Icahn Reveals Caesars Stake Is 2.44 Million Shares

Posted on: August 15, 2024, 03:32h. 

Last updated on: August 15, 2024, 03:33h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Caesars Entertainment (NASDAQ: CZR) rallied Thursday after Carl Icahn’s Icahn Enterprises (NASDAQ: IEP) revealed its recently initiated stake in the casino operator is 2.44 million shares.

Carl Icahn Caesars Entertainment board
Investor Carl Icahn. His new stake in Caesars is 2.44 million shares, according to an SEC filing. (Image: Getty)

To be precise, Icahn owns 2,440,109 shares of the gaming stock, according to a Form 13F filing with the Securities and Exchange Commission (SEC). Large money managers and other professional investors are required to publicly disclose equity stakes 45 days after the end of the prior quarter so it’s possible that Icahn’s Caesars position has increased or decreased since the end of June.

At the end of May, Icahn told financial media outlets that he had amassed a “sizable” position in the Harrah’s operator. “Sizable” is in the eye of the beholder. Caesars has 215.44 million shares outstanding, according to Finviz data. That means Icahn owns about 1.1% of the gaming company’s shares outstanding.

On a percentage basis, that makes Icahn one of the biggest Caesars investors, though still outside the top 10. The two largest owners of the shares are Vanguard and BlackRock, which combine to own 18.67% of the stock.

Icahn Says He’s Not Considering Activism with Caesars

When he revealed his Caesars investment to CNBC in late May, Ichan said he’s not considering activist action with the gaming company, signaling he’s a passive investor and like all the others in that camp, he’s hoping the gaming stock increases in value.

Still, his history with Caesars cannot be ignored as he’s one of the biggest reasons the gaming exists in its current form. In 2019, Icahn Enterprises took a roughly 10% stake in “old Caesars,” positioning him to later become the engineer of the $17.3 billion acquisition by Eldorado Resorts — the transaction that created “new Caesars.” Eldorado management, including CEO Tom Reeg, now run  Caesars. Icahn reportedly has ample respect for Caesars ‘current management team, including Reeg, and that may have been some of his motivation for investing in the company a second time.

One thing is clear: market participants view Icahn’s renewed ownership of Caesars stock favorably. Two of the stock’s best intraday performances in recent months were the day the financier confirmed the stake and today when the size of the investment was made clear.

On that note, it’s likely that unless Icahn Enterprises bought Caesars just days prior to May 31, it is holding a position that’s in the red. The stock slumped in April and May and while it’s rebounded off the late May lows, it still has work to do to reclaim the second-quarter highs.

Catalysts that Could Spark Caesars Stock

While it’s likely Caesars currently represents a loss for Icahn Enterprises, there are catalysts that could emerge to galvanize the shares.

Those include increasing profitability in the operator’s digital division, ongoing progress in reducing one of the industry’s largest debt burdens, the Federal Reserve lowering interest rates, and potential asset sales.

Reeg has been consistent in his view that the company would consider divesting casinos it views as “non-core” and those that aren’t generating adequate cash flow.