The role that large hedge fund managers play in the stock market has taken a drastic shift in recent years. We are in a new world where hedge fund managers assume massive positions in companies, and then work hard to get the rest of the market to agree with their position.
This year no one has been as vocal in his views as Carl Icahn. It started with Herbalife (HLF). After another manager, Pershing Square's Bill Ackman, shorted the stock and presented his view that the company was a pyramid scheme, the stock tanked. A few weeks later Icahn stepped in and took a large stake in the company saying Ackman was wrong.
Earlier this month, Icahn criticized the board of Transocean Offshore (RIG), a company in which he recently boosted his ownership stake from 1.6% to 5.6%. He believes the company's dividend is too low, and has announced plans to nominate three new members to the board. Icahn is pushing hard for a special $4.00 dividend to be paid to all shareholders.
While his demand for a $4 dividend from RIG may sound extreme, it is nothing compared to the $9 dividend that he wants Dell (DELL) to pay out.
It is no secret that Dell has been struggling in a world of slowing PC sales. The company's founder, Michael Dell, wants to take it private. Mr. Dell has plans for a $24 billion buyout, but Icahn has publicly said that the $13.65 per share offer is too low.