Even at 88 years old, Carl Icahn is not yet out or showing signs of slowing down in the lucrative yet murky investment world. After over 40 years of making waves on Wall Street, the billionaire investor continues to rattle cages at various companies through direct investments and activist campaigns.
Born in 1936 as the only child of a teacher mother and a lawyer father, he graduated from Princeton University with a degree in Philosophy. However, he dropped out of New York University while pursuing a medical degree. His career on Wall Street began in 1963 at Dreyfus, where he was a stockbroker, after which he became a trader in stock options at Patrick and Company.
It was in 1968 when Icahn made a bold move, borrowing $400,000 from his uncle and purchasing a seat on the New York Stock Exchange for his new brokerage company, Icahn and Company. Initially, Icahn was focused on risk arbitrage, whereby he would buy a stock in anticipation of a takeover to generate returns. Here, Icahn started polishing his activist skills by agitating and pushing for takeovers to profit from them.
His first foray into the activist world came in 1978 when he made a large investment in kitchen stove maker Tappan Company and used his holdings to push for a seat on the board. With his influence on the board, Icahn pushed for the sale of the company to AB Electrolux, for which he made $3 million.
In the summer of 1978, Icahn met Liba Trejbal, who would become the mother of his two children, Brett Icahn and Michelle Celia Icahn Nevin. The two would divorce in 1999 in a fierce standoff, with Icahn marrying his long-time assistant, Gail Golden, the same year.
Icahn rose to prominence in the 1980s' when he was called a corporate raider, a title he held until he became an activist investor. The legendary investor invested in Hammermill Paper, Simplicity Patterns, Marshall Fields, Dan River, and ACF Industries and agitated for management changes and strategic changes to unlock value.
In the 1990s, Icahn invested in American Real Estate Partners and converted the company into his investment vehicle, which transitioned into Icahn Enterprises. He founded Icahn Partners in 2004, becoming one of Wall Street's most feared activist hedge funds. The hedge fund primarily invests in companies that Icahn believes will appreciate in value on corporate and strategic changes. Consequently, the legendary investor used the hedge fund to initiate positions in companies and then pressure management to pursue strategic alternatives to unlock shareholder value.
By the end of the 20th century, Icahn had risen to the realms to become one of the most feared and tracked activist investors.
At the start of the 21st century, Icahn set sights on entertainment-related ventures, investing in Hollywood video chains Time Warner and Netflix. When Netflix was trading near its 52-week low, Icahn bought 10% of the company, sending the shares soaring 14% in what has come to be known as Icahn Lift. As he exited his investments in the streaming giant in 2015, his investment had ballooned from $321 million to more than $1.9 billion.
He has also launched some of the most aggressive campaigns to unlock value in companies he believes are trading below their fair value. In 2013, the billionaire investor came out on top in the world of activism following successful campaigns against Apple and Dell. He ran 14 public activist campaigns after making eight new investments with an average size of $1.2 billion.
Apple will always remain one of Icahn's top activist campaigns as he convinced the company to increase its stock buybacks in 2015. After a successful meeting with Tim Cook, Apple agreed to a $150 billion buyback proposal.
While Icahn has always been at the forefront of putting pressure on company boards as a corporate raider and activist shareholder, in the recent past, he has tasted his own medicine. His Publicly traded company Icahn Enterprises was in the limelight in 2023 as short seller Hindenburg Research targeted it over claims the company was overvalued and operating a Ponzi-like economic scheme.
The Enduring Losses Incurred by Carl Icahn's 10 Activist Targets over the Long Term
Carl Icahn of Icahn Capital
The short seller swiped at the Icahn Company, trading well above its net asset value compared to a similar financial services company run by William Ackman and Daniel S Loeb. In its accusations, Hindenburg Saud Icahn Enterprises was taking money from new investors to pay out dividends to old investors, an unsustainable model.
Amid the Icahn Enterprise controversy, Icahn remains one of the most revered investors on Wall Street. Investors always track his moves and investments in anticipation that the legendary investor would uncover shareholder value through activist campaigns. It's from the massive following and trust that the Icahn Lift acronym came into being, depicting the expected value investors expect to unlock when playing by the legendary investor playbook.
With a net worth of about $5.6 billion, Icahn's investment philosophy focuses on investing in stocks that people ignore. He also identifies stocks with low price-to-earnings ratios and book values and tries to unlock value by engaging the management. By engaging the manager, he also calls for splitting up the business or returning value through buybacks and dividends.
Our Methodology
While Icahn has made a name for himself by running some of the most successful activist campaigns, he is not immune to failure. Some of his campaigns have struggled to bear significant returns, resulting in substantial losses for the activist investor. After analyzing 13D filings, we have settled on losses incurred by Carl Icahn's top activist targets. The stocks are ranked in ascending order based on the losses incurred. Hedge funds' top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
The Enduring Losses Incurred by Carl Icahn's Activist Targets over the Long Term
10. Talisman Energy
Stock Loss: 31.98%
S&P 500 Return: 26.25%
Talisman Energy was a Canadian petroleum company that existed between 1993 and 2015. In 2013, it was the subject of an activist campaign engineered by Icahn, who had bought 61 million shares in the company.
Backed by significant holdings, Icahn pushed the board to consider selling some of the company's assets and restructuring to unlock hidden value. The legendary investor succeeded in engineering a sale of the company in an $8.3 billion deal.
Nevertheless, Icahn was believed to lose 31.98% on the stock even as the S&P 500 was up by 26.25% over the same period.
Headquartered in Laval, Canada, Bausch Health Companies (NYSE:BHC) is a diversified specialty pharmaceutical and medical device company. It develops, manufactures, and markets gastroenterology, hepatology, neurology, and dermatology products.
Bausch Health Companies (NYSE:BHC) was one of Carl Icahn's top activist targets when he acquired stakes in the fourth quarter of 2020 when the stock traded at $18.65 a share. With the investment, the legendary investor pushed for seats on the board as he sought to unlock value. The investment has turned sour, as Bausch Health Companies (NYSE:BHC) has shed about 48.73% in market value, during which the S&P 500 has gained more than 20%.
Headquartered in Norwalk, Connecticut, Xerox Holdings Corporation (NASDAQ:XRX) is a technology company that integrates hardware services and software for enterprises. Its print and other segment designs, develops, and sells document systems, solutions, services, and IT and software products and services. The FITTLE segment offers financing solutions.
Icahn first acquired stakes in Xerox Holdings Corporation (NASDAQ:XRX) in 2015 and pushed for management changes as he sought to be in the driving seat in reinvigorating the company's fortune. He engineered the exit of several high-profile executives, including CEO Jeff Jacobson.
The activist campaign turned out differently than expected. When Icahn sold all his holdings in the third quarter of 2023, Xerox Holdings Corporation (NASDAQ:XRX) had lost close to 54% in market value.
Texas-based CVR Energy Inc. (NYSE:CVR) is involved in the US petroleum refining and nitrogen fertilizer business. In 2013, Icahn set sights on the company, having accrued a 14.54% stake, and started pushing for the sale of CVR Energy Inc. (NYSE:CVR) as part of an activist campaign aimed at unlocking value.
The legendary investor sought to acquire and take CVR Energy Inc. (NYSE:CVR) private, having tendered a $30 a-share offer. The takeover bid fell, and Icahn was forced to pay $78.5 million for allegedly manipulating the company's market value.
When Icahn exited all his holdings, CVR Energy Inc. (NYSE:CVR) had shed nearly 59.14% in value, underperforming the S&P 500, which had gained 75%.
Newell Brands Inc. (NASDAQ:NWL) is one of Carl Icahn's top activist targets and the oldest holdings offering exposure in the consumer defensive sector. The company designs, manufactures, and distributes consumer and commercial products. Newell Brands Inc. (NASDAQ:NWL) provides commercial cleaning and maintenance solutions under the Rubbermaid brand.
Icahn bought and sold shares in Newell Brands Inc. (NASDAQ:NWL) in 2018 when he amassed a 9.3% stake, giving him the power to appoint some directors to the board. With four directors on the board, Icahn succeeded in getting the company to agree to a $257 million stock repurchase in 2022.
Nevertheless, Newell Brands Inc. (NASDAQ:NWL) has shed nearly 75% in the market since Icahn invested and started pushing for management changes. The S&P 500 has gained more than 70% over the same period.