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.