Carl Icahn Increases Stake in Lions Gate: Will He Agitate for Change?

Lions Gate (LGF) stock has been trading around a 52-week low during the recent financial upheaval, presenting an attractive opportunity to Carl Icahn. The activist shareholder upped his stake in this company to 9.17 percent "in the belief that the shares were undervalued" according to a SEC filing late Monday.

Lions Gate told CNBC that Icahn has been a shareholder for three years, holding a four percent stake until this recent purchase. Lions Gate says it's pleased about what Icahn's acquisition says in the context of Icahn's history of buying undervalued assets. And Wall Street seems pleased as well, with a Jefferies & Co. analyst upgrading shares of LGF to "buy" on Tuesday.

Is the company concerned Icahn will agitate for change? The studio's spokesperson said, "The company maintains a very good relationship with Mr. Icahn and continues to have an open dialogue with him and other major shareholders." In fact, in contrast to Icahn's other conquests -- Time Warner (TWX) and Motorola (MOT) -- Lions Gate seems incredibly stable, the company's CEO just extended through 2014 and it recently closed a $350 million credit facility with JP Morgan. And what's notable in this market, the company has no corporate bank debt.

I recently spoke with Lions Gate vice chairman Michael Burns, who is optimistic about the movie industry holding up despite the economic downturn. Lions Gate has a couple of major factors working in its favor. The company is not exposed to the advertising industry -- even its TV shows air on cable. And it has two fail safe franchises that manage to perform admirably at the box office despite being very inexpensive to produce: Tyler Perry's films and the SAW series. With a new deal to churn out even more Tyler Perry movies, and lower overhead than the major studios owned by media conglomerates, Icahn's interest makes sense. Now the movie industry just needs to keep people in their seats despite the economic downturn.