Icahn Buys More Lions Gate After Major Drop (LGF, IEP)

After the close of trading, there was an SEC filing showing that billionaire and activist investor Carl Icahn now controls more than 10.5%  of Lions Gate Entertainment Corp. (NYSE: LGF).  This was on the heels of a huge drop today.

Icahn’s High River Limited Partnership, Hopper Investments, and many other Icahn affiliates have filed an early warning report with regulators in Canada (Lions Gate is Canadian) confirming that the acquisition of 1,036,136 common shares of the entertainment company.

The last purchase was an additional 0.89%  of the outstanding common shares.  These shares were purchased on the New York Stock Exchange at $4.532 ($US) on average per share.  This now takes Icahn’s position to  12,235,723 shares of Lions Gate common stock.  Icahn has been long and wrong in this one, and that 12.2+ million shares is worth about 17 days of trading volume.

The reason noted was “the belief that the common shares of Lions Gate were undervalued.”  Lions Gate fell by 26% to a new 52-week low and multi-year low today alone.  That is after a 50% drop already.  The company warned on soft box office sales and revenues.

This also noted that representatives of the Icahn Affiliates have had discussions with the Chief Executive Officer and Vice Chairman of Lions Gate and intend from time to time to seek to continue to have discussions with representatives of Lions Gate.

Icahn also noted that the affiliates may buy more shares but also reserve the right to dispose of or hedge any of these securities.

So what does Icahn see here?  Is he a fan of horror and sci-fi movies and made for TV series?  More likely, he probably likes that these are down more than 60% from highs.  Shares fell by about 26% today to $3.90, which is a multi-year low close.

Lions Gate has a spotted history on the earnings front.  Before the mud slide that came in the second half of last year, this stock spent most of the four prior years trading between $8.00 and $12.00 for the US-listed shares of the Canadian company which trade on the NYSE.

Icahn Enterprises, L.P. (NYSE: IEP) is Icahn’s public private equity and real estate vehicle.  Those shares are also down almost by two-thirds over the last year.

Jon C. Ogg
February 10, 2009