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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