This is why you follow Carl Icahn.
On Tuesday morning, eBay said it would spin off its PayPal unit in 2015 in an announcement that most investors hadn’t expected to come until sometime next year.
Earlier this year, Carl Icahn bought a stake in eBay and began agitating for the company to spin off PayPal. Icahn exchanged a series of letters with the company’s management, questioning conflicts of interest among some board members and within the broader Silicon Valley community of investors.
Ultimately, Icahn relented, kept a stake in eBay, and agreed to support management.
But Icahn had spoken, and a few months later, after hearing nary a peep from Icahn on the status of his eBay investment: BOOM! EBay spins off PayPal, and the deal is a huge win for Icahn and all eBay shareholders.
In early trading on Tuesday, eBay shares were up about 8%.
And this is just the latest win on what has been a series of victories for Carl Icahn.
Icahn bought a huge stake in Netflix back in fall 2012 and made about $US800 million after the stock rose from about $US58 to about $US340 in a little more than a year. It was one of the great trades of all time, and Icahn still holds a sizable stake in Netflix.
And earlier this year, Icahn bought a stake in Family Dollar and urged the company to seek a sale. That came to fruition and has been, so far, a big win for Family Dollar shareholders.
In September, Icahn cashed out and took a roughly $US200 million win on the investment.
On Monday, shares of McDonald’s spiked intraday, and some isolated Twitter chatter indicated that maybe Icahn was getting involved in the company. So far, nothing has come of that.
And last month, shares of Whole Foods also spiked on rumours that Icahn was getting involved. Nothing came of that rumour, but it shows the power of even mentioning Icahn’s name with regard to a stock.
To go a bit further back, Icahn took a stake in Apple and urged the company to increase its share buyback program as a way to return cash to shareholders. Icahn didn’t get the $US50 billion buyback that he wanted, but Apple shares are currently just below their split-adjusted all-time high.
Right now, as has been the case for the past few years, when Carl Icahn is involved in a company, investors are following. And even the mere suggestion that Icahn might be getting involved in a company has sent the stock higher.
Tuesday morning is the reason why.
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