Thoughts on Carl Icahn?

Hey monkeys,
I don't usually like bringing politics into WSO, however, I felt as if I could make an exception on Carl Icahn.
Just recently, Carl Icahn resigned as a special adviser to President Donald Trump. This was largely due to ...


Mr. Icahn said he felt the need to step down after Mr. Trump named Neomi Rao as Administrator of the Office of Information and Regulatory Affairs, an official administration role as opposed to Mr. Icahn’s unusual spot advising the president from outside.

“I sincerely regret that because of your extremely busy schedule, as well as my own, I have not had the opportunity to spend nearly as much time as I’d hoped on regulatory issues,” Mr. Icahn wrote in a letter to Mr. Trump. “I truly appreciate the confidence you have in me and sincerely hope that the limited insights I shared have been helpful to you.”


It seems as if Carl Icahn was not able to accomplish what he wanted within the White House and has resigned.

I'm sure most of you have heard of the various opinions regarding Carl Icahn's obsession with closing deals and "corporate raiding". Carl Icahn often argues that he is supporting the shareholder but many times neither the shareholders nor management end up on top.

I'm curious as to what WSO's opinion of Carl Icahn is. Do you monkeys respect his work ethic and his self-made nature? Perhaps you guys believe that he embodies everything wrong with Wall Street.
Please discuss.

 

C5. The man is persistent, very persistent. This thing is one big pissing match and so far little has gone Icahn's way. Management seems to be very very opposed to him, and I get the feeling that they will do just about anything to keep him from taking over. I don't see Icahn liquidating his position completely though unless the company really starts to go south. Based on the animosity between him and management+allies, I think there will be a large push against his board nominees as well.

 

True, they really don't want him there and with his buddy on their side its just going to get worse for him. I may be giving him too much credit here but he's done this a lot of times before and as you said, he's persistent. He'll be on them like white on rice until he gets a seat on the board. What happens next is anybody's guess, but odds are it won't be in his favor. That's why I chose 1, that way he could get out before it gets even worse.

People like Coldplay and voted for the Nazis, you can't trust people Jeremy
 

This is going to get interesting. That's a pretty big position (actually, given Carl's worth, it's not very that big to him) to not have a good idea about what you're talking about. I'm curious to hear where he bought in at...

I'll start shopping around eBay for an Herbalife protein shaker to send you. OR... maybe I can sign up for Herbalife and get it at a discount that way!

I hate victims who respect their executioners
 
BlackHat:
This is going to get interesting. That's a pretty big position (actually, given Carl's worth, it's not very that big to him) to not have a good idea about what you're talking about. I'm curious to hear where he bought in at...

I'll start shopping around eBay for an Herbalife protein shaker to send you. OR... maybe I can sign up for Herbalife and get it at a discount that way!

Just be sure to include a single malt beverage in there to spice up the flavor as discussed.

 
kyleyboy:
I had a gut feeling at 3:53 today and bought a bunch of herbalife. I'm so happy right now. Ackman is totally wrong on this. Every single thing that comes out of his mouth these days is bullshit

You just can't appreciate Ackman's brilliance - you're not on his level. For example: JCP is like retail inception, maan. Just imagine: a mall... within a mall. The brand is going to improve and people will change shopping habits overnight! How can it not be worth $40, 80, 100 billion???? It's worth more than all other major dept stores combined!

-Ackman logic

 

Icahn kind of reminds me of somebody I know that did 3 tours in Vietnam and then was a cop in a city for 30+ years that had mafia and urban gang problems. When I was a kid I asked him if he was ever worried about bad guys coming after him. He said "Men have been trying to kill me for 35 years. They're all dead and gone and I am still here." Icahn may be senile and a dick, but he has been at this game for a long ass time and Ackman is probably going to get his ass handed to him

 
Gray Fox:
Icahn kind of reminds me of somebody I know that did 3 tours in Vietnam and then was a cop in a city for 30+ years that had mafia and urban gang problems. When I was a kid I asked him if he was ever worried about bad guys coming after him. He said "Men have been trying to kill me for 35 years. They're all dead and gone and I am still here." Icahn may be senile and a dick, but he has been at this game for a long ass time and Ackman is probably going to get his ass handed to him

I really, really hope he does. Ackman's ego needs a dramatic readjustment.

 
DontMakeMeShortYou:
Gray Fox:
Icahn kind of reminds me of somebody I know that did 3 tours in Vietnam and then was a cop in a city for 30+ years that had mafia and urban gang problems. When I was a kid I asked him if he was ever worried about bad guys coming after him. He said "Men have been trying to kill me for 35 years. They're all dead and gone and I am still here." Icahn may be senile and a dick, but he has been at this game for a long ass time and Ackman is probably going to get his ass handed to him

I really, really hope he does. Ackman's ego needs a dramatic readjustment.

i'm pretty sure his ego from his growth properties trade has gone so far into egoland that it has actually developed into full fledged mental illness
 
WallStreetOasis.com:
Still havent seen anyone address the details laid out in Ackman's presentation that would imply that there is anywhere near 50% of sales out of network...

Ackman may lose on this short term, but if you're long HLF long term, good luck. did you not see the sales pattern when they enter new markets?

You are totally right, it's just that it is not a pyramid scheme. I'm not investing in this thing long term, I agree it is still a terrible business model and company. Great trade though
 
BTbanker:
So Icahn didn't even own HLF when he went off on Ackman... wtf

Looks like a personal attack / market manipulation.

ding ding din, we have a winner. For full disclosure, I own some puts ....and Icahn's stake in HLF doesn't surprise me... he clearly hates Ackman's guts because of their previous legal history and has been waiting for an opportunity like this.

All I know is that when one side is spitting facts and numbers (factsaboutherbalife.com) and the other side is backing a sleezy business and keeps waving thier hands in the air, throwing insults and generalities, I tend to go with the side that is giving the more thoughtful argument.

If what Ackman laid out in his three hour presentation is even remotely true, HLF is one of the largest pyramid schemes we've seen in history (based on the definition of more than 50% of the sales being IN network on the promise of a "business opportunity')...whether you want to call is a pyramid scheme or not, the reality is that 97%+ of all distributors never make it out of the first level so by definition, most people lose hundreds or worse, thousands of dollars by "reaching for the dream" they sell hard....

If you look at the pattern of spike and rapid fall in sales in each region they enter, you will see that they will eventually run out of fools. The runway may just be longer than Ackman can stay solvent and I wouldnt short 20 million shares hoping the FTC comes to the rescue. All he can hope is that the cracks start to show (in more mature markets) before he's forced to cover his position...

 

I admire both Ackman and Icahn. Both are arrogant as hell though. However, I kind of want Ackman to beat this old geezer down. I looked up the information that Ackman and Icahn were fighting about regarding the lawsuit and its clear Icahn was trying to screw over Ackman. While Ackman may be arrogant, he makes a sound thesis and his slideshow presentation is more than reasonable. I hope Icahn gets his ass handed to him.

Array
 

Ackman's presentation is simply breathtaking. The level of detail in the analysis is game changing. The pro-HLF side is literally a bunch of bullshit ad hominem attacks based on nothing. I hope Ackman wins this even though he comes off like a prick and his whole vision for JCP is completely insane.

 
TheKing:
Ackman's presentation is simply breathtaking. The level of detail in the analysis is game changing. The pro-HLF side is literally a bunch of bullshit ad hominem attacks based on nothing. I hope Ackman wins this even though he comes off like a prick and his whole vision for JCP is completely insane.
I just went through about a third of the slide deck, and all I'm thinking now is where to find a loan shark, so I can leverage a short to the max.
 

I went through the entire slide deck that morning Ackman put it up and the first thing that came to my mind was 'this presentation is the biggest load of crap I've ever seen.' I think both the retail sales and the pop/drops are non-issues. More to the point, Ackman's core thesis is really - since I'm super rich and have never heard of this thing, clearly nobody must use it.

HLF was originally bought out of the Hughes estate and LBO'ed in the early 2000s by Golden Gate Capital and JH Whitney - they made a killing on it and tried to re-LBO in '07 but were rebuffed. Do you really think that they were too stupid to hire a law firm to diligence the issue? Or that during all those years on the Board including as Chairman (with new management that they brought in) they managed to miss the whole pyramid scheme thing? It's an MLM - you can't not look into it if you have half a brain. Another thing - check out the bio of HLF's general counsel. He joined the firm 10 years ago - prior to that he was the General Counsel of Walt Disney Intl and a SVP of Disney overall; 15 year career at Disney. This guy is a top corporate lawyer, clearly able to get a GC job elsewhere (or a lucrative partnership at a white shoe firm), but he chooses to stay at an illegal pyramid scheme for 10 years...why exactly?

Finally, I'd point out that HLF has been tossed around the HF community for years; there are a LOT of very smart funds that know this business well and have diligenced it, and a lot of them made a ton on the way up. 13F's came out today - check out who some of the buyers were in the last quarter after Ackman came out short - a lot of really smart funds...not just Third Point and Icahn, but also Lone Pine, Tiger Consumer, Coatue, Seneca, Hoplite, Bridger, Chilton, Wellington, Capital Group.

I can't wait to watch Ackman get hosed on this. My money is this thing goes private in the next 6 months, $60 or better.

 
xqtrack:
I went through the entire slide deck that morning Ackman put it up and the first thing that came to my mind was 'this presentation is the biggest load of crap I've ever seen.' I think both the retail sales and the pop/drops are non-issues. More to the point, Ackman's core thesis is really - since I'm super rich and have never heard of this thing, clearly nobody must use it.

HLF was originally bought out of the Hughes estate and LBO'ed in the early 2000s by Golden Gate Capital and JH Whitney - they made a killing on it and tried to re-LBO in '07 but were rebuffed. Do you really think that they were too stupid to hire a law firm to diligence the issue? Or that during all those years on the Board including as Chairman (with new management that they brought in) they managed to miss the whole pyramid scheme thing? It's an MLM - you can't not look into it if you have half a brain. Another thing - check out the bio of HLF's general counsel. He joined the firm 10 years ago - prior to that he was the General Counsel of Walt Disney Intl and a SVP of Disney overall; 15 year career at Disney. This guy is a top corporate lawyer, clearly able to get a GC job elsewhere (or a lucrative partnership at a white shoe firm), but he chooses to stay at an illegal pyramid scheme for 10 years...why exactly?

Finally, I'd point out that HLF has been tossed around the HF community for years; there are a LOT of very smart funds that know this business well and have diligenced it, and a lot of them made a ton on the way up. 13F's came out today - check out who some of the buyers were in the last quarter after Ackman came out short - a lot of really smart funds...not just Third Point and Icahn, but also Lone Pine, Tiger Consumer, Coatue, Seneca, Hoplite, Bridger, Chilton, Wellington, Capital Group.

I can't wait to watch Ackman get hosed on this. My money is this thing goes private in the next 6 months, $60 or better.

Of course there was a ton of smart people in the business and still are, because the key to the thesis and argument is how sustainable it is and WHEN it will run out...and it doesnt mean that when the company was smaller (or if you still believe it has more poor people to take advantage of) that it didn't present an awesome opportunity for growth. The products, confusing tiers/rules and cult culture make it very easy to obfuscate what is actually being sold and the % of people that ever make money with the company.

I think the key to Ackman's thesis is not that he has never heard of it, but that the majority of people lose money and are buying into a business oppportunity -- and that the majority of the product sales are coming from recruitment, not out of network to retail customers. In other words, 90+% of the sales are coming from selling to other distributors down the line -- the real question is how long the runway is before they run out of markets to take advantage of poor/uneducated people...also, several courts have already found HLF to be a pyrmaid scheme, so are we supposed to be shocked when someone accepts a job where they can be compensated handsomely because they previously worked at Disney?

It's not the typical simple pyramid scheme where money is just passed from new recruits to people higher up in a rolling cycle and more recruits are needed to keep it going. In this case they happen to use a commodity product as their cover. They are "Selling" the products...but do you really think that is what they are selling? No, they are selling a business opportunity and are misrepresenting the opportunity blatantly to all potential distributors. Don't believe me, read some of these: http://factsaboutherbalife.com/category/compensation-scheme/recruiting-…

It may go private and Ackman may get hosed, but that doesn't mean what he highlighted about this business is not true.

 

I do think there is something to be said about Ackman being an insanely out of touch rich guy...just look at his entire plan for JCP. The dude probably hasn't bought his own groceries in a decade.

That said, just because a lot of smart people run HLF, doesn't mean it isn't simply an illegal money making scheme. Lots of really smart dudes worked at Enron before everything came to light.

 
TheKing:
I do think there is something to be said about Ackman being an insanely out of touch rich guy...just look at his entire plan for JCP. The dude probably hasn't bought his own groceries in a decade.

That said, just because a lot of smart people run HLF, doesn't mean it isn't simply an illegal money making scheme. Lots of really smart dudes worked at Enron before everything came to light.

I don't know that Enron and HLF are necessarily comparable. From a senior perspective, I'd imagine that HLF's business model is far more translucent and easy to understand. At Enron, on the other hand, you had to be able to comprehend labyrinthine energy accounting concepts... and few people had both the knowledge and access to the pertinent information to be able to do so. Furthermore, HLF prints cash... Enron did not.

WallStreetOasis.com:
It may go private and Ackman may get hosed, but that doesn't mean what he highlighted about this business is not true.

That invalidates his entire pitch. As an investor, I don't care if his thesis is correct. The underlying assumption behind his investment is that the government will act as a catalyst. Given the amount of cash HLF throws off, Ackman's time is limited, and it doesn't seem like the government is doing much. I can't remember a time when this government has gone out of its way to help minorities without an ulterior motive. They don't get anything from dismantling HLF.

 
BlackHat:
Can we at least agree that this is the worst interview of all time by Carl here...

"Having my people go to HLF & look at the company is relatively meaningless. Some of the best investments I’ve made are in companies I’ve never seen."

Ummm ok. Yeah... that, errr, logic makes a lot of... sense? Well, at least Icahn and Ackman are on a level playing field: neither has actually stepped foot inside an actual shop.

 

On the analysts sourcing ideas thing, well of course they fucking do, that's their job. There's a gazillion trade ideas out there, its about committing capital to the right one and most importantly get the timing right, that's why PM's get the credit... (this is a bit of a simplistic way of looking at things admittedly, some ideas are just simply brilliant)

 
WhiteHat:
I'd probably short half the companies in Ackman's book but this one seems like a lose-lose situation for any investor who isn't already in on it. It hasn't been about the company's fundamentals since Icahn stepped in. Goddamnit Carl.

100% true, but I'll put my money (and have put a little) on the side that is trying to give MORE detail, not less -- the side that doesn't resort to namecalling and wave their hands to brush aside very serious allegations.

If ever there was a time for HLF to make up some juicy fake #s, now would be the time. It demonstrates all the signs of a pyramid, just brilliantly executed and one that will likely touch a huge % of the poor population on this earth before it's eventual collapse.

I think for Ackman to win in this trade, he will need some help from the FTC....I think for Ackman's thesis to be proven right, all he needs is time.

 
kyleyboy:
hedge:
I want to be just like Ichan when I grow up
Just don't be a grouchy old fart like him.
Agreed :D How can someone be such a miserable prick with all that loot? I don't think he's a bully though, remember that Ackman is the one that decided to broadside a company that people actually do rely on as their income (even if it is a skeevy business). I think one rich dude doling out an ass whooping to another rich dude is acceptable in the face of rendering a bunch of folks potentially jobless and killing shareholder value, if anyone's the bully it's Ackman. If you don't like HLF's business model and also believe in personal accountability, then people can easily buy their milkshakes somewhere else or learn the hard way about treating a sales business as a get rich quick scheme. In the meantime, it's a legit company and the stock isn't going anywhere soon, they've been hawking this crap for decades and are good at it...
Get busy living
 

Icahn is an opportunist and this guy can smell one even in a vacuum. I mean we all know if you can come off as the victim a sympathetic perception usually follows. So given the current situation that is exactly what has happened. We have the bully and we have the big brother that used the unfolding events to appoint 2 board members. It's a lot easier to pass on optimism vs pessimism, its just human nature.

 
DontMakeMeShortYou:
13D appears to roughly say that Ichan cannot sell his HLF stake until Feb. 28th 2014 (i.e. 1 year from today) unless BlackHat sends DMMSY a bottle of Cristal for him and his ladyfriends.
I hate victims who respect their executioners
 

I give up... The market is bullshit, fundamentals don't matter, only psychology. It's been this way for a long time, and now's not the time to make the same mistake twice. HLF is one of the worst companies in existence, and it deserves to go under. Clear example of irrationality and insolvency right here.

I'm getting long HLF to ride the squeeze. God help whoever is still short this stock; I hope you have a rainy day fund.

 
BTbanker:
I give up... The market is bullshit, fundamentals don't matter, only psychology. It's been this way for a long time, and now's not the time to make the same mistake twice. HLF is one of the worst companies in existence, and it deserves to go under. Clear example of irrationality and insolvency right here.

I'm getting long HLF. God help whoever is still short this stock; I hope you have a rainy day fund.

Smart man, there's simply no doubt that ackman is going to lose this fight. Whether it's right or not
 

Just like Blackhat I tend to stay away from these public battles between “high level” activists investors. Cases like this always make me wonder, how much of this public scenery is actually really?

Let us assume that there is a place on earth where all the ego tripping hedge fund managers reside during the weekends, a place where they can host one of their many bunga bunga parties and, if they want to, occasionally participate in bike rides. Let us assume that this place is called the Beeftomps.

Let us also assume that several of these guys meet in the weekend during dinner, drinking 1907 Heidsieck out of their crystal champagne glasses whilst (or before) enjoying a nice steak. After drinking one or two glasses, one of the guests, let us call him Lil’ Backman, has an ephiphany: “Guys you know what would be funny? We select a healthy company, use our guru status to trash the stock and subsequently acquire a cheap stake. And maybe, as an extra, and just for the “lols”, we get some people on the board of directors??”

The initial reaction is, of course, laughter. However, the seed has been planted and slowly grows with each glass of Heidsieck that the attendees gubble down. The seed evolves into a plan and the guys decide to target a certain company, Harbelefi.

They commence their plan, starting with a short selling thesis (released by the originator of the plan), massive media coverage (own web sites, 300+ pgs presentations, live debates), the white knight who comes to the rescue (who was seated across the originator), several other attendees that pick a side (you are short/long depending on whether you vomited on the hosts Persian carpet that night) until they eventually receive both the stake at a discount, as well as some people on the board. Once achieved, the shorter publicly announces the closure of his stake (but still makes money) and the acquirer keeps his stake as he has a very favorable entry point. It goes without saying that throughout the entire period biweekly celebrations were held at the ""humble"" estate of one of the participants.

It just for humorous purposes but still, when I look at the relationships between all these HF big shots it often makes me wonder. Let us assume that Ackman started his stake 8-9 months ago, isn’t he still in the money? And is Icanhn not also in the money?

If they are both in the money, who are the real losers here?

 

Here's what I don't get about this entire situation. Why won't the FTC choose to investigate Herbalife so this debate can be settled once and for all? Instead of speculating on who is right, I feel as though it would give all investors some sense of relief that there is a legitimate 3rd party trying to figure out if this company is an illegal pyramid scheme or not. Since enormous sums of money are being wagered on this company, an investigation would not be unreasonable.

 
Huskies25:
Here's what I don't get about this entire situation. Why won't the FTC choose to investigate Herbalife so this debate can be settled once and for all? Instead of speculating on who is right, I feel as though it would give all investors some sense of relief that there is a legitimate 3rd party trying to figure out if this company is an illegal pyramid scheme or not. Since enormous sums of money are being wagered on this company, an investigation would not be unreasonable.
This is a totally normal question that any smart human being would have but the FTC never does shit. Or maybe they are confident that it simply is not a pyramid scheme.
 
Huskies25:
Here's what I don't get about this entire situation. Why won't the FTC choose to investigate Herbalife so this debate can be settled once and for all? Instead of speculating on who is right, I feel as though it would give all investors some sense of relief that there is a legitimate 3rd party trying to figure out if this company is an illegal pyramid scheme or not. Since enormous sums of money are being wagered on this company, an investigation would not be unreasonable.
Just to be clear, there was about the same amount of money riding on Herbalife before Icahn and Ackman got involved, just not them or their funds. Now, there's just some semi-famous people betting on/against it publicly.
 
CivilServant:
I thought I would bump this up as its such an interesting issue.

Has anyone been swayed one way or the other on Herbalife? The more research I read the more I am starting to agree with Ackman that it is a scam... But I don't have the legal background to say whether its illegal. Views welcome!

It's about as much of a scam as the average "broker trainee" program in PWM
Get busy living
 

http://www.businessforhome.org/2013/02/the-fall-of-fortune-hi-tech-mark…

For anyone who has been looking at the FHTM scandal this article can help to clear things up. A lot of people have been scared by it. Article written by a lawyer, helps to clear things up. Very much worth the read. I am still maintaining a long position on HLF, may buy a bit on the dip we had from the FHTM scare here. The companies are comparable in industry but not in how they conduct business if you look at the marketing details.

That's just my opinion

 
kyleyboy:
http://www.businessforhome.org/2013/02/the-fall-of-fortune-hi-tech-mark…

For anyone who has been looking at the FHTM scandal this article can help to clear things up. A lot of people have been scared by it. Article written by a lawyer, helps to clear things up. Very much worth the read. I am still maintaining a long position on HLF, may buy a bit on the dip we had from the FHTM scare here. The companies are comparable in industry but not in how they conduct business if you look at the marketing details.

That's just my opinion

I think I read somewhere that Ackman has done a side by side comparison of Herbalife and fhtm.

I'm curious, what catalyst are you waiting for on your long? Icahn taking it private?

 

http://www.marketfolly.com/2013/03/bill-ackmans-latest-herbalife.html?u…)

Here's the side by side Fortune Hi tech vs Herbalife

There's a lot of complete bullshit in this slideshow. It seems really desperate to me. But we won't know till we know.

When Ackman says Financial damage he (seems to) totally forget that people actually consume this shit. It's not like they are just stealing money here and no one is getting shit from it.

 
kyleyboy:
http://www.marketfolly.com/2013/03/bill-ackmans-latest-herbalife.html?u…)

Here's the side by side Fortune Hi tech vs Herbalife

There's a lot of complete bullshit in this slideshow. It seems really desperate to me. But we won't know till we know.

When Ackman says Financial damage he (seems to) totally forget that people actually consume this shit. It's not like they are just stealing money here and no one is getting shit from it.

Exactly. He's basically complaining about the free market here and how the gov't should shut a company down. If people can get a similar shake for a bit cheaper but prefer HLFs for whatever reason, guess what...they're free to do so. If a socialist wants the gov't to intervene in the economy all the time it's one thing, but when a finance guy does this it's hilarious. On these grounds, Ackman is in the same camp of absurd as Bloomberg's soda ban.

If the issue is strictly the pay structure, I'm guessing that HLF will resume disclosing the ratio of recruitment vs commission income. Personally, I think HLF had a couple of rough quarters where recruitment bought in a higher percent of income so they stopped disclosing in order to stay off the radar until things went back to normal. In reality, people DO make money as distributors and just because the top 1% out earn everyone else doesn't make the company a criminal conspiracy. If so, then our very society is given the same pay structure LOL. Could it be more uniform, sure. But that's no reason to shut it down. Just because Bill Ackman doesn't want to be a HLF salesman doesn't mean the company should be shut down. I'm no huge fan of Icahn, but I'm glad he's putting this snot nosed brat in his place. If Ackman wants to raise money for charity, then START A CHARITY, don't try and justify a crummy investment thesis by grandstanding humanitarianism

Get busy living
 

Haven't read Dealbreaker in a while, but that analysis is probably the best I've read from Matt Levine. Rehashing Matt's point, if you think the warrant has value (ie. Dell can reach >$20), you shouldn't tender, but if you think the warrant is useless, you should tender. One point he misses, though, is an addendum to the first statement. This should be split into two parts: - Do you think Dell can reach $20 without substantial leverage, Icahn control - Do you think Dell can only reach $20 with leverage/Icahn

You shouldn't tender if you believe the former and should tender if you believe the latter. Icahn wants shareholders to believe that Dell can only reach $20 under his control, and shareholders would get $14 + warrant value. Personally, I think the warrant is useless because Icahn is basically handicapping himself at $20 a share and has no incentive to go past that. He can exit at $20/share and not deal with any of the implications of the warrants, using the warrants as a sweetener that the company will have to back down the line.

However, if I were a shareholder, would I pick $13.65/share or $14/share? Probably $14

 

Now this is the Icahn we all know. A bore, poking up everyone's ass, sanctimoniously spouting 'shareholder value' like it's a fucking religion, and very likely damaging the long term health of a wildly successful company in order to squeeze a buck out of them.

If I were a CEO, I'd stongly considering paying someone to whack the prick, his tough ghetto Queens gangsta persona not withstanding.

For a short time, I liked the guy for sticking it to his younger, wannabe protege Bill Ackman. And activist investors have a place for sure. Many an idiot CEO has been called out by a minority stakeholder, and said stakeholder rewarded with higher share prices. But do we really need this asshole to tell us that AAPL should be doing more with its cash? My mom could have told you that.

Aside from a few lucky shots, I'd like to see the breakdown of companies these two yokels have actually successfully restructured in any useful capacity VS a list of the companies they've merely harassed and fucked over. Let's be real: if you take a multibillion dollar position in a company and then go to the press, the price is going to move....if you're not drinking the koolade, this looks a whole lot more like market manipulation than any useful type of 'activism'. Pissed off, rich old guys with lots of money tend to the the ultimate idiot armchair general.

I know I'm a pretty harsh critic lately, but these jackasses keep doing stuff. And frankly, I'm enjoying speaking my mind. Given my days are pretty much numbered on Wall Street, I'm not inclined to give a shit anymore if anyone agrees with me.

Get busy living
 

I find it hilarious when Wall Street guys go into companies and try to tell them how to better run their companies. Especially companies that are being bought by PE groups or going public for the first time. Its ironic when a Harvard MBA with about 2 weeks experience in an industry is trying to tell a guy or company that has been in that industry for 30 years how the company should be run. That would be like the owner of XYZ company buying a stake in Goldman and then telling Goldman they need to make home loans. Can investors add insight? Sure, however most of the time they think they know way more than they really do.

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 
heister:

when a Harvard MBA with about 2 weeks experience in an industry is trying to tell a guy or company that has been in that industry for 30 years how the company should be run.

I didn't know Icahn recently graduated from Harvard Business School.

heister:

I find it hilarious when Wall Street guys go into companies and try to tell them how to better run their companies. Especially companies that are being bought by PE groups or going public for the first time

I didn't know PE guys take a hands off approach to their investments. I also didn't know that filing for an IPO is a strong signal of business acumen per se.

As much as you may dislike the activist approach (for whatever reason), you might consider the malpractice some of these so called seasoned sector veterans conduct due to the complete misalignment of incentives and greed on their part. I'll be the first to say that shareholder activism isn't an end-all solution to value destruction (again misalignment of incentives plays its part), but to fully side with corporate boards and to imply that PE guys are the only ones who know what they're doing... That just shows a severe lack of understanding of the landscape and context in which these situations unfold.

 

Agreed. You know when some old people hit a certain age and don't care what comes out of their mouths anymore and just become generally cranky - that's Carl Icahn. The only difference is that he's an investing legend and has $20B+. So rather than just ruining Thanksgiving he has the ability to disrupt huge and successful companies.

"This is the business we've chosen"!
 
Hyman Roth:

Agreed. You know when some old people hit a certain age and don't care what comes out of their mouths anymore and just become generally cranky - that's Carl Icahn. The only difference is that he's an investing legend and has $20B+.

Was thinking the exact same thing...you could also insert Tom Perkins' name in there, just change the 20 to 8.

 
Hyman Roth:

Agreed. You know when some old people hit a certain age and don't care what comes out of their mouths anymore and just become generally cranky - that's Carl Icahn. The only difference is that he's an investing legend and has $20B+. So rather than just ruining Thanksgiving he has the ability to disrupt huge and successful companies.

Exactly. Some influential men develop seriously psychotic/attention-whoring powertrips as they reach old age. It's as if they sense their imminent demise in the near future and want to leave some markings ASAP with their self-perceived BSDs. Stalin committed human rights atrocities past his 60s, Mao initiated the cultural revolution in his 70s. Icahn's is "meeeeeeh-ing" all over media like an attention starved sheep.

Buffett is just a beast of an outlier in comparison.

 

Often they may be annoying but, all things equal, activists improve shareholder results for the long term. That's the data.

Here's a study: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=948907

Here's Damodaran making some nice points on it: http://aswathdamodaran.blogspot.com.br/2013/03/marty-lipton-shareholder…

Today I've just had access to a bunch of proprietary data on activists, and the results were the same.

I've never seen a single study showing activism as something negative for shareholders on the long term.

It is always wise to remember that, since the corporate raiders of the 80s, most of the targeted companies are mismanaged companies. Even the threat of activism usually puts some discipline on lazy entrenched management. I haven't seen many activitists targeting very efficient companies with huge ROC, vigilant boards and proper capital struture.

 

From the article:

With some $5 billion of his own money left, Icahn should have plenty of firepower to keep battling resistant targets.
I am permanently behind on PMs, it's not personal.
 

If I had $10B lying around, would the following proposal be ridiculous?

MSFT takeover of both NFLX and RIMM. Would the combination of NFLX and RIMM help lift MSFT from its mediocrity?

RIMM does not want to be bought, but if BB10 turns out to be shit, they might not have a choice.

NFLX can stand on its own, but would MSFTs cash pile and clout help secure more deals with distributors to improve NFLXs offerings?

iPhone is the phone of choice for the masses, but do F500 IT departments really trust Apple's security?

Looking forward to comments.

"Come at me, bro"- José de Palafox y Melci
 
lasampdoria:
If I had $10B lying around, would the following proposal be ridiculous?

MSFT takeover of both NFLX and RIMM. Would the combination of NFLX and RIMM help lift MSFT from its mediocrity?

RIMM does not want to be bought, but if BB10 turns out to be shit, they might not have a choice.

NFLX can stand on its own, but would MSFTs cash pile and clout help secure more deals with distributors to improve NFLXs offerings?

iPhone is the phone of choice for the masses, but do F500 IT departments really trust Apple's security?

Looking forward to comments.

How would the acquisition of both Netflix and RIM be advantageous to Microsoft? I feel like realistically it would be one way or the other.

Netflix makes much more sense.... RIM would only complicate matters for Microsoft as they're trying to get their own-brand mobile hardware out there now. RIM wouldn't be beneficial.

iPhone is going down. Good riddance, I say. Apple does not, and will never, have the functionality and capabilities needed to catapult them to make them the F500 go to tech. http://www.wallstreetoasis.com/blog/dear-apple-i%E2%80%99m-leaving-you

Maximum effort.
 
Edmundo Braverman:
I honestly can't decide if this is legit or if Icahn has just decided to be that guy for the rest of his life. He's sure been pulling a lot of dick moves lately.
Honestly, this is my perception of him going back at least a decade, he kind of just does this stuff to do it. He IS doing the right thing here, but like you said, not because he's out to be a sweetheart. Did he make his money this way, or is this a post-becoming-rich-Icahn personality shift?

To answer OP's question, I think that Icahn is going to get his way on this one. The larger part is psychological intimidation given his public ass kicking of Ackman. That kind of thing actually affects people's decision making process on some level, even if they don't want to admit it. On a technical level, I don't know but this is exactly Icahn's MO: he's dismantled opposition with mere basis points worth of ownership and this time around he's holding a lot of cards...this is kind of his thing and he's got the home court advantage.

My best guess is that Microsoft will probably jump in just because they're so closely linked: these two firms came up together on the hardware/software side of things as partial symbiotes, I'm pretty sure they're going to want to keep an eye on this to get a pulse for things to come in the personal computing space.

I'm totally shooting from the hip in idle speculation, so I absolve myself of any requirement to be right.

Get busy living
 

If I was a Dell shareholder, which thank god I am not, I would appreciate Icahn's move here. As an outsider, kinda seems like he is just trying to get his nose in anything and everything.

"For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."
 

I am completely with him on this one. I agree That MD will have to raise his offer, but i can't see him going high enough to appease the major shareholders... $20+ a share is a punchy price to pay for a company that needs to undertake a major transition to remain competitive....

I wonder what an MD resignation threat would throw in to the mix..... I doubt ICahn would bat an eyelid but others might.

 

In a Corporate Governance class at school we did a fair bit on whether the likes of Icahn are good for this world. Personally, I get the the whole shareholder activism to keep management in check but, I think he abuses his fame purely for arbitrage purposes and has no interest in the company or its other stakeholders.

He buys a chunk of stock and goes on CNBC saying how its undervalued and it moves a few points. He jumps on transactions like this just to force a higher price and some risk free money (like the Arabs on the Xstrata/Glencore deal). I'm not sure why the SEC doesn't investigate him for this king of behaviour.

 
t-jfk:
He buys a chunk of stock and goes on CNBC saying how its undervalued and it moves a few points. He jumps on transactions like this just to force a higher price and some risk free money (like the Arabs on the Xstrata/Glencore deal). I'm not sure why the SEC doesn't investigate him for this king of behaviour.
Agreed, this is what I first noticed with the Ackman thing as well...and in that case I actually got pissed off because it appeared incredibly dishonest. Turns out he was just wrong. This pattern seems to be in that "ethically questionable but perfectly legal" category if they aren't too flagrant with it.
Get busy living
 
CivilServant:
It reminds me of RJR Nabisco and the first low ball management offer. I'm not sure Icahn is a suitable Kravis replacement though...

I was thinking along those lines. Lets say management's bid is rejected in favor of recap or higher offer. Just like Kravis, MD has to re-offer atleast once because as OP said, it means something to him. For Kravis it was KKR's standing in PE at the time. For MD, its his fricking company. He can't be the guy left with nothing at the end of all of this. As a partner in Deloitte working with KKR for 20 years said, PE is half brains and half personality/ego. At some point I think silverlake will be the voice of reason, but I think that current situation is unacceptable to many stakeholders.

 

Mr. Icahn is a good poker player, that's what he is.

He is sorts of dog that shouts out like he's a wolf.

At this time, I give the deal a better than average chance of getting done, albeit at a higher price. The price however, will be nowhere as high as Southeastern (a shareholder opposed to it) would want.- They valued Dell at $23 or around that using sum-of-parts.- That's just out of question. Maybe $14 to $15 ?

It appears Dell's Board has already considered leveraged recapitalizations in the past and decided to pass.

Winners bring a bigger bag than you do. I have a degree in meritocracy.
 

the thing is that MD is a key part because he holds so much of the companies stock, without him the cash/financing to complete the deal would be significantly higher.

 

I've thought the same way before. That's how it was 10000 years ago. Cave man beat up everyone else, became king, and to protect himself, made the rules. Modern man is the finished product of all those rules. No point taking it back there, since we will reach same stage eventually.

 
LeveragedSelloutX:
I've thought the same way before. That's how it was 10000 years ago. Cave man beat up everyone else, became king, and to protect himself, made the rules. Modern man is the finished product of all those rules. No point taking it back there, since we will reach same stage eventually.
Philisophically, I went out on a limb and lost perspective. Truth is, I'm from a hunting/cop/military family and if it came to it, all these self proclaiming "social darwinist" finance and political types would be the first ones we took out. But that's just a cheery fantasy, and I'm not quite so naive. What really is going on is people with money+power influence the law to their own advantage and I'm calling bullshit: if you or I did what Ackman or Icahn did, we'd be in the slammer. I personally stress ethics over the law the same way that corporate governance takes precedence over mere management.
Get busy living
 

Pretty cool. It reminds me a lot about what 50 Cent did like 3 years ago, when he just twittered the symbol of some stock and that soared like 300% or something...

I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing. See my Blog & AMA
 

This quote aptly describes the situation:

"If everyone is thinking alike, then somebody isn't thinking." - George S. Patton

"He that hath a beard is more than a youth, and he that hath no beard is less than a man." ― William Shakespeare, Much Ado About Nothing
 

Without Steve Jobs APPL is a sinking ship full of cash. Judging by the insider activity Captain Cook and Co. are not willing to go down with the ship. I would not be surprised if Icahn and Co. launch a quick raid before the ships sinks.

"He that hath a beard is more than a youth, and he that hath no beard is less than a man." ― William Shakespeare, Much Ado About Nothing
 

It's not the means by which he said it... it's what he said that made the stock move. It's literally no different than Loeb announcing a big stake in CF or YHOO, Ackman saying he's short HLF, Einhorn calling out CMG, etc. It's not revolutionary at all.

I hate victims who respect their executioners
 
equityandexuberance:
Silent Guardian:

Larry Ellison calls Steve Jobs "irreplaceable:"

He was also really good friends with Steve and Steve did a really shitty job in the 80's

Then the company nearly went bankrupt without him. When he returned the stock skyrocketed.

"He that hath a beard is more than a youth, and he that hath no beard is less than a man." ― William Shakespeare, Much Ado About Nothing
 

So if a research analyst at Company X Tweets important info on an organization (and he's not famous so only his 60-70 friends see it), is it still considered insider info?

"Better to remain silent and be thought a fool than to speak out and remove all doubt." --Abraham Lincoln
 

Well, the smart money clearly isn't too confident. Blackstone, KKR, et al had opportunities to get in on the deal but passed. Think there are two crucial questions: A) How long will it take for desktop to be replaced by mobile computing, and B) How quickly (and cheaply) do you think Dell can pivot to enterprise storage and (potentially) mobile devices?

 

Given that Silver Lake is on-board, I think that it will probably turn out to be a successful privatization in the future. Silver Lake has unmatched expertise in investing in mature tech companies and if you take a look at what they did to Skype, I am sure, that they will do just as good for Dell.

I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing. See my Blog & AMA
 
Yekrut:

Why the buyback push then? Is he just using it as an excuse to voice his opinions?

Share buybacks typically make share prices go up. Apple has tons of cash and little debt so they could buyback with their cash or issue more debt. Like @"Waymon3x6" said, Icahn wants his shares to be worth more.

I don't think he can really pull his true activist shareholder stuff and try to bully AAPL around though. They're not struggling, the market cap's just so massive that he can't accumulate any meaningful % of shares (I thought I read he holds something like 1% of shares, and think about 1% of shares being worth $600MM) to throw his weight around and I'd imagine that the stock is so widely held that any larger shareholders are going to be a Vanguard or Fido type and they're not activist investors.

I think he's smoking the kind shit though if he thinks AAPL is currently worth over $200 unless they buy back an outlandishly large amount.

 

I read about it and think his assumptions are overly optimistic - I'm unconvinced it's worth twice what it is now, but I think someone in his position (ie a known activist investor with a vested interest in the share price increasing) has every reason to make similar claims to try and profit

 

"Funny how that term caught on, isn’t it? I tell everyone: I hated it! Somebody said, ‘Drain the swamp.’ I said, ‘Oh, that’s so hokey. That is so terrible.’ I said, ‘All right. I’ll try it.’ So like a month ago, I said, ‘Drain the swamp.’ The place went crazy. I said, ‘Whoa. Watch this.’ Then I said it again. Then I started saying it like I meant it, right? And then I said it, I started loving it. And the place loved it. It's drain the swamp. I mean it's true. It's true. It's true."

I think sometimes he talks just for the sake of talking.

 

He's following through by putting people in power of agencies, where the leader of his picking has actually spent a huge deal of time focusing on developing the skills and understanding of something totally different. Let's just point out that Russia is still acting up: http://www.reuters.com/article/us-usa-trump-nuclear-idUSKBN14B1ZZ (that has nothing to do with this, but just wanted to throw it out there, re: Rex Tillerson as Sec of State)

Honestly, I'm hoping to save up some cash over the next 18 months or so before this thing gets really bumpy. After the Obama administration, it's quite understandable that we're now headed down a much more volatile path. Maybe something good will come out of it? We had arguably one of the worst presidencies in Bush, 43, yet we also got the RE boom, which made a lot of people feel wealthy while it lasted through the financial engineering banks/private lending/gov created. It looks like we're going to see a lot of volatility as everyone, Trump especially, figures out how to do their jobs. The Trump bump is indicative of the type of ride we're in for, and it looks like things are going to be opposite of the liquidity induced rally over the past few years, caused by the Fed.

 
Plainview:

Not a fan of Trump, but I am a fan of his advisor picks. I prefer to see these outsiders over people who are heavily entrenched in the 'system'.

Outsiders...? There's things like hiring a mathematician at a hedge fund, or an engineer at a consultancy... and then there's things like hiring Asa Akira to head the Ministry of Censorship. Next we're gonna see Trump hire an anti-vaxxer to head public health.

I used to think that Trump wouldn't be quite as shitty a President as he could be, as long as he picked some reasonably experienced people to make the right decisions on his behalf. Now I'm not so sure.

 
Best Response

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"I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing. " -GG
 

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Winners bring a bigger bag than you do. I have a degree in meritocracy.
 

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