Carl Icahn Streams Into Netflix, Buys a 10% Stake
Carl Icahn is back with a new target. The activist billionaire has taken a nearly 10% stake in Netflix (NFLX).
An SEC filing reporting this ownership stake was made on Wednesday afternoon, temporarily halting trading of Netflix shares. When trading resumed, they surged higher during the last hour of the trading day.
Followers of Icahn know the drill. He'll buy into a company that seems out of favor. He'll try to either smoke out a buyer or find ways for the company to increase shareholder value, often by selling off assets.
He doesn't always win. He isn't always right. Sometimes a stock is out of favor for a reason. There are a few possible locations where a buyer for Netflix might be found, if that is Icahn's ultimate goal. One rumor late last week that Microsoft (MSFT) was potentially interested sent the stock soaring last Friday.
Microsoft makes sense, and the company behind Windows, Office, and the Xbox hasn't shied away from multibillion dollar acquisitions in the past. No word yet about whether it really wants to make an investment in streaming video.
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Amazon.com (AMZN) is another name that often comes up. It clearly wants to get in on Netflix's business, having launched a Netflix-like service in the U.K. and added video streaming to its Amazon Prime service. Given the way that Netflix's stock has been rocked over the past year, it also wouldn't be a surprise if some of the larger private equity firms kicked the tires.
But not even an experienced raider like Icahn can be sure of how the process will end. He may not find a suitor, or a potential buyout bid may not be enough to sway a majority of the former dot-com darling's stakeholders.
Either way, watching Netflix's corporate action just got as entertaining as some of its streaming movies and TV shows.
Other Things Worth Watching
• Visa (V) is charging ahead. The credit card network posted better than expected fiscal fourth quarter results after Wednesday's market close. Even though payments volume only grew 6% and the total processed transaction climbed just 2% higher, revenue soared 15% to $2.73 billion. Visa also announced a new $1.5 billion stock repurchase plan.
• Ellie Mae (ELLI) is another financial name moving higher after a strong earnings report on Wednesday night. The fast-growing processor of mortgage originations saw its revenue soar 87%, and adjusted earnings more than quadrupled. Ellie Mae's profit of $0.35 a share obliterated the $0.20 a share that analysts were targeting. Apparently, the real estate bounce and Ellie Mae's growing position in its niche are paying off. The company is boosting its outlook for the current quarter.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Netflix. The Motley Fool owns shares of Microsoft, AMZN, and Netflix. Motley Fool newsletter services have recommended buying shares of V, AMZN, Grubb & Ellis, and Netflix. Motley Fool newsletter services have recommended creating a synthetic covered call position in Microsoft and a bear put ladder position in Netflix.
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