Carl Icahn Buys Stake in Manitowoc Inc., Pushes for Breakup

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Dec 29, 2014
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Carl Icahn (Trades, Portfolio) spent the weeks before Christmas revving up for his latest activist play, buying millions of shares and call options for Manitowoc Co. Inc. (MTW, Financial). The investor, who tells his Twitter followers he makes money “studying natural stupidity,” acquired 10,532,660 shares in aggregate, or 7.77% of the company, according to GuruFocus Real Time Picks.

Icahn believed the shares were undervalued, he said in the SEC filing reporting the event. His price paid per share ranged from $16.83 to $19.30. The company’s shares surged 8.94%, or $1.87 per share, on Monday as news of Icahn’s stake surfaced. They closed at $22.79 each on Monday.

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Icahn also said he intended “to have discussions with representatives of the Issuer’s management and board of directors related to separating the Issuer’s Crane and Foodservice segments into two separate companies.” The $3.1 billion market cap Wisconsin company, founded in 1902, offers a global line of engineered lift solutions and commercial foodservice equipment.

The Keeley Small Cap Fund, which also has a holding of the company, commented on Manitowoc Co. in its third quarter investor letter, foreseeing a potential separation of its two segments:

“Manitowoc Company, Inc. (MTW) was the second largest detractor during the quarter after falling over 28 percent and costing the portfolio 32 basis points of return. Shares of the capital goods manufacturer fell sharply in July after cutting its 2014 forecasts for crane sales and foodservice operating margins. The company now anticipates that revenue in its crane-making division will be flat or slightly negative in 2014. We continue to see a restructuring opportunity in Manitowoc, with a potential break-up of their industrial crane-making and foodservice segments.”

In its third quarter results, announced Oct. 27, Manitowoc reported $986.3 million in sales, a 2.5% decrease from $1.012 billion in sales in the same quarter the previous year. The Foodservice segment saw sales increased 3.8%, while Crane segment sales flagged by 6.7%.

The company also reported net earnings of $73.1 million, or $0.53 per diluted share, compared to $52.9 million, or $0.39 per diluted share, in the same quarter of 2013. The increase was due to $18.1 million tax benefits in the third quarter of 2014 and a $17.1 million tax expense in the third quarter of 2013.

The third quarter results reflected “the muted demand environment brought on by uncertainty in the global economy,” the company’s CEO, Glen Tellock, said in the earnings press release.

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Other gurus with stakes in Manitowoc include Paul Tudor Jones (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio). Carl Icahn (Trades, Portfolio)’s largest shareholdings at the end of the third quarter were Apple Inc. (AAPL, Financial), CVR Energy Inc. (CVI, Financial) and eBat Inc. (EBAY, Financial).

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