Making waves
Billionaire Carl Icahn starts meddling in other investors’ deals,
Carl Icahn never shied away from picking a fight with a company he deemed undervalued or poorly run. In the past two months, he’s taken to meddling in investments put together by others.
At Dell Inc., Icahn is opposing founder Michael Dell and Silver Lake Management LLC’s plan to take the computer maker private.
He also bought a major stake in Herbalife Ltd. after rival investor William Ackman said he made a $1-billion bet the stock would fall.
Icahn, who turned 77 last month, no longer manages money for clients. He decided in March 2011 to return their cash, which accounted for about a quarter of his $7 billion in fund assets at the time, citing concerns about the economy and unrest in the Middle East.
He ranks 34th on the Bloomberg Billionaires Index, with a net worth of $20 billion.
“He’s the ultimate alphamale investor, and now that it’s his own capital, he doesn’t have to answer to anyone,” said Brad Balter, head of Boston-based Balter Capital Management LLC, which invests client money in hedge funds.
Icahn hasn’t stopped pursuing his own corporate quarry. He’s trying to get Transocean Ltd. to increase dividend payouts, and in October he won seats on the board of Navistar International Corp. Since the start of the year, he’s also jumped into other investors’ deals.
At Dell, Icahn said the founder’s bid of $24.4 billion, or $13.65 a share, “substantially undervalues” the company.
If shareholders reject the deal, he proposes that the Round Rock, Texas-based company pay a special dividend of $9 a share. Icahn says the stock would still be worth $13.81, for a combined value of $22.81.
If Dell refuses, Icahn said he’ll start a proxy fight and put up his own board candidates.
“I simply think that Dell is paying too little for the company and I’d like to note that other investors have said that before me,” Icahn said this week.
Icahn has saved his most dramatic battle this year for Ackman, with whom he once waged a seven-year legal dispute over a $4.5-million claim related to his purchase of a stake in Hallwood Realty Partners.
Icahn became the secondlargest shareholder of Herbalife within two months of Ackman saying he was shorting the stock because he believed the vitamin seller was running a pyramid scheme. The two investors had it out on television even before Icahn’s stake was disclosed.
“I had dinner with him and I got to tell you I laughed,” Icahn said during the Jan. 25 broadcast on CNBC. “I couldn’t figure out if he was the most sanctimonious guy I ever met in my life or the most arrogant.”
Icahn increased his stake in Cayman Islands-based Herbalife to 15.6 per cent from 13.6 per cent, according to a filing Friday with the U.S. Securities and Exchange Commission.
Icahn said his Herbalife purchase doesn’t pit him against another investor.
“Ackman might be called a ‘disinvestor’ because he sold the stock short,” he said.
“I bought the stock after he trashed it because I thought it was very cheap.”