What a year for Carl Icahn.
The activist investor appeared to taking advantage of that Monday night when he announced a sale of roughly 2 million shares of his fund Icahn EnterprisesIEP -9.25% via a regulatory filing. In doing so, he generated a tidy profit of $289 million.
The sale spooked investors in Mr. Icahn’s fund, pushing the stock down roughly 9% Tuesday. But they can’t be all that dismayed. Shares of Icahn Enterprises are up more than 200% in 2013.
Mr. Icahn has scored big profits this year with his successful bets on NetflixNFLX +2.05%, CVR EnergyCVI -0.70% and Apple among others. Holdings in Icahn Enterprises’ investment funds have increased 50% through the first three quarters of 2013, according to a filing.
At the same time, as my colleague David Benoit outlines in a front-page Wall Street Journal article Tuesday, Mr. Icahn has been winning the hearts and minds of corporate boards.
“Carl Icahn, long seen as the archenemy of chief executives, is finding the path to the boardroom easier to tread. Mr. Icahn, among the most relentless of activists, secured representatives on more boards this year than he ever has, without resorting to shareholder-vote battles.”
The most seats ever? Icahn Enterprises has scored seats on seven different corporate boards this year.
Even when Mr. Icahn loses a fight he wins. As Mr. Benoit notes, Mr. Icahn couldn’t stop Dell’s founder Michael Dell from taking his company private. Still along the way Mr. Icahn bumped up the share price securing more returns for his firm.
buying more myself
thats why this stock is up huge 5 years in a row yeah your right hes a dumb GUY lmao another clueless clown this is a great stock to buy and hold watch
u are clueless read why and learn something lol
your clueless this stock is up huge year to date and has made huge profits in its investments u best do better research your clueless
carl has made millions and one of the smartest investors in the country im sure he knows what hes doing just look at this stocks year to date stats up huge lol sit back relax this will be fine
hes done before and stock has risen after every single time he does it to get more investment cash i have no worries in this long term none
wrong go read his earnings statement better hes made plenty your so misinformed lol
12 points is nothing look at how much its up year to date its giving back peanuts my friend in since 78 and going no where long term this is a winner watch and learn come see me in a month
Pandora Media ($P) announced a secondary offering and it still went up to new all-time closing highs above $25. Its float will increase by 14 million shares, four million of which are sold by insiders.
LinkedIn ($LNKD) raised a billion dollars in a secondary earlier this month. It still made new all-time highs.
Zillow announced a secondary on August 19: 2.5M shares at $82. $Z is trading near $100 today.
In February 2013, Michael Kors priced a humongous secondary offering: 25 million shares at $61. $KORS is trading near $75 today.
Sure, there are plenty of examples of stocks being killed after announcing secondary offerings. The bull market in 2013 has been very forgiving and capable of absorbing secondaries.
On the surface, most secondaries are viewed as negative events for three main reasons:
1) A secondary represents an increase in company’s float, which dilutes current shareholders and potentially could lead to an increase in supply down the road. This is not always the case (the increase in supply) and i will explain why in a bit.
2) It is always priced below the current market price to entice institutions into buying big blocks of shares.
3) Insiders selling is always looked with suspicion.
Secondary offerings are an organized transfer of ownership, often from weak to strong hands. Counter-intuitively, they could be positive if there are enough institutions willing to participate.
Depending on who is selling, secondary offerings help:
1) companies to raise more cash for operating and expanding purposes. The companies are in stronger financial position after the offering. You raise when you can, not when you have to.
2) insiders sell in an organized manner. there is a transfer of ownership from insiders, who would sell on the open market anyway, to institutions, who are more likely to be long-term holders.
3) institutions to accumulate large blocks of stocks they want to own at prices slightly below market. If they had to buy the same number of shares at the open market, it would probably cost them a lot more. Institutional interest is generally considered a positive sign. If a stock runs from 20 to 40 and has a secondary at 35, the event could be considered a stamp of approval; a justification of the current prices in a way.
Remember, the market is designed to fool most of the people most of the time and it is often counter-intuitive.
In no way I am saying that secondaries are always positive events. I am just open-minded to the thesis that sometimes they could be. I am a big believer in the philosophy that “Reaction to news is more important than the news itself”. When I see a stock, making new all-time high after announcing a secondary, I consider that a really good sign.
Positive reaction to what appears to be “bad” news on the surface is bullish. When stocks don’t fall on bad news, good news is usually just around the corner.
At the moment of writing, I don’t own any of the mentioned stocks in this post. I am just sharing my thought process.
he wanted more cash to invest more not bad in my opinion long term no worries look at companies that have issued more stock its not always bad news lol