Carl Icahn (Trades, Portfolio) last week lightened his holding of Mentor Graphics (MENT, Financial), an abortive activist target attempt from five years ago, as his money poured from his top holdings such as Cheniere Energy (LNG, Financial) and CVR Energy (CVI, Financial).
His sale of 8,060,145 shares of Mentor, or half his stake, on Friday netted him a hefty profit. The company paid him $18.12 per share, or $146 million in total, to repurchase the shares from him at the previous day’s closing price. Icahn reportedly paid between $8 and $11 when he accumulated the stake in 2010 and 2011.
Mentor, a chip-design company, rejected Icahn’s buyout bid of $17 per share as undervalued in March 2011, though the offer was 40% higher than its trading price several months prior. The company also denied his proposal to put itself up for sale to a strategic buyer. Shareholders did defy the company’s urgings not to support Icahn’s nominees for board membership, voting in all three. The last remaining representative did not leave Mentor’s board until February 2015.
A few months-earlier sale would have netted Icahn significantly higher profit, as the company reached a 52-week high of $28.09 per share in November before plunging as much as $10 that month after announcing fiscal third quarter results. For the quarter ended Oct. 31, revenue declined 0.7% from the same quarter of 2014, as the company reported weakness in its business.
“Semiconductor consolidation and delays in emulator decisions are now having an adverse impact on our ability to close business,” Gregory K. Hinckley, president of Mentor Graphics, said in the release.
“Because we recognize revenue upfront on product sales, changes in market outlook and demand are reflected in real time in Mentor’s results. Nevertheless, with appropriate scaling of the business and continued attention to expenses, we expect to deliver FY16 non-GAAP operating margins consistent with our strategic objective.”
In the recent five years, Mentor Graphics grew annual revenue at an average rate of 5.3%, EBITDA at 27.9% and book value at 12.2%. It has a P/E ratio of 14.8 and P/B ratio of 1.7.
Mentor expects to report results for its fiscal fourth quarter and 2016 fiscal year on March 3.
The gains come at an opportune time for Icahn, who typically crusades against companies to move prices up but who has had a brutal 2016, mainly with large energy bets. Year to date, Icahn’s CVR Energy holding has lost 39%, and Cheniere Energy has fallen 19%. His second-largest position, Apple (AAPL, Financial), also dropped 8%, and AIG (AIG, Financial), where he has secured board membership, declined 16%, while his own company, Icahn Enterprises LP (IEP, Financial), was down 19%.
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