Saturday, December 18, 2010

Icahn in the House!

News came yesterday that Carl Icahn increased his ownership of Chesapeake Energy from 2.5% to 5.8% and now "seeks talks" with the company.  Icahn is best remembered as a corporate raider from past decades who now plays the euphemistic role of "activist investor," aiming to buy into undervalued companies and "maximize shareholder value."

Pardon the "excess quotation marks" above, but activist investors can be a mixed bag and I tend to view them with one eyebrow raised because they can sometimes cause a company to make short-sighted decisions that help the investor make a quick profit but don't always benefit the long-term holders of the company.

One thing is for certain, Icahn will not be a passive investor.  Likely more of a burr under the saddle, in fact.  Interestingly, Icahn agreed last week to buy utility Dynegy, a company that uses lots of gas (and a bunch of coal too) but has been burned (pun unintended) by low gas prices of late.  Interesting coincidence?

No comments: