Skip to search.

Being Carl Icahn: If It Were Easy, We'd All Be Billionaires

Posted May 16, 2008 03:45pm EDT by Aaron Task in Investing, Newsmakers
Related: YHOO
A couple of questions about Carl Icahn's efforts to amass shares in Yahoo have been nagging at me:
  • Why does Icahn need FTC approval to buy more YHOO shares?
  • If Icahn's YHOO stake is mostly via options vs. common stock, as The WSJ reports, does he have voting rights?


On the odd chance some of you are wondering the same things, I've attempted to answer them here:

The first question has a fairly straightforward answer, although Federal regulation is involved so it's not "simple."

The big issue is that Icahn is an "activist investor" as defined by the Securities Exchange Act of 1934. Activist investors must submit a 13D filing if they are going to acquire more than 5% of a company's stock. More detail can be found here.

As per his letter to Yahoo's board, Icahn is seeking "antitrust clearance from the Federal Trade Commission to acquire up to approximately $2.5 billion worth of Yahoo stock"; at current prices, $2.5 billion would buy more than 5% of Yahoo's stock.

The second question is a bit more complicated to answer. According to The Wall Street Journal, Icahn currently owns "only" 9.9 million shares, not the 59 million widely reported. "How can Mr. Icahn hold the rest without actually owning them? It's because of an old strategy Mr. Icahn and other corporate raiders used in the 1980s, of matching put-and-call options," the Journal explains.

The Journal goes into the mechanics of the options trade, but Paul Kedrosky sums it up this way: "People like Icahn are notorious for playing call option tricks and parking stock with buddies to build large de facto positions without disclosing until last minute," i.e. until he's ready to declare his intentions.

For the record, Icahn has not responded to multiple requests for comment and/or an appearance on Tech Ticker.
Go to Tech Ticker

There are no comments yet

Post a comment

Sign in to post a comment, or Sign up for a free account.
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges.

Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.