Shares of Caesars Entertainment surged on Thursday following the revelation that Carl Icahn’s Icahn Enterprises had acquired 2.44 million shares in the casino operator. This information came to light through a Form 13F filing with the Securities and Exchange Commission (SEC), which mandates that large money managers disclose their equity stakes 45 days after the end of the previous quarter. This means that Icahn’s stake, which precisely amounts to 2,440,109 shares, might have fluctuated since the end of June.
Back in May, Icahn had already hinted at his significant interest in Caesars, known for operating the Harrah’s brand. With Caesars Entertainment boasting 215.44 million shares outstanding, Icahn’s stake translates to roughly 1.1% of the company, making him a notable investor, albeit not within the top 10 shareholders. Vanguard and BlackRock currently lead as the two largest holders with a combined ownership of 18.67%.
Despite his sizable investment, Icahn disclosed to CNBC that he does not plan to engage in activist efforts at Caesars, implying his role as a passive investor aiming for the stock’s value appreciation. Historically, Icahn’s interaction with Caesars is significant; in 2019, his investment in “old Caesars” played a crucial role in the $17.3 billion merger with Eldorado Resorts, forming the modern iteration of the company. The current management team, including CEO Tom Reeg, has earned Icahn’s respect, potentially motivating his renewed investment.
Market participants have reacted positively to Icahn’s reinvestment. Notably, some of Caesars’ best recent intraday stock performances occurred on the day of Icahn’s investment announcement and again when the size of his stake was disclosed.
However, the timing of Icahn’s latest purchase suggests that Icahn Enterprises might currently be facing a loss, as the stock experienced declines in April and May. Although it has rebounded since late May, it still has some way to go before reaching the highs of the second quarter.
There are several possible catalysts that could lift Caesars’ stock value. These include increased profitability in its digital division, progress in reducing its substantial debt, potential interest rate cuts by the Federal Reserve, and asset sales. Reeg has indicated that the company is open to selling off non-core or underperforming casinos, which could further bolster the company’s financial health and enhance shareholder value.
