For many media executives and other corporate chieftains, news on Tuesday that billionaire shareholder activist Carl Icahn was returning cash to all his outside investors must have elicited a brief moment of sheer joy. Could Icahn be preparing to retire, hang up the gadfly moniker and get out of their hair forever?
Wishful thinking, C-suiters. For now the 75-year-old Icahn will maintain his position in all his company holdings, including on the media front, stakes in Lionsgate Entertainment, MGM and Blockbuster, sources say.
In a letter to investors disclosed in a regulatory filing Tuesday, Icahn said he worried about future market upheaval and did not want to be responsible for managing others’ money. He will return nearly $1.8 billion to his hedge fund investors by the end of April.
Icahn said his funds earned returns of 33% in 2009 and 15% last year and posted overall returns of 107% since he created Icahn Capital in 2004.
“While we are not forecasting renewed market dislocation, this possibility cannot be dismissed,” Icahn wrote. “Given the rapid market run-up over the past two years and our ongoing concerns about the economic outlook, and recent political tensions in the Middle East, I do not wish to be responsible to limited partners through another possible market crisis.”
Icahn still has billions of his own capital, and he is apparently not interested in slowing down. Just last week, he told Reuters that he enjoys being a shareholder activist. “It’s sort of like a chess game. I find it fascinating … What else would I do?”
It is still not clear what Icahn’s move will be when it comes to his debt holdings (about a third) in Blockbuster Entertainment. A federal bankruptcy judge in Manhattan is expected to take up the issue of a possible bid for the beleaguered retail chain on Thursday.
An affiliate of hedge fund and senior creditor Monarch Alternative Capital offered $290 million for Blockbuster in February, but bankruptcy Judge Burton Lifland opposed the bid, saying it is too “aggressive.” Dozens of creditors, including many of the major studios such as Disney, Universal and Sony, oppose the bid as well.
It had been thought that Icahn might partner with Monarch on a bid, but that has yet to happen.
After an unsuccessful proxy fight last year at Lionsgate, Icahn still holds a 33% stake in the mini-major. He also holds about a 15% stake in MGM and has previously proposed merging Lionsgate and MGM.