The Exchange

Great day for Netflix shares could pay off for Carl Icahn's son

The Exchange
Icahn: Apple should launch $150B stock buyback
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FILE - In this March 16, 2010 file photo, financier Carl Icahn poses for photos upon arriving for the 32nd annual New York City Police Foundation Gala in New York. Icahn has told Apple CEO Tim Cook that the iPhone and iPad maker should launch a $150 billion stock buyback immediately and disclosed that he now owns 4.7 million shares in the company. In a letter to Cook posted online on Thursday, Oct. 24, 2013, Icahn said he has increased his stake in Apple by 22 percent from 3.9 million at the end of September. At Apple’s current stock price, that’s worth about $2.5 billion and amounts to less than a 1 percent stake in the company. He plans to increase his stake. Icahn wants Apple to launch the buyback at its current stock price, which closed at close to $525 on Wednesday when the letter was sent. He stressed that he does not plan to tender any of his shares in the buyback he is proposing. (AP Photo/Henny Ray Abrams, File)

A good day for Netflix (NFLX) shares could be a great day for Brett Icahn, son of billionaire financier Carl Icahn.

Recall that, last October, Icahn senior sold more than half his firm’s Netflix position over the objections of Icahn junior and business partner, David Schechter. But to mollify the kids, Carl agreed to compensate them if the Netflix stock price kept rising.

With Thursday's 17% jump to a new all-time high, Netflix shares have risen considerably from where pops sold back in October. The stock skyrocketed after the online video service reported adding 2.3 million new U.S. subscribers and 1.7 million new international subscribers in the fourth quarter. The additions exceeded analyst estimates, showing Netflix growth has yet to slow even after its membership surpassed top premium cable channel HBO.

Icahn senior in October sold almost 3 million shares, mostly at $341, while retaining about 2.6 million shares.

“As a hardened veteran of seven bear markets, I have learned that, when you are lucky and/or smart enough to have made a total return of 457% in only 14 months, it is time to take some of the chips off the table,” he said at the time.

For a while that looked like the better bet, but with the share price Thursday at around $390, the sale represents about $150 million of lost profits.

The tally so far

Under terms of the Icahns’ agreement, which includes a complex formula to calculate junior’s profit sharing, Brett and his partner are entitled to a small portion of those lost gains, likely about 7.5%, or more than $11 million so far.

The final reckoning won’t be for a couple more years, however, when Carl Icahn is due to make the next profit-sharing payment to his son and Schechter, who manage a $5 billion fund, known as the Sargon Portfolio, within the firm.

Carl Icahn has shifted his energies to other investments. He is pushing Apple (AAPL) to increase its stock buybacks and dividend payments and, on Wednesday, said he wants eBay (EBAY) to split off its lucrative PayPal unit.

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