As it was reported in the news in the last couple of days, activist investor Carl Icahn took some important steps regarding two companies, in which he is a large shareholder. Therefore, Mr. Icahn yesterday reached a standstill agreement with eBay Inc (NASDAQ:EBAY), following which the company appointed Jonathan Christodoro to its board of directors. Earlier today, Mr. Icahn disclosed a letter sent to Gracia C. Martore, President & Chief Executive Officer of Gannett Co., Inc. (NYSE:GCI), in which among other things, he expressed his intention to nominate Michael Dornemann and Courtney Mather to the board of directors of the company. Mr. Icahn was interviewed today on CNBC’s Halftime Report via phone, where he discussed these developments and also provided his opinion on oil and global markets.
Regarding the agreement with eBay Inc (NASDAQ:EBAY), Mr. Icahn said that he is pleased that the company “acted responsible” by appointing Icahn’s representative on the board. The investor added that he does not intend to push for a sale of the company and his intention to have a representative on the board is mainly related to corporate governance. However, the CEO of Icahn Enterprises added that he hopes that someone will make a bid to purchase PayPal, which will be spun off from eBay later this year. Mr. Icahn, as a shareholder with a significant stake in eBay Inc (NASDAQ:EBAY), will obtain a large position in PayPal as well. Therefore, in the case of a transaction, Mr. Icahn, as well as other shareholders of PayPal would get a significant premium to sell their stakes.
“We certainly aren’t going to have a fight with eBay. We like what they are doing and we certainly appreciate the good corporate governance. We have an amical relation,” Mr. Icahn said.
Carl Icahn holds around 45.82 million shares of eBay Inc (NASDAQ:EBAY) as of the end of September. Ever since initiating a stake, the investor has pushed for a separation of PayPal into an independent, publicly-traded company. After eBay announced the decision to spin off PayPal, Mr. Icahn said that after going public, PayPal should join forces with another company, in order to better compete with giants like Apple Inc. (NASDAQ:AAPL).
Regarding Gannett Co., Inc. (NYSE:GCI), Mr. Icahn dismissed the allegations made by the company that he is trying to “advance his own agenda.” The investor said that he acts for the benfit of all shareholders of the company and added that in the past shareholders “made hundreds of billions of dollars” on the back of his activist moves. He added, that he will try to negotiate with the company over the next several weeks, rather than launching a proxy fight. “Peace is better than war,” Mr. Icahn said about his negotiations with Gannett Co., Inc. (NYSE:GCI).
Icahn Capital owns around 14.99 million shares of Gannett Co., Inc. (NYSE:GCI), the stake representing 6.63% of the company’s outstanding stock. Soon after becoming a shareholder of the company, Mr. Icahn intended to push for a separation of Gannett’s print and broadcasting businesses, but the company made this decision on its own and announced it the same day as Mr. Icahn disclosed its stake.
Another important point that was discussed during the interview, was the energy sector and particularly, oil prices. Mr. Icahn considers that oil will go lower, since Saudi Arabia does not intend to cut production, which makes the commodity’s demand and supply unbalanced. However, Mr. Icahn added that even though the supply is not cut artificially, it will still “dry out” in a couple of years, as a result of depletion. Nevertheless, in the near term oil prices will keep falling, which represents a good opportunity, since in the past, commodity prices rebounded and the same might happen in the future as well. However, it is unclear when exactly oil prices will stop losing ground and will start climbing.
In Icahn Enterprises’ equity portfolio there are several large positions in energy stocks. As of the end of September, the third largest stake was represented by CVR Energy, Inc. (NYSE:CVI) (71.20 million shares). The investor also holds shares of Chesapeake Energy Corporation (NYSE:CHK), Transocean LTD (NYSE:RIG), Talisman Energy Inc. (USA) (NYSE:TLM), CVR Refining LP (NYSE:CVRR), and Seventy Seven Energy Inc (NYSE:SSE). Overall, energy stocks represent around 18% of Icahn Enterprises’ equity portfolio.
Carl Icahn also talked about global markets and dollar. He said that he has been short on euro vs. dollar for the last 2-3 years, but the bet has started to play out only recently. However, the activist considers that a stronger dollar will also affect the United States’ exports. The strenth of the US dollar is mainly caused by the Fed’s low interest rates and this also affects other countries around the world. Overall, Mr. Icahn considers that a strong dollar might have a negative impact on many companies from the S&P 500, because they make a lot of money abroad.
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