EconomyWritten by Havre On 26 March 2012
Carl Icahn’s “Hunger Pangs”

By now we all know how popular the Hunger Games movie has been in its opening weekend. It pulled in $152.5 million at the box office, making it the third-best opening weekend in the U.S. ever. The movie also performed well internationally, making $59.3 over the weekend.

The success has been showing up at Lionsgate‘s (LGF, NYSE, 52 week range 5.76 – 16.19), the movie’s production and distribution company, share price. LGF shares are up about 80 percent this year alone, currently at about $15 per share, and Piper Jaffray now has a price target of $22 per share.

Where does Carl Icahn, the famous corporate raider, come in?  Last August, Icahn gave up a 3-year battle with the company to take control. He claimed that it was passing on merger opportunities and was spending too much on production costs. (Ironically, Hunger Games cost about $80 million vs Disney’s John Carter failure that cost $250 million.) Icahn had launched four tender offers during that period but was never able to a mass more than 33 percent of the shares, thwarting his attempt to wrestle control of LGF.

So back in August 2011, he agreed to sell his 44.2 million shares at $7 per share, or $309.4 million. The company itself purchased 11 million of those shares, with the rest going to insiders and other investors. It’s turning out to be a pretty good investment.

Icahn claimed then that he was distracted from a bigger deal he was working on, a $10.5 billion takeover attempt of Clorox (CLX, NYSE, 52 week range 63.06 – 75.44). Interestingly, the Hunger Games’ three-movie deal was in the works when the agreement was reached. You can only guess that he had no idea how popular the book trilogy was with movie-going demographics.

Now the company is looking to become profitable year-over-year for the first time in four years, and analysts are busy crunching the numbers for the next two sequels in the series. Lionsgate is also the studio that produced the successful “Weeds” TV series and is enjoying resurgence of its “Mad Men” hit TV series.

By the way, Clorox shares spiked to $74 per share last summer on the news of Icahn’s interest in the company and is currently trading at about $68 per share.

Another interesting phenom from this movie is that the demographics is such that a high percentage of the ticket sales were from online purchases through smartphones and tablets. The number crunchers are able to track pre-sales with news today that over 450 theaters have already sold out for the upcoming week.

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Havre

Randy Havre has a wealth of experience in the financial industry. In 1987, he established his own full-service stock brokerage firm, which was also registered with the SEC as an Investment Advisory Firm, managing money for the State of Hawaii’s pension fund, among other portfolios. In 1994, he started his first of three Hawaii based Venture Capital Funds. Additionally, he wrote a weekly stock column in the Pacific Business News for 21 years, taught Finance 315 Portfolio Management and Investment Strategies at the University of Hawaii for five years and is on KHON’s Morning News as a business/financial analysis twice weekly. Over the past nine years, Havre has been active in South America doing business development work for some of his portfolio companies, mentoring entrepreneurs and advising investors.

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1 comments
Randy Havre
Randy Havre

March 27,Carl Icahn showed some class on CNBC stating that he had called the company and congratulated them on their success. "You can't win em all"