Love him or hate him, Carl Icahn is on a roll. As an activist investor, sentiment surrounding the 77 year old self-made billionaire and Icahn Enterprises (NYSE:IEP) founder is often mixed. He is an outspoken critic of anybody he thinks is running a company poorly, and is not afraid to shake people out of board positions.
Icahn recently stole the media spotlight because of Herbalife (NYSE:HLF), a nutrient- and healthcare-supply company that was the centerpiece of a fairly dramatic showdown between him and fellow hedge-fund manager Bill Ackman. Ackman, who manages $11 billion at Pershing Square, publicly disclosed a $1 billion short position in Herbalife in December of 2012. Icahn came out swinging in defense of Herbalife and criticized Ackman for trying to capitalize on the sensationalist nature of his announcement.
That said, 2013 has been kind to Icahn. The story isn’t over yet, but Icahn looks like something of a white knight as far as Herbalife is concerned. He took a 13.6 percent stake in the company and designated two board members, and the stock is up 15.25 percent this year to date.
Bloomberg’s billionaire index shows that Icahn is worth $19 billion dollars, up 14.8 percent this year to date. Between 2004 and 2011, his hedge fund returned an annualized 14 percent, and there’s plenty of evidence to suggest that the trend will continue…
CVR Energy (NYSE:CVI)
At $3.4 billion, or 26.9 percent of Icahn Capital’s portfolio, CVR Energy is the hedge fund’s second-largest holding. Icahn’s stake in the lightly-traded oil and gas refining company compares against the company’s market cap of $4.33 billion.
However, the stock is up just 4.53 percent this year to date, making it one of the weaker performer’s in the hedge-fund’s portfolio. That said, slow growth recently — more than 10 percent lost in the last month — is overshadowed by 90 percent year-over-year gains.
Chesapeake Energy (NYSE:CHK)
Icahn Capital’s portfolio is fairly heavily invested in basic materials. The hedge fund increased its stake in Chesapeake Energy by 19 percent to about $1 billion in the fourth quarter of 2012 and the independent oil and gas company constitutes 7.71 percent of the portfolio.
Chesapeake stock is up 22.5 percent this year to date. The company is in the throes of change as CEO and founder Aubrey McClendon officially stepped down on April 1. Under his leadership, Chesapeake grew to become the second-largest gas producer in the United States. McClendon identified the tremendous value of shale gas early, outbidding competitors for fields and drilling aggressively.
However, his aggressiveness led to his resignation. After the shale gas boom entered second gear and production skyrocketed, prices fell. Alongside them, so did the value of Chesapeake’s assets and equity. Icahn’s entry into the picture isn’t very difficult to imagine from here.
Icahn’s involvement in any company generates a frenzy of conversation, but his decision to take a position in Netflix was exceptional. He announced a 5.5 million share stake in the company at the end of the fourth quarter and is the second-largest shareholder. Since the beginning of 2013, Netflix’s stock price has increased 98 percent.
The surge in Netflix’s stock value is more due to the company competently adding subscribers and content to its core video-streaming service, and not because it pursued the strategy that Icahn wanted it to. When he took his nearly 10 percent stake in the company, Icahn expressed his interest in persuading the company to sell itself. In response to his efforts, the company adopted a poison pill to prevent a takeover.
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