Billionaire Carl Icahn’s private hedge fund has taken a massive position in a low-cap stock.
Icahn Enterprises just reported nearly a 15% stake in the automotive repair chain Monro (MNRO), triggering a major breakout.
Icahn Enterprises’ 13D filing shows the hedge fund has scooped up 4,439,914 shares for approximately $84.7 million.
Monro shares closed the first trading day in November at $15.05 and soared to a high of $18.05, a gain of nearly 20%.
Shares are trading for around $17.98 at time of writing, with the company’s market cap standing at $529 million.
In response to Icahn’s massive stock buy, Monro has implemented a shareholder rights plan to protect against unsolicited takeovers, which aims to prevent any party from gaining control of Monro without offering appropriate compensation to all shareholders.
Monro operates more than 1,100 auto repair shops and tire dealers in 32 states.
Says Monro,
“We are aware of Icahn’s investment. Monro’s Board and management team are focused on continuing to progress in our key areas to accelerate the pace of our performance improvement and capitalize on positive industry trends.”
In August, Institutional Investor reported Icahn’s private hedge fund has been on a six-year-long red streak due to unsuccessful short-selling.
In a filing, the company said that “market hedges” were mostly to blame for the losses, which overshadowed gains in otherwise viable long positions.
“The negative performance of our investment segment’s short positions was driven primarily by net losses from broad market hedges of $147 million and net losses in the energy sector of $81 million.”
Icahn’s investment portfolio is a component of Icahn Enterprises (IEP), which is made up of six other segments, including energy, automotive, food packaging, real estate, home fashion and pharma.
As of Tuesday’s close, shares of Icahn Enterprises were trading at $9.06, down nearly 94% from its all-time high of $149, last seen in 2013.
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