Carl Icahn could be on the warpath again, this time with Netflix as his target. Through a number of investment vehicles, Icahn has taken what amounts to a 9.98 percent stake in the subscription video company.
Icahn, of course, is best known as an activist shareholder who advocates for change in companies that he believes are not well run, and as a result, undervalued. He spent several years agitating the top brass at Yahoo, after founder and then-CEO Jerry Yang turned down a $45 billion acquisition offer from Microsoft. (Just some perspective: Yahoo’s current market cap is under $20 billion today.) After that, Icahn entered a proxy battle and was able to get himself and some compatriots installed on the Yahoo board.
Of course, we all know how that played out: After about a year-and-a-half Icahn stepped down from the board and eventually sold his stake in the company after having not accomplished much. But boy, was it a fun show to watch!
According to an SEC filing, Icahn has bought a big chunk of Netflix stock — nearly 10 percent altogether. It’s not clear exactly what his intentions are, but according to the filing, the investment was made because Icahn believes the stock is undervalued. And he might have a point: Netflix was once sitting pretty at about $300 a share, but has fallen fast over the past 12 months or so. Shares in the company were hovering around $60 after another disappointing earnings report last week.
From the filing:
The Reporting Persons acquired the Shares with the belief that the Shares were undervalued due to the Issuer’s dominant market position and international growth prospects. The Reporting Persons believe Netflix may hold significant strategic value for a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution of the internet, mobile, and traditional industry. The Reporting Persons are considering ways for the Issuer to maximize shareholder value but have reached no conclusion. The Reporting Persons may in the future seek to have discussions with the Issuer.
It’s those last two sentences that you should pay attention to. Icahn believes he can maximize shareholder value and may seek to have discussions with Netflix to unlock that potential.
Are you ready for another Icahn proxy battle? I’m grabbing my popcorn just thinking about it.
UPDATE: Netflix, btw, declined to comment for this story.