Icahn may be buying into HP

No one can say for sure if corporate raider Carl Icahn is gunning for Hewlett-Packard (HPQ). That's the story making the rounds on Twitter and elsewhere.

But the fact is Icahn hasn't filed anything with the Securities and Exchange Commission. He doesn't have to until he owns 5% of the stock. And the lack of disclosure has cooled off the speculation.

The stock was up 32 cents to $14.13 by 2:30 p.m. ET Monday after topping out at $14.59.

But this much we can say. Someone has been buying HP. It is up nearly 25% since bottoming on an intraday basis at $11.35 on Nov. 20, the day it disclosed it was writing off $8.8 billion of its $11 billion investment in British software company Autonomy.

HP officials say they were misled about the true state of Autonomy's finances. Former Autonomy executives dispute the charge, and the dispute could end up in a courtroom near you.
Meanwhile, the volume in HP is up, too. By 2:15 p.m. Monday, 37 million shares had changed hands. The daily average since July 2 has been 26 million shares. That includes Oct. 3, when 141 million shares were traded, and Nov. 20, when volume hit 154 million shares.

It could be Icahn, and lots of people on Wall Street know that just intimating Icahn is up to something can set off buying hysteria in a stock. He has taken a big stake in Netflix (NFLX). He made an unsuccessful run at truck-maker Oshkosh (OSK). Shares of both jumped when he started to move.

HP, meanwhile, is vulnerable. It has written off more than $17 billion in investments in two companies, Electronic Data Systems and Autonomy, this year alone. The stock is down 45% for the year and nearly 81% since its closing peak of $74.06 in April 2000. That's more than 12 years ago.

Still, it would take a little doing to buy 5% of HP, which translates into 98.5 million shares. It would require an investment of $1.43 billion. Icahn could borrow some of the money to buy the shares. But, still, it means a lot cash and a game plan on how to exit the trade. It's not clear what the game plan would be. He doesn't like being an owner-operator.

But if it isn't Icahn, who's buying and why? The short answer may be everyone is buying HP because they sense that the electronics giant may get broken up. Reuters Breakingviews thinks the company is worth twice its market capitalization -- or about $52 billion or so -- if sold off in pieces. Here's how Reuters' Rob Cox and Robert Cyran break it down:

• Computer business: $9 billion
• Printers: $9 billion
• Enterprise and servers: $22 billion.
• Services: $17 billion
• Software: $11 billion.

Net of debt, the company may be worth $52 billion. We'll see.

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