When it comes to becoming an investor-billionaire, there are myriad approaches.
Berkshire Hathaway's (NYSE: BRK.A ) Warren Buffett has relied on rigorous
analysis as well as holding onto positions for decades. Or take George Soros. He
prefers to make big bets on just about anything, be it interest rates or
currencies. Then there is Carl Icahn, who is one of the pioneers of activist
investing. That is, he buys large chunks of a company's stock and then
agitates management to boost the price whether through spinoffs, large
dividends or a sellout. The strategy takes a lot of work but has produced
tremendous results. Icahn is worth about $12.5 billion. So what is he up to now?
Well, Icahn has had a busy August (at 75 years old, he makes us wonder if he
ever takes a vacation). For example, he scored a $435 million profit when Google
(NASDAQ: GOOG ) agreed to purchase Motorola Mobility Holdings (NYSE: MMI ). At
the same time, Icahn has been pursuing Clorox (NYSE: CLX ). Actually, he has
been buying up the stock since February (the stake is at about 9.4% of the
outstanding shares). Clorox has a great portfolio of brands such as Armor All,
Kingsford, Hidden Valley and Glad which are either No. 1 or No. 2 in their
categories. The company also has used acquisitions to boost a product line, such
as with its deal for Burt's Bees, a provider of natural skin care and beauty
products. Yet the real reason for Icahn's interest in Clorox is that it could
be an attractive asset for a global consumer products company such as Procter &
Gamble (NYSE: PG ), Colgate-Palmolive (NYSE: CL ), SC Johnson, Unilever (NYSE:
UL ) or Kimberly-Clark (NYSE: KMB ). These potential suitors are flush with cash
and are trying to find ways to boost the top line. If Icahn's history is a
guide, he will put lots of pressure on getting Clorox to do a deal. To that end,
he promises to sell the company if he gains control of the board. And if he
cannot find a buyer for at least $78 per share, he'll buy the company for
himself. Consider that Icahn made an $80 offer back in July. Of course, Clorox
rejected the offer and then there was the plunge in the equities market. True, a
good outcome is far from guaranteed. Keep in mind that only this week Icahn
also dropped his bid for Lions Gate Entertainment (NYSE: LGF ). It was a
grueling three-year battle that resulted in no gains. So yes, even billionaires
make mistakes. But when it comes to Icahn, he has a batting average that is
above most others. In other words, it's probably a good bet that Clorox will
somehow be yet another winner. Tom Taulli is the author of various books,
including "All About Commodities." He does not own a position in any of the
stocks named here.
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