Carl Icahn Companies

Brian Hicks

Updated November 20, 2007

Just why did Carl Icahn buy 2.74 million shares of Biogen Idec (BIIB) for $146.5 million in mid August 2007?

Investors believed that, given Icahn’s medical background, it may have had something to do with the perceived success of Tysabri, the controversial multiple sclerosis drug that was pulled from the market after some users developed a deadly brain disease. Tysabri, according to some estimates, could be a $1 billion MS drug by 2010. And should it be approved for Crohn’s disease, there’s even more upside potential.

As an investor, Icahn may have viewed BIIB as an undervalued buyout target. The company was trading at a paltry 37 times earnings, as compared to the 48 times earnings it traded at prior to Tysabri’s withdrawal.

Had you followed Icahn and bought around $55, you would’ve had a $30 gain two months later.

Who was I to argue with billionaire logic? This was the same man who increased his stake in MedImmune by 50% before it was sold to AstraZeneca for $15 billion, doubling MedImmune’s market value.

In any case, when a billionaire goes shopping, pay close attention. They didn’t make their money by investing in just anything . . . so when Icahn increased his stake in Take-Two Interactive (TTWO), barely a mid cap, we took notice of this latest Carl Icahn company buy-in.

Options scandals, game delays, frequent management changes and SEC investigation, oh my!

Like I said, billionaires didn’t make their money investing in just anything.

So when Icahn reported a 1.1% stake in TTWO, we took an interest, in hopes that Icahn will do the company some good as an activist.

Controversy aside, the recent fall to $15 is a buying opportunity with upside to $20 near-term. While news that Grand Theft Auto IV won’t be released in time for the 2007 holidays, its Q2 2007 release is sure to bring out the bulls.

When the word “controversy” is raised in gaming circles, this controversial company’s name can’t be too far behind. Take-Two is still months away from releasing the next installment of the most controversial and intense game to legions of fans, but already the anticipation is mounting, and the parental groups are more than likely to line up to protest, indirectly promoting the latest version. Earlier incarnations sold:

• Grand Theft Auto III: 11 million games annually . . .

• Grand Theft Auto: Vice City: 13 million annually . . .

• Grand Theft Auto: San Andreas (GTA: SA) was just as successful, selling 12 million copies in its first year out.

At $50 per game, GTA: SA did $600 million in revenue in year one. In fact, sales of this one game were so big that Take-Two Interactive announced it was a significant contributor to Q1 2005 numbers. Net sales for that quarter were $502 million, a 34% jump in a year. Net income was up 74% in a year.

Carl Icahn Companies: Following the Billionaire’s Lead

Billionaires aren’t dumb investors. If they were, they wouldn’t be billionaires.

Carl Icahn is a perfect example. Here’s a rich guy known for buying up shares in companies and then pushing for major changes that may affect them very positively. In recent quarters, he’s bought shares of Symantec and Cigna . . . and now, Take-Two Interactive.

While it’s unknown how he plans to positively affect the company after its recent legal issues and SEC investigations, it’ll be interesting to see how this pans out. His piece of the TTWO pie does mean he’ll make his presence known at shareholder meetings. We can assume he has a plan for where he’d like to take Take-Two.

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Ian L. Cooper


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