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Carl Icahn: Rescuer or Bluffer?
The Oxford Short Alert
Tuesday August 31, 2004
By Alexander Green, Investment Director
Email – #220
** Carl Icahn: Rescuer or Bluffer?
On Aug. 9, we began shorting Mylan Labs (NYSE: MYL), in anticipation that the company’s results would disappoint shareholders.
Just 11 days later, the company cautioned analysts to reduce their earnings estimates for the rest of this year and withdrew its own estimates for 2005.
This was very bad news, especially coming on the heels of the company’s confession earlier this month that both California and Florida have subpoenaed the company in connection with a probe of its pricing and marketing practices.
And yet the stock has moved higher. Why?
In a word, Carl Icahn.
The same day Mylan confessed that the company would report zero earnings growth this year, at best, it also reported that Icahn had received antitrust clearance from the Federal Trade Commission to acquire a stake in the company.
This news trumped the lousy earnings forecast and has driven Mylan higher.
Mylan is a drug company with flat revenues, declining net income and a miserable outlook due to its plan to merge with struggling King Pharmaceutical. But some short sellers have been tossing in their cards due to the Icahn news.
However, Carl Icahn is a poker player who has been known to bluff. Sometimes he makes a lot of noise and does nothing. (Remember his much vaunted plan a few years ago to take over Chrysler alongside Lee Iaccoca? Another non-starter.)
But we’re not going to argue with the market. I’m reducing Mylan to a hold today, since our buy stop is at $18.
We’ll give this short a bit more time to see whether the market is more interested in Icahn’s maneuverings or the company’s poor fundamentals.
If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or 410.223.2679 (e-mail: viptrader@oxfordclub.com), or contact Pillar One Advisor Greg Galloway at 800.438.3040 or 407.667.4729.
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Stock: Lions Gate Enter. (NYSE: LGF)
Current Price: $6.59
Comments: Sell short. Buy stop is $8.00.
Stock: Mylan Labs (NYSE: MYL)
Current Price: $17.26
Comments: Hold. Buy stop is $18.00.
Stock: British Airways (NYSE: BAB)
Current Price: $40.93
Comments: Sell short. Buy stop is $50.00.
Stock: Health Net (NYSE: HNT)
Current Price: $25.68
Comments: Sell short. Buy stop is $28.50.
Stock: Carolina Group (NYSE: CG)
Current Price: $24.60
Comments: Sell short. Buy stop is $27.00.
Stock: Cooper Cameron (NYSE: CAM)
Current Price: $50.02
Comments: Hold. Buy stop is $54.00.
Stock: Newell Rubbermaid (NYSE: NWL)
Current Price: $21.44
Comments: Sell short. Buy stop is $24.00.
Stock: Janus (NYSE: JNS)
Current Price: $13.70
Comments: Sell short. Buy stop is $18.00.
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Bio:
Alexander Green is the Investment Director of The Oxford
Club. A Wall Street veteran, he has over 16 years
experience as a research analyst, investment advisor, and
professional portfolio manager. Mr. Green is also
considered one of the most talented financial writers in
the business. He’s been featured on “The O’Reilly Factor,”
profiled by Forbes and Marketwatch.com, and has written for
Louis Rukeyser and several other leading financial
publications. He currently writes and directs The Oxford
Club Communiqué, the Oxford Insight e-letter, and four
elite trading services: one focused on momentum stocks,
another focused on companies with significant insider
buying, another dedicated to international growth stocks
and another focused on short-selling fundamentally flawed
companies. Mr. Green is also a top-rated speaker at
financial conferences around the country.
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