Talisman Energy – Carl Icahn Takes a Position

Mr. Icahn tweeted this bit of news out last night.


Tweet by Carl Icahn


Another Canadian company comes under attack from a US hedge fund manager.  (I’m thinking of Bill Ackman and CP Railroad as the other.)  What should we make of this?

Immediately I go to our Model Price Facebook app and punch in TLM – Talisman’s stock symbol – and look at our model price chart.

Here is the long-term (monthly price bars) of Talisman Energy going back to 2006.

Talisman Energy Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

Talisman Energy Inc. with weekly price bars, EBV Lines (colored lines) and model price (dashed line)

For those interested, a daily updated chart of TLM subsequent to this post will be maintained on Facebook, here.

Observables From our Long-Term Model Price Chart

1.  Our calculation of model price has been falling since 2011.  Earnings over the last few years have been drying up leaving a significant gap between our calculation of model price and TLM’s share price.

2.  Back in 2006, TLM traded at EBV+5.  EBV+5 – comparing apples to apples – as of last night’s computer run is $35.72.  That’s a stunning 173% from last night close of $13.07 CDN.  (I’m not saying TLM is going to EBV+5, I’m justing observing where TLM has traded in the past.)

3.  For the last 8 years the stock has traded in a range, with performance being lackluster for shareholders.

If any company is in need of a shakeup Talisman should be it.  Mr. Icahn investment should be welcomed news for long suffering shareholders and hopefully a catalyst for a higher share price sometime in the future.  Maybe the Calgary oil culture has gotten a little to cozy for their own good.  An outside agent, like Mr. Icahn, possibly can shake up management and the board of the company giving shareholders and Mr. Icahn something to cheer about.

I know I will be keeping an eye on this situation and monitoring our model price math hopefully with a happy ending like most situations Mr. Icahn participates in.

P.S. My last investment with Mr. Icahn’s participation was Netflix and that investment had a  very happy ending indeed.  See my blog on Mr. Icahn and Netflix here.

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