Shares of PC-maker Dell (DELL) are slightly higher after CNBC’s David Faber reported that activist investor Carl Icahn has taken a significant stake in the company to oppose Michael Dell’s and Private Equity firm Silver Lake Partners' go-private transaction of the PC maker at $13.65. Icahn is believed to have built up a 100 million-share stake. The price has been contested since the deal was announced with Mason Hawkins and Southeastern Asset Management leading the way. Southeastern is Dell’s largest independent shareholder and currently owns roughly 123 million shares. Carl Icahn is asking the company to leverage up and issue a one-time $9 special dividend. Rumors are also circulating that rivals Lenovo (LNGVY.PK) and Hewlett-Packard (HPQ) are also contemplating a bid for cash-rich Dell. With so much opposition lining up, Dell has set up a special committee to solicit offers and has set March 22, 2013 as the deadline. The clear winner in all this is Mason Hawkins and Southeastern Asset Management as it looks like Dell will get a higher takeover bid after all. With Icahn on board, and promising a fight, it definitely looks like $13.65 will not be the final price someone will get. Dell’s share are already trading at a 5% premium to Michael Dell’s $13.65 price tag.
Other Gurus who stand to benefit from a higher bid include:
- Donald Yacktman, Yacktman Asset Management
- Francis Chou, Chou Associates Management
- Bill Nygren, Oakmark Fund
- Steven Cohen, SAC Capital Advisors
- David Dreman, Dreman Value Management
Pet supplies retailer PetSmart (PETM) reported fourth quarter EPS of $1.24. Analyst were expecting EPS of $1.21. The stock however is under pressure after the company guided lower for 2013. The company is now expecting fiscal year 2013 EPS to come in between $3.76 and $3.92, below analyst estimates of $3.93 per share.
Overall, Gurus have been net sellers of the pet supplies retailer. Gurus reducing or selling out completely include:
- Steven Romick, FPA Crescent Fund
- Paul Tudor Jones, The Tudor Group
- First Pacific Advisors
- Jeremy Grantham, GMO
Time Warner (TWX) will spin off its Time Inc. unit which publishes popular magazines such as Time, Sports Illustrate and People. The announcement comes shortly after merger talks between Meridith Corp. and Time Inc. had announced talks had broken down and the deal was off. Time Inc. is expected to trade as a separate publicly traded company. Time Inc.’s magazine sales have been in decline since 2008 and the Wall Street Journal is reporting sales of People Magazine have been hit especially hard and has put some operating pressure on the unit as People accounts for more than 50% of TIme Inc.’s profits.
Gurus who added to or established a new position include: