the hedge fund, which agreed to terminate its proxy fight with the consumer products company. Under the deal, Newell’s board appointed two new independent directors. It also plans to nominate Bridget Berman from Starboard’s slate, who has been agreed upon by Starboard and Carl Icahn. For his part, Icahn, who reached an earlier deal with Newell that came under heavy criticism from Starboard founder Jeffrey Smith, agreed to give up two board seats.

“This agreement will enable the company to now focus exclusively on the execution of our transformation plans and our efforts to strengthen our financial and operational performance,” said Newell chief executive officer Michael Polk, in a press release. In a statement, Icahn said, “The company reached out to us and requested that we give up two board seats to avoid a potentially disruptive proxy fight, which could have been especially bad at this important time for the company. We spoke to Jeff Smith and determined we both have similar goals and objectives to enhance shareholder value, and we therefore agreed to give up two of our seats to avoid a damaging proxy fight.”

___

One day after he touted a new short at the Sohn Investment Conference, David Einhorn saw the stock of another one of his negative bets take a beating. Shares of heavy equipment maker Caterpillar fell about 6.4 percent, to close at $144.19, despite reporting strong quarterly results. However, on a conference call with investors, chief financial officer Bradley Halverson issued a few caveats and warnings that took many by surprise. He said higher steel prices will result in higher material costs.

“While we expect strong operating margins for the rest of the year, which is defined as within or better than the Investor Day ranges, we do not expect to repeat first quarter operating margin at the consolidated level,” he added. “We expect steel and other commodity costs to be a headwind all year.” The stock is now down about 15 percent from its January high.

___

Shares of both classes of Alphabet lost between 4.5 percent and 4.7 percent on Tuesday after the parent of Google reported revenue and recurring earnings per share that were above the consensus but came up 9 percent short on operating income. In response, Credit Suisse raised earnings estimates but maintained its price target for the Class A shares at $1,350.

“Similar to the results of last quarter, Websites revenue posted better-than-expected results but operating margin and profit dollars fell short of our estimates as Google continues to invest to open up/expand new opportunities in video/YouTube, cloud/enterprise software, hardware, and AI,” the investment bank told clients in a note. It did acknowledge that core segment operating margins compressed by two percentage points, citing higher marketing costs and higher capital expenditures. Barclays told clients that the stock is over-sold and “would selectively add to positions.” It maintained its price target at $1250. The A shares closed Tuesday at $1,022.64.

___

Elliott Management Corp. reduced its stake in Platform Specialty Products to 4.9 percent, according to a regulatory filing. As a result, the hedge fund firm, whose position in the chemicals company was passive, no longer needs to make timely filings when it sells additional shares. Bill Ackman’s Pershing Square Capital Management remains the largest shareholder.

___

Adage Capital Partners said that as of April 12 it owned a little more than 8.9 million shares of Ferroglobe, or 5.2 percent of the producer of metal alloys and other metallic products.

Related Content