Carl Icahn / Getty
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/ By Clive Minchom /
Stock picking is something of an art, and will always be very far from a science, but private equity king Carl Icahn seems to pick many more winners than losers these days.
On Tuesday it was announced by Hain Celestial Group, a producer of organic and natural foods, that Icahn is selling about half of his shares in the company.
In the press release Hain said that Icahn and his related companies have now sold 3, 650, 000 shares of common stock in the Lake Success, New York, company to an investment bank Jefferies LLC. Jefferies will subsequently resell the shares of the NASDAQ listed company to the market. Assuming Jefferies paid the market price then Icahn is realizing about US$80 per share. The deal also leaves Icahn still holding 3, 589, 963 share or 7.5% of the company.
Carl Icahn had bought 7.2 million shares of Celestial in 2010, for a 15.2% stake, and he paid prices starting at around US$20 per share when he first started buying in. Currently Hain’s stock is trading at around US$80, so if Icahn’s average buying in price was, say, US$25-27 per share then he has already at least tripled his money on paper, and realized a total of US$292 million in actual cash with Tuesday announced transaction. This would already be about US$100 million more than he paid for the whole position back in 2010, and still leave him with a remaining stake valued at a further US$287 million.
Icahn has also given Jefferies LLC a 30 day option to buy an additional 547, 500 shares of his Hain shares, which Jefferies will presumably exercise if they find there is strong market acceptance for resale of the first tranche of shares they have just agreed to buy.
Hain Chief Executive Officer Irwin Simon described the share sale as a “win-win” for both the company and Icahn.
Given the rise in the company’s share price… “Like any shareholder, they have profited here very, very handsomely”… Simon said… “There’s nothing wrong with ringing the cash register and taking money off the table. It speaks for what the company has been able to do.”
Hain also announced on Wednesday that it had been named to FORTUNE’S 100 Fastest-Growing Companies in America list for 2013. FORTUNE’S methodology includes analyzing companies’ revenue and earnings per share growth rates with a three-year annualized return for the period ended June 28, 2013. Hain Celestial was ranked No. 83 on the list with annual revenue growth of 20% and profit growth of 58% with a total return of 48%.
There is undoubtedly an element of art in picking when to sell a position and Carl Icahn has picked up a big profit here and still has money left on the table, at a time of continuing good news for the company. it is much better to sell into a rising market if you still have a position left over as people will remember later, and have good feelings about it the next time around.