Things are getting better for Nuance Communications, Inc. (NUAN). Carl Icahn, now estimated to be worth $20 billion by people who do the calculations, has acquired 9.3% of the company. There have also been some favorable stories from within, just not as felicitous.
There are plenty of articles on Seeking Alpha that discuss Nuance. If you care to review my other one, written after the recent earnings disappointment, it is accessible here.
Here is a list of what now may be other key considerations:
(2) A 9.3% NUAN stake would be worth about $550 million, and about an average size holding for Carl Icahn personally. Various funds have also disclose shared voting power, per SEC documents (including three Master Funds, an Onshore Fund, an Offshore Fund, a Partners Fund, a Capital Fund, two Enterprise entities, and perhaps IPH GP is controlled by him too). If Nuance's next Report reveals deterioration, despite what could be improving results from the Microsoft partnership, the implications could manifest. There might already be enough power to try and place someone--such as Icahn Enterprises (IEP) President, Daniel Ninivaggi--on the Board. If not, votes are probably continuing to be amassed.
(3) Until something new happens, I do not see the stock price going below $20. Too many shares have been soaked up for that (including stakes taken by other funds).
(4) Obviously Icahn's presence is more helpful to Nuance shareholders than CFO Thomas Beaudoin's insider sales. There is no indication that the former party is done buying. The company's finances have been a concern under the latter.
(5) NUAN remains compelling. A stream of press releases announces exciting new technologies and products, most recently Voice Ads.
It must be a thrill to take control of a company. Terms like "Poison pill" and "Shark repellent" are applicable to those who attempt to do so. A method that could perhaps lead to having the resources for such a presence in corporate America is to take profits at times like now, which I have done.
Icahn is one of my favorites. I remember when he could not afford Clorox (CLX). Some others are not as enthusiastic about him. Most of us can buy and sell without causing a stock's price to move 5.7% though, which is what happened on April 2, 2013.
IEP itself appears worthy of consideration for those who invest in limited partnerships. It offers distributions, and because the CEO has said he intends to be paid in additional depositary units, there may be another effect that almost has similarities to a regularly executed buyback program. He owns over 97 million shares, out of 108 million outstanding. There has recently been insider buying, followed by $200 million in dilution. At the current unit price of $55.14, and based on a $1 per share February distribution increase, the yield is 7.25%! An obvious consideration is that virtually everything is in one set of hands.
Needing to look out for myself, I am hoping to repurchase shares of NUAN when the effect of the buy-in publicity subsides. Even though it is tangibly helpful to investors, a different party may be taking control of the company in the near future and most of us do not have his tactics to utilize. No one is clearly better versed at this type of thing than Carl Icahn.
Meanwhile, an intraday low below $21 may present another opportunity to be a shareholder.