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No Limit Icahn Poker: FTC Greenlights More Yahoo Investment

yahoo stockAt this week’s D6 trade conference a question was asked of Rupert Murdoch about Carl Icahn’s grab at Yahoo.  Mr. Murdoch, often frank and to the point, replied “that’s not serious. He just wants to make a few hundred million bucks.”

Accurate or off base, one mogul’s insight on another is always fascinating.  Here, I’d suspect the conclusion is true as well.  Icahn is a special kind of value investor – he looks for corporate weakness and tries to turn it into short term investment opportunity.  He’s an opportunist imbued with the mentality of a trader, together mixed in with the instinct of a predator and the guile of a poker player.  He’s honed his game over years of practice.  The playbook is in memory; tried and true.  Yahoo, as a target,  was looking weak.  The opportunity was there.

Of course, it usually takes money to make money.  A ten percent return on a thousand dollar investment will buy a decent dinner.  A ten percent return on a billion dollars is an entirely different kind of achievement.   Icahn has no shortage of cash.

To date, he has spent more than a billion dollars buying up Yahoo stock; about 59 million shares as of last report.  That equals more than 4% of the company, by ownership.    Expanding the opportunity, today, the Federal Trade Commission gave him the green light to more than double that existing position, should he choose to.

As part of a routine process, Icahn and his affiliated fund entities were cleared to invest as much as $1.5billion more.

For now, there’s little reaction to the approval.  Icahn seems to be sitting quietly behind the mask of a public poker face.    With more buying a possibility, even a probability, it would likely be contrary to his interests to stir things up.   That will change.

Like a poker game, this is in the early stage. The antes are in and the first round of bets has been made but there’s plenty yet to unfold.  It is just the beginning. There will be more cards, more bets, more intrigue.  The FTC ruling is equivalent to a casino lifting the table limit.  It went from fixed bets to no limit.

There are a bit less than two months left before Yahoo board seats come up for official election at the shareholders meeting.   The strategy and the gamesmanship is sure to expand as the deadline gets closer.

As Rupert Murdoch hinted, it’s a game.  The stakes for Carl Icahn are a few hundred million and the hand is slowly and methodically being played out.


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