Legendary activist investor Carl Icahn knows how to make a buck or two. The corporate raider, who’s been an icon in his own right on Wall Street for decades, is worth more than $23 billion.
It’s not like he needs more cash, but the meteoric rise of Voltari Corp (NASDAQ:VLTC) stock this month should further pad his portfolio.
Shares of the mobile advertising company were up more than 40% in trading on Thursday, continuing a preposterous rally that’s taken the VLTC stock price from its humble $1.01 per-share close on March 31 to nearly $6 a share today.
What gives?
Icahn Flexes His Influence for VLTC
All it took was an SEC filing from Carl Icahn to get VLTC stock popping off. The billionaire disclosed a 52.3% stake in VLTC stock on the eve of April Fool’s Day, but it was no joke. Icahn owns 4.7 million shares of the stock.
He’s actually been an investor for a while, and even caused a sudden rally in the VLTC stock price back in 2012 when he disclosed a 32% interest in the company, known at the time as Motricity. Shares rocketed more than 60% higher then on the news.
While Icahn has already seen the value of the 4 million VLTC shares he recently bought advance by about $18 million, his position in Voltari preferred stock is much larger. He owns about $39 million of the outstanding $42 million in preferred shares.
What Icahn is almost certainly doing is pushing for an outright sale of Voltari, as the company itself has been offloading assets for years. Sales fell from $133 million in 2010 to just $10 million in 2013. Ironically enough, that horrific decline is the source of VLTC’s value today.
Due to the wondrous magic of accounting, Voltari possesses $187 million in deferred tax assets due to nearly $480 million in federal and state operating loss carry-forwards. That means a similar, successful company that’s actually profitable can swoop in, acquire VLTC and enjoy the $187 million tax break. Seeing as Icahn is the majority shareholder and his son and son-in-law sit on the board, it seems pretty clear that Voltari is merely waiting for a suitor.
Icahn, at 79, is likely reaching the end of his career. It may be true that you can’t teach an old dog new tricks, but when the old ones work so well, who’d want to?
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
