What Carl Icahn Could Mean for Transocean

by Alyssa Oursler | January 14, 2013 11:17 am

Carl Icahn — billionaire investor and chairman of Icahn Enterprises (NASDAQ:IEP[1]) — is making headlines today. The news? Icahn has acquired a 1.56% stake in Transocean (NYSE:RIG[2]), the world’s largest offshore rig contractor.

On top of that, he is seeking regulatory approval to potentially acquire shares worth more than $682.1 million, according to Bloomberg[3]. That would expand his stake to more than 3%.

Is this good new for Transocean investors?

The past isn’t always an indicator of the future but, in the case of Icahn, investors may be hoping it is. While his track record of adding value[4] to companies is mixed, his most recent move indeed paid off. On Halloween of 2012, Icahn reported a 10% stake in Netflix (NASDAQ:NFLX[5]).

At the time, shares of the media company had sunk more than 37% since hitting a high in early February and were just starting to slowly reverse course.

How have they done since Icahn revealed his stake? Well, since Oct. 31, NFLX has recorded gains of nearly 47%. Shares are still about $30 off that high last February, but are at least back in the triple digits — quite an improvement from a price tag just over $50.

Just take a look at the chart. The red line shows when Icahn revealed his stake.

NFLXlongterm1 What Carl Icahn Could Mean for Transocean

Of course, this is a simplistic interpretation at Icahn’s impact. But, on top of that, Transocean owned the oil rig that created the catastrophic Deepwater Horizon spill and employed nine of the 11 workers killed there. Just over a week ago, the company agreed to pay a fine of $1.4 billion, settling the legal threat[6] that had been hindering shares for some time.

Shares have already gained more than 20% since the news broke and are nearing 52-week high territory.

A Netflix-like boost from Icahn could be the icing on the cake. In fact, shares have already gained over 3% since the open this morning.

As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.

Endnotes:
  1. IEP: http://studio-5.financialcontent.com/investplace/quote?Symbol=IEP
  2. RIG: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIG
  3. according to Bloomberg: http://www.bloomberg.com/news/2013-01-14/transocean-says-icahn-acquired-1-6-of-shares-seeks-more.html
  4. track record of adding value: http://investorplace.com/2012/11/carl-icahn-netflix-friend-or-foe/
  5. NFLX: http://studio-5.financialcontent.com/investplace/quote?Symbol=NFLX
  6. settling the legal threat: http://investorplace.com/2013/01/for-transocean-its-finally-time-to-shine/

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