1:00pm (EST)
Billionaire investor Carl Icahn is at it again.
Chesapeake Energy (CHK, $24.90, up $1.60) is getting a huge pop today after Wall Street learned he has a 5.8% stake in the company. Of course, Carl says shares are undervalued and says he is in active talks with the top brass to discuss the business and how to maximization shareholder value.
In case you haven’t heard of Carl Icahn, he was once considered an “obsessive corporate raider” after scoring big with takeovers of Texaco and USX back in the ’80′s. Now he is considered an “activist shareholder” that takes minority stakes in public companies and typically pushes for change, often threatening a proxy battle, through his hedge fund.
His hedge fund, Icahn Partners, was created in late 2004 and manages about $10 billion, of which $1.5 billion is his own money. Usually what happens is that after acquiring a small stake in a company, Mr. Icahn puts pressure on the CEO’s to do a big stock buyback or spin-off assets in order to get the stock moving. And in some cases he forces the CEO out altogether.
Chesapeake’s CEO, Aubrey McClendon, has gotten some sweet “kickbacks” over the years and has done nothing for the stock in years. We have been watching this stock for years and back in October we said we thought shares could hit $25 over the near-term. After weeks of consolidation, the stock could be ready to roll.
Although the market is mixed after a strong open, we still like the action. Currently, the Dow is down 20 points to 11,472 after touching a high of 11,517. The S&P 500 is up 3 points to 1,247 but continues to struggle at 1,250 while the Nasdaq 100 is higher by 5 ticks to 2,648. As usual, we have a lot to cover in our
Members Area so let’s get on it.
We will be back in the morning with a full update.]]>
