A disappointing result from Nuance Communications Inc. (NASDAQ:NUAN) during its fourth quarter does not appear to have dampened Carl Icahn’s appetite for shares of the voice recognition software maker. Icahn plans some changes at the company, as first reported by ValueWalk. Nuance supplies the Siri software found on Apple Inc. (NASDAQ:AAPL)’s iPhones.
Between December 6 and 10, the renowned activist investor added another 1.38M shares of Nuance Communications Inc. (NASDAQ:NUAN) to his existing holdings of 59.15M shares, bringing his stake up to 60.31M shares according to a Form 4 filing. The additional stock was purchased at prices ranging between $14.12 and $14.19.
Is Carl Icahn averaging down?
Nuance Communications Inc. (NASDAQ:NUAN) has been one of his not-so-memorable investments during 2013, when viewed in the exalted company of deals such as these:
| Company | 2013 Returns | Icahn’s Stake |
| Netflix |
292.60% |
9.40% |
| Herbalife |
118.90% |
16.80% |
| Chesapeake Energy |
61.90% |
10.00% |
| Forest Laboratories |
56.80% |
11.40% |
| Dell |
35.40% |
8.90% |
In contrast, Carl Icahn paid an average price of $20.14 per share for 52.4M shares of Nuance as on November 26.
The stock is down 36.16% year to date. The company declared indifferent results for its fourth quarter; EPS was down 41% from the previous year, and revenue of only $472.2M, missing street estimates of $489.56M. Analysts at UBS downgraded the stock from Buy to Neutral.
Brett Icahn and David Schechter on Nuance Board
In October, Nuance appointed Brett Icahn and David Schechter to its Board. Icahn and Schechter are Co-Managers of the Sargon Portfolio, a designated portfolio of assets within the various private investment funds comprising the Investment segment of Icahn Enterprises LP (NASDAQ:IEP). The Icahn Group and its affiliates have agreed to support the Company’s slate of director nominees, which will include Icahn and Schechter, at Nuance’s 2014 Annual Meeting of Stockholders.
By past trends, shareholders of target companies have generally benefited from Icahn’s muscle on a company’s board, for example, in Herbalife Ltd. (NYSE:HLF) and Forest Laboratories, Inc. (NYSE:FRX).
Carl Icahn thumps the table, too, in the latest quarterly release of his company Icahn Enterprises LP (NASDAQ:IEP) saying, “I believe that by far the best method to utilize in investing is the ‘Activist’ model. I have spent a great deal of time and effort perfecting its use…and in my opinion there has never been a better time than today for activist investing, if practiced properly. Several factors are responsible for this: 1) extremely low interest rates, which make acquisitions much less costly and therefore much more attractive, and 2) the current awareness by many institutional investors that the prevalence of mediocre top management and non-caring boards at many of America’s companies must be dealt with if we are ever going to end high unemployment and be able to compete in world markets.”
Shareholder activism has certainly proved profitable, according to a Citi Research report quoted by Barron’s, observing that since 2009, an index of the 17 most prominent activist hedge funds generated returns of 19% compared to just 12% from the S&P500.
