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Carl Icahn Says Allergan Is Undervalued, Takes a Large Position

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Carl Icahn has acquires a large position in Allergan

There’s been a lot of news around Carl Icahn’s recent large recent position in Allergan (AGN). Icahn’s May 31, 2016, disclosure of his “large position” in Allergan on his website sent the stock up by over 2% during morning trading that day. Icahn notes that as an investor, he prefers to own companies with great CEOs. For Icahn, “Allergen is one of them.”

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Allergan, which has been trending southward for most part of 2016, seemed to get a lift from Icahn in May. Although the stock is down by 26% YTD, as of June 21, it is up by 2.7% over the past month.

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Why Icahn likes Allergan

According to what Allergan’s CEO, Brent Saunders, told CNBC during a Squawk on the Street interview, Icahn doesn’t want Allergan to do anything differently. He has confidence in the company’s strategy and looks forward to being a long-term investor.

“Allergan has a great pipeline,” said Icahn. For Icahn, this healthcare sector (XLV) firm’s stock appears to be undervalued.

Icahn noted that he is “very supportive” of Saunders. Icahn’s website states, “we have every confidence in Brent’s ability to enhance value for all Allergan shareholders.”

Icahn’s view on the Allergan–Pfizer deal

About five months ago, Icahn was critical of the proposed $160 billion merger deal with Ireland-based Allergan (AGN) by US-based Pfizer (PFE). The deal was “a travesty,” according to Icahn, and he saw it as a move being used by Pfizer to lower its tax bill by moving abroad.

About three months ago, the deal was blocked by the US (SPY) (IVV) Treasury Department by the imposition of new tax inversion rules.

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