Icahn Dumbs Down Message for All Shareholders: Shah

Your next video will start in

Recommended Videos

  • Info

  • Comments


Feb. 28 (Bloomberg) -- Sachin Shah, special situations strategist at Albert Fried & Co., and Bloomberg Industries’ Paul Sweeney examine Carl Icahn’s approach to activist investing and the market and economic benefits on activist investing on Bloomberg Television’s “In The Loop.”

In this saga that is going on in the men's retail sector.

It is interesting they seem to be going back-and-forth.

Ultimately, who wins?

I've been covering this from the beginning.

I am more than aware of what is going on.

The biggest issue here is the timing.

When you look at the release, it said we need to do this quickly.

If you're going to give us your best offer, give it to us right now because if you're not, we will close this eddie bauer d eal.

That is what is happening now and they need the due diligence to increase the price to $65 and maybe more.

It is not $65 in cash.

It could be stock.

Men's wearhouse has the door open to close this transaction.

What about the activist field with ebay and paypal.

Carlicahn is rattling the cages on almost a daily basis.

He was on with me a couple of days ago pushing heavily against the paypal spinoff.

One thing he is trying to get investors to pay attention to is the composition of the board.

In april they will have an annual shareholders meeting and there will be two board seats open and he says there are conflicts now with the board of directors.

He says this is one of the reasons why they have not spun off paypal.

Do activists have more swayed nowadays?

It depends who it is.

Clearly we have seen more activism coming out of the hedge fund community.

A 15 l young dollar hedge fund can be heard quickly.

You also have carlicahn, he has a very big bullhorn and is able to get his message out there quickly.

What do you do if you are the company?

Ebay is fighting back and many companies have said let's try to -- sotheby's is an example -- where they try to work with the activist.

Ebay is saying no.

It is mind-boggling to believe what the company is doing.

They are continuously attacking him.

Elon musk, the cofounder of paypal, has said you need to separate the company i cofounded.

They are scared of exposing their lack of substantial growth relative to paypal.

They want to keep this and hide some of that stuff.

Are activists playing a vital role in this case?

They are, he says no-brainer.

He dumbs it down.

These two businesses do not belong together.

Look at what they have done in the past.

Elon musk -- he dumbs it down.

Look at the valuation.

He dumbs down his comments not only for the institutional shareholders but the retail people saying this makes sense to me.

You want to get as many people on board as possible?

That's it.

This is a technique to do it.

Perltz is doing the same thing.

He needs to be less yogic as he has been and more like carl icahn - no-brainer.

He likes that phrase.

What's going on with ebay is probably emblematic of what we will see from activist investors going forward this year.

They spent a lot of time last year asking companies to return capital to investors through dividends and buybacks.

What's going on this year is that they are looking for him and they at tibbetts he --m&a activity to spur activity for shareholders.

They will want to vest teachers.

They have seen the stock market -- they want divestitures.

They have seen the stock market at a rally and that of ready fair valuation and possibly at a peak.

What they will do this year is potentially pressure companies and management teams to spin off assets and we will see this potentially spur some economic and m&a activity as well.

Is this good overall for the economy, this kind of activism?

I think it is.

The open market we have in this country, uc see activists come into fine situations where there is perhaps hidden value.

Often times, it works well.

Sometimes, they picked the wrong target.

Perhaps ebay might be the wrong target.

Why is that?

Generally, the company is performing fairly well and paypal clearly is the growth story of the business.

I think the long-term growth of e-commerce overall is so positive and so strong that they will create -- they have an argument that they can create shareholder value long-term and they have an argument that paypal helps them grow their overall business.

I have looked at some of these numbers and when you look at paypal, it is growing offbook , 70% is off book and that is growing 30%. there is an argument that is -- that it is expanding outside of ebay and growing faster outside of ebay.

That's correct, men's wearhouse was the trigger.

Don't they have an investment in both companies?

They do and when they say something, they can tell each shareholder base that this is what we want to do.

We want to combine the companies.

Getting back to activism in general, there is low hanging fruit in the market right now.

They have to go and climb this trait.

You need activists to do that and that's what they are doing.

If it is good for the economy, it is good for capitalism and the stock market.

It is not good for jobs.

When this happens, there are job cuts.

If men's wearhouse and joseph a bank merge, they don't need that many stores that that many people.

I want to thank you both for being here.

And christina alesci as well.

Moving on --

This text has been automatically generated. It may not be 100% accurate.


BTV Channel Finder


ZIP is required for U.S. locations

Bloomberg Television in   change