A Raider, Is a Raider, Is a Raider

Focus: STOCKS

Carl Icahn has been in the business of upsetting the status quo for a long time, and he's back at it again in the railroad sector, notes William Patalon III of Money Morning.

Back in the 1980s, corporate raider Carl Icahn was routinely vilified by CEOs and worshipped (most of the time) by investors. The mere mention of his name in association with a specific company was usually good for a 15% or 20% pop in that company's stock price.

Thirty years have passed, and Icahn is now 76 years old. And he's apparently no longer a "corporate raider." In the careful, politically correct climate of the present, Icahn is now referred to as an "activist investor."

Call him what you want...but the bottom line is that the Icahn name still has a King Midas-like cachet. And what happened last week proves it.

Indeed, shares of American Railcar Industries (ARII) soared as much as 19% last Tuesday, after investors speculated Icahn might be crafting a merger plan that involves the railroad-car manufacturer.

As its name implies, the St. Charles, Missouri-based American Railcar designs, builds, and refurbishes railcars and provides related services. This brawny industrial business typically ebbs and flows in tandem with the broader economy. But the oil-and-gas exploration boom that's gripping parts of America right now—and the new fracking process that demands tons and tons of sand—has transformed railroad cars into prized assets.

That big boost in demand for American Railcar's sand-transporting "hopper" cars was a key reason we recommended the company's stock 12 months ago.