The Greenbrier Companies
(NYSE: GBX) shares soared more than 20 percent today after Carl Icahn
disclosed a substantial stake in the company and discussed the
possibility of a combination with American Railcar
(NDAQ: ARII). The news comes as shares of the railroad company sat near
52-week lows, beaten down by poor earnings and growth. Many
shareholders are hoping that the billionaire activist will be able to
unlock value in both companies through strategic alternatives.
Carl Icahn currently holds a 53.7% stake in American Railcar and
aggressively purchased shares of Greenbrier through its subsidiary
Longtrain. Longtrain purchased the full 1,530,000 share position
between January 8th and January 25th and prices ranging from $17.60 to
$19.54 per share. Many are speculating that the activist is moving
quickly to acquire the company at bargain-basement prices after
amassing a 9.45% stake in just a month. It will be interesting to see
how ready shareholders will be to sell at these levels.
Greenbrier confirmed that it had received Carl Icahn’s Schedule 13D
filing and is committed to acting in the best interests of Greenbrier
shareholders and other constituencies. However, the board offered no
additional comments at this time as they are reviewing the information
carefully. It is worth noting that Carl Icahn is not opposed to taking
hostile action when necessary to unlock value in his investments, so
the board will likely pay attention to anything that he says in future
communications.
In the end, the railroad industry has been recovering but still
suffers from many fundamental issues. Carl Icahn’s investment in
American Railcar alongside investments by many other value investors
suggest that the industry may be undervalued. As a result, Carl Icahn’s
(assumed) planned purchase of Greenbrier couldn’t come at a better time
as shares sit near 52-week lows. It will be interesting to see how all
parties respond when something becomes of this situation. Combined,
these factors make Greenbrier a stock worth watching!
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