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Holly LaFon
Holly LaFon
Articles (9196)  | Author's Website |

Big Buys of the Week: Ackman and Icahn

Two gurus announce substantial unreported buys

March 02, 2018 | About:

Two heavy-hitting investors disclosed this week that they are building positions that have not yet hit Securities and Exchange Commission filings.

Bill Ackman (Trades, Portfolio) of Pershing Square bought a stake in United Technologies (NYSE:UTX), he told CNBC on Wednesday, saying it was a “great” company. Despite a sharp upturn as the news reports came out, shares of United Technologies ended the week down 2.85%, closing Friday at $129.94.

United Technologies is a $103.92 billion market cap company with businesses in aerospace, defense and building. It owns recognizable brands like Otis elevators and Pratt & Whitney aircraft engines, among others. About half of its sales come from its commercial & industrial segment, 38% from commercial aerospace and 12% from military aerospace & space.

Ackman’s announcement came a week after reports circulated that the company’s CEO Greg Hayes may split up the businesses.

In the fourth quarter, United Technologies reported sales of $15.7 billion, up 7% year-over-year. Earnings per share were 50 cents, down from $1.26 for the fourth quarter the prior year, after including 90 cents related to tax law changes.

Sales for the full year totaled $59.8 billion, up 5% and topping the company’s expectations. Earnings per share declined 7% to $5.70, including the 90 cents of tax-related charges.

For full-year 2018, the company said it expects total sales growth of 4-6%, with growth in sales and earnings across all of its segments.

Carl Icahn (Trades, Portfolio)

Carl Icahn (Trades, Portfolio) also reported to CNBC that he built a position of less than 5% in Newell Brands (NYSE:NWL), the maker of Rubbermaid, Mr Coffee and Sharpie.

"I believe Newell itself is undervalued and that's why I bought it," he said.

Despite a jump when Icahn reported the news, shares ended the week down 1.56% at $26.59. In the past year, the company lost 46.29% of its value.

The company reported a 9.5% decline in sales to $3.7 billion in the fourth quarter. Diluted earnings per share were $3.38, up from 34 cents. It expended $152.4 million repurchasing shares and paid down $1.4 billion in debt during the year.

Newell Brands has a price-earnings ratio of 4.7, near a 10-year low. Its price-book ratio at 0.93 and price-sales ratio at 0.89 are both near their respective five-year lows.

Last year, the company embarked on an ambitious turnaround plan. In January, it announced an acceleration of the strategy by focusing its portfolio on nine core consumer divisions and exploring divesting some of its commercial and consumer assets. As a result, the company would be streamlined to an $11 billion portfolio of consumer brands.

“We believe that exiting non-strategic assets, reducing complexity and focusing on our key consumer-focused brands will make us more effective at unlocking value and responding to the fast-changing retail environment,” Michael Polk, Newell Brands CEO, said in a statement.

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

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