November 13, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Greenbrier Companies (NYSE: GBX ) soared 17% today after activist investor Carl Icahn reported a 9.99% stake in the freight car equipment manufacturer.
So what: Greenbrier's backlog and deliveries have been hit particularly hard by the economic downturn, but the investment from Icahn -- best known for buying up a large stake in a company and then agitating for change -- provides a possible catalyst for a share-price turnaround. The move also suggests that Icahn may retry his failed 2008 attempt to merge Greenbrier with another one of his major holdings, American Railcar Industries (Nasdaq: ARII ) , sending the shares of American Railcar up 14% today, as well.
Now what: Expect Greenbrier shares to remain volatile as the story plays itself out. "The Reporting Persons acquired the Shares with the belief that the Shares were undervalued," Icahn's filing said. "The Reporting Persons informed the Issuer of this filing and intend to have further discussions possibly relating to strategic opportunities." Fools know never to buy a stock based on activist involvement alone, but Greenbrier's still-cheapish valuation and improving orders of late might provide enough downside protection to make the bet a safe one.
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