iBankCoin
Now suffer my opinions and recommendations.
Joined Nov 23, 2015
13 Blog Posts

Freeport McMoRan $FCX: The New Chesapeake $CHK

 

James Moffett is out at Freeport McMoRan (FCX), much like Aubrey McClendon was shown the door at Chesapeake Energy (CHK), both Icahn targets. The still hasn’t restored confidence in the cooper and oil company, just like McClendon’s exit from CHK left the company in no man’s land. The strategy shift from “buy, buy, buy” oil and gas rich land to monetize those assets has proven stressful.

For FCX, Moffett was a McMoRan Oil & Gas co-founder in ‘69 and merged it with Freeport Minerals in ‘81. In 2012 he bought up Plains Exploration & Production and McMoRan Exploration for $20 billion.

Both of these latest buys, Plains and McMoRan Exploration reeked of corporate governance shenanigans. Recall that Moffett was a part owner of McMoRan Exploration when they bought it a couple years ago. And the Plains’ CEO, Jim Flores, sat on the McMoRan Exploration board. All deals that would be right up Aubrey’s alley.

Icahn went activist on FCX in Oct. and since then shares are down 55%.

fcx

Icahn went activist on CHK in 2012 and since then the stock is down 75%.

chk

The latest value-unlocking catalyst that Icahn has worked up is re-splitting the oil business off from the mining operations. A great idea, especially if he can do it while oil is going for less than $30 a barrel. 

Comments »

Carl Icahn: I Cannot Tell A Lie $TWX

It’s truly become the Carl Icahn version of he said, she said with Timer Warner ($TWX). “Sources” have said Carl is building a long position in Time Warner. Carl has appeared on the televised vision to say, “I don’t own one share of Time Warner and it annoys me that certain speculators use my name to make profits at the expense of other shareholders.”

Someone’s lying. First, Carl’s no fool, he’s not going to say, “Well hell yes I’m long, please join me in bidding up the stock price before I’ve built a full position.” But, why not just simply ignore the question? No comment is just as bad as a “yes, I’m long.” So he says “hell no” in order to help keep the stock lower for longer as he buys more.

Now – former Carl Icahn key grip Keith Meister, who left Carl a number of years ago to form his own hedge fund, Corvex Management, apparently is building an activist position in Time Warner. Keith joined Carl in 2006, just as Carl was waging his first war to breakup Time Warner. He failed then.

Time Warner has been beaten up like most media companies. Consolidation is an easy answer for these media companies to protect themselves from Netflix ($NFLX). Recall that 21st Century Fox ($FOXA) tried buying Time Warner in 2014 for $85. Time Warner rebuffed and its shares are now trading ~20% below that offer. And lest we forget the fact that Jeff Ubben and his ValueAct Capital are “activist” at Fox.

There are fresh rumors that Fox is coming back around, looking to make a run at Time Warner again. This time, said to be willing to pay $105 a share. Has Jeff really become that desperate; overpaying for assets isn’t his typical modus operandi. He won’t let Fox pay such a ridiculous premium unless he’s looking to be a quasi-activist at Time Warner and get his owns hands on HBO. It would be fun to see Carl go round 2 with Time Warner, where he’d have the support of his former protege Meister in the push to get HBO spun off. Now, is spinning off HBO the right now – absolutely not – but will it send Time Warner shares soaring – hells yes.

Disclosure: Long Carl Icahn ex-oil names, capital intensive names and tech names.  

Comments »

Marissa Mayer Is A MILF $YHOO

No doubt Yahoo CEO Marissa Mayer is a hot new mom, but she’s also a Mom I’d Like To Fire. At least one that Eric Jackson and a few other Yahoo shareholders would like to fire.

Jackson and his SpringOwl hedge fund put together the 99-page presentation on how to turnaround Yahoo. Priority number one is getting rid of Marissa. I have to give mad props to Jackson for sticking by Yahoo for so long. He’s been talking about Yahoo for years on Forbes.

It’s finally his time to shine. He’s quietly threatened a proxy battle. Although his fund only has a small Yahoo position, he’ll likely look to rally his 22,000 Twitter followers. Jackson has until Jan. 31 to decide whether he’ll wage the proxy battle.

In any case, Yahoo is set on spinning off the core business – something Jackson, correctly, notes would be a taxable event and is against. Yahoo has some interest in its core business – only a few private equity players, but still something. Nonetheless, Yahoo CFO Ken Goldman is turning everyone away. You call into Yahoo and Ken is telling you the core business is not for sale. This goes against what Canyon Capital and Starboard Value would like to see happen – both of which would like to see the core business sold.

The problem is, something has to happen – whether it be a spinoff or sale. Meaning,  Jackson won’t get the chance to force Yahoo into his 9-step, 99-page, turnaround plan, which includes not only getting rid of Marissa and bringing in an “operator” as CEO, but also includes potentially partnering up with John Malone’s Liberty Media.

I think Jackson can’t get the support of Jeff Smith’s Starboard Value because he hasn’t addressed the big overhang; how do you really turnaround a company like Yahoo? Jackson’s plan reads a lot like a private equity playbook, in which case, why not turn the core biz over to private equity buyers and GTFO while it’s still possible.

Here’s the best way to think about the Jackson-Yahoo plan: “These investors aren’t platform experts…they just want to cut costs and then sell off the business. The investor doesn’t have any valuable guidance on how Yahoo can grow its platform businesses. So, this deck could really be 5 slides telling Yahoo how to cut costs and then sell its assets.”

I’m not sure where this goes in 2016, but I do believe something has to be done sooner rather than later. That likely means a sell or spin of its core business. The time for turnarounds is over. 

Comments »

Interpreting The Bill Ackman Rhetoric

The silver-haired fox, Bill Ackman, was down almost 21% through November. This is haping up to be his worst year ever with Pershing Square Capital.

Despite this, Ackman spun it in a very color light during his 3Q letter to investors; noting that the intrinsic value of the portfolio “increased materially over the course of the year.” Nonetheless, most interesting holding right now is Platform Speciality Products (PAH), so let’s forget the shenanigans going on at Valeant Pharma right now and the machinations that he and Nelson Peltz are orchestrating at Mondelez.

Platform doesn’t get much love as it is Ackman’s smallest U.S. position, but it’s also his worst performing activist target. Consider this – since he went activist at Valeant, the stock is down 45%. For Platform, the stock is off 55% since Ackman went active in Oct. 2014. Ackman also owns more of this company, ~20%, than any of his other holdings.

But the Moral of the story is; Ackman is spending a lot of time hand-holding Mike Pearson, Hunter Harrison and Irene Rosenfeld, meanwhile, he’s been a bit standoffish with Platform. That’s appealing; in part, because Martin Franklin is running things there. Marty Franklin is the Platform founder and chairman. He’s known for co-founding Jarden, where he was the CEO from 2001-2011. He’s still the Chairman.

Marty noted the other month that he’s planning on taking a more active role at Platform. And as it turns out, he’ll have more time. His Jarden was just sold to Newell Rubbermaid, booking a helluva win, where the stock went from ~$1.50 to $57 in 15 years.

Now it’s time to focus on Platform, which could use a little love. It’s trading about 15% below the early 2014 IPO price. Now, for the goodies, Ackman was talking up Platform in his 3Q letter. Here’s the interpretation of his rhetoric:

All chemical rollups, and rollup companies in general, are getting taken to the woodshed. Hell, just look at Colfax and XPO. But never fear, the major management changes at Platform are a positive. It’s lost its head of ag solutions, CEO and CFO over the last six months. The CEO was ousted because he couldn’t see eye-to-eye with Marty Franklin. Marty’s ready to get his hands dirty and he’s buying more shares in the open market.

The rollups are getting washed out here with tax-loss selling. Platform is an easy play on the growing demand for food and urbanization of emerging markets. I’m not as huge of a fanboy of Marty Franklin as Ackman, but this Brit is a likable guy. Starter position in Platform.

Comments »

Martin Shkreli Ain’t Nothing To Fuck With

Martin Shkreli is a local celebrity. The fame of this 32-year old internet live-streaming, World of Warcraft playing, Wu-Tang album buying, OkCupid prowling, pharmacy executive has gone from 0 to 60 in just a few months.  

We learned earlier this month that Martin dropped a couple million dollars on the only copy of Wu-Tang’s latest album, Once Upon a Time in Shaolin. And he’s better known for his antics with hiking drug prices.

However, as it turns out, Martin might be a better short-seller than anything else. Notable names Martin has been short includes the likes of Horizon Pharma, Zalicus, Oncothyreon, Vital Therapies, Avanir Pharma and Neoprobe  – all of which are down more than 30 percent since Martin went short. He’s also been short a number of other biotechs that he’s made money on.

Martin’s performance as a short seller tops what the likes of Citron Research, David Einhorn and Jim Chanos have done on the short side..

In short, if Martin shows up in one of your pharma stocks – GTFO – whether he’s long or short.

Comments »

Icahn Goes Senile: Loses Half Billion

Busy week ladies and gents.

Just wanted to drop in and do some Carl Icahn bashing since it’s the weekend.

Well, recall that time Carl Icahn upped his stake in Cheniere Energy (LNG)? Let me count the ways.

Carl Icahn LNG

Note that Icahn’s average cost basis is ~$60 a share. Here’s now down ~$650 million.

Icahn showed up with the promise that the massive debt load was nothing to worry about. And more importantly, that the take-or-pay contracts mean LNG will be making money for centuries, even if natural gas prices go below zero.

In his old age, Icahn forgot that the spreads and prices still impact the natural gas demand. LNG runs on demand. And with prices where they are, you can forget LNG being able to lock in any multi-decade take or pay contracts. Other companies have already caught on to the boom in exporting natural gas, they’re taking market share. Let us not forget the other big overhang, China’s economy is doomed and there will be no one to buy the ratchet natural gas LNG is trying to peddle. 

I’m not sure where the bottom is in LNG, but I fear it’s much lower.

Comments »

Marissa Mayer Has $YHOO By The Balls

Yahoo’s board has supported Marissa Mayer for more than three years. And for good reason. Mayer has the Yahoo board by the balls.

She’s helped select most of the eight members. And while Jeff Smith’s Starboard Value wants a board seat, Mayer refuses. He’s going to have to wage a proxy fight. Something he’s willing to do if Yahoo moves ahead with the Alibaba spinoff.

Everyone saw Mayer as a savior when she joined the company, now they’re calling for her head. Glassdoor shows that Mayer’s approval rating fell to 80% in 2014 and is now down to 73%.

If Yahoo gets bought and Mayer is let go she’ll rake in $160 million thanks to a change-of-control severance. Double what the stock market is valuing all of Yahoo’s core business today. Even if there isn’t a sale and she’s fired, she’ll still collect more than $25 million on her way out.

The board is heavily invested in Yahoo, even if it’s for the wrong reasons.

Comments »

Everybody Wants To Be Famous

I am officially changing careers to economist. To be an economist, you must be a boss, that is all (and maybe write a book, I’m not sure). Fuck being right about anything, just have a fucking opinion.

The two best in the industry: Nouriel Roubini and Nassim Taleb. Now I know Nassim claims to hate economists, but he’s actually a closet economist.

But don’t be fooled, these guys put in the work. Everyone wants to be famous, but no one wants to put in the work.

First a tweet from Nassim Taleb this morning while he was putting in the work.

nassim

Second an old Twitter DM fail from Nouriel, followed by one of my all-time favorite pics of him. For context of the pic, the man has a 10-person roof deck hot tub.

nouriel dm

Why yes, I will be your boyfriend for the night.

roof top

 

Comments »

More Yahoo Fuckery

The sum-of-the-parts story at Yahoo (YHOO) is overblown and misunderstood there’s no way this ends well for investors. Shares are up 5% this week on the self-imposed ultimatum to decide what to do with the Alibaba (BABA) stake.

This is the shit I’m talking about. Saw this today:

Line item: $ billions

Yahoo market value: $33.7

less Alibaba: $32.2

less Yahoo Japan: $8.8

less cash: $5.9

plus long-term debt: $1.2

Value of Yahoo’s core business: -$12

When the market is paying you to own something, it’s for a good reason. As I said – “I hope all the longs in Yahoo go broke. It’s well deserved. In truth – anyone who uses a SOTPs thesis deserves to make the hobo village under the Manhattan bridge their hometown.”

Today is D-day for the grand Yahoo plan and board meeting marathon, deciding whether to spin off Alibaba or hopefully con some PE firm into buying the core business. We shall see. FYI, no position.

Comments »

Disregard Females Acquire Currency

There’s a monstrosity going on right now in the hedge fund world. Activist investors are pulling an ol’ number 6 on female CEOs across the S&P 500.

Big-name activists like Carl Icahn and Bill Ackman are targeting companies led by female CEOs, because they’re easier targets.

Icahn’s recent target, Xerox, is led by Ursula Burns.

Nelson Peltz has active campaigns targeting DuPont – Ellen Kullman, Pepsi – Indra Nooyi, and Mondelez – Irene Rosenfeld.

Bill Ackman has joined Peltz in the Mondelez circle jerk.

Jeff Smith has taken on Marissa Mayer at Yahoo.

Even David Tepper got in on the action this year by teaming up with Harry Wilson to get force Mary Barra at GM into a buyback.

As it turns out, female CEOs are much more accommodating when it comes shareholder rights, which by default, makes them easy targets. A catch 22 caught in a vicious cycle. Of the 27 female CEOs in the S&P 500, only 1 has a takeover defense in place. 1-in-4 male CEOs have their company geared up for any activist looking to make a run at it.

Activists have claimed they are taking on underperforming companies and not simply targeting women. Does that mean that female CEOs are poor leaders?

Well, weak shareholder rights aligns with poor stock performance, but female CEOs run a tight corporate governance department with strong shareholder rights.

Something’s amiss here.

Comments »