Market Overview

How To Invest Like Carl Icahn

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How To Invest Like Carl Icahn

Carl Icahn is one of the most noted activist investors of the last 50 years.

About Carl Icahn: Carl Icahn runs the Icahn Enterprises (NASDAQ: IEP) conglomerate, which is a holding company owning assets in the railway, casino, auto parts and mining industries.

Icahn is the 39th richest person in the world with a net worth of $14.6 billion, according to Forbes.

Icahn’s investment strategy has produced strong returns for him and his holding company using several key strategies.

Investment Strategy: Icahn is an activist investor who accumulates large positions in companies he believes are undervalued. Icahn looks at companies that are trading with poor price-to-earnings ratios or book values that exceed market values.

“My investment philosophy, generally, with exceptions, is to buy something when no one wants it,” Icahn said.

Icahn normally becomes the largest shareholder of the company so he can push through changes.

Activist Investor Strategy: Among the moves that Icahn makes in the companies he takes stakes in are hostile takeovers, pushing for mergers and pushing to spin off or sell assets.

Icahn pushes for changes to the board of directors through his large ownership positions. He normally nominates a whole new slate of directors and then pushes for more changes.

Icahn is considered a short-term trader, as he seeks to unlock shareholder value and then sell his position when he has realized a gain.

Current Activist Trade: Icahn is the largest shareholder of Xerox Holdings (NYSE: XRX) and is pushing for the company to merge with HP Inc (NYSE: HPQ). He also owns a stake in HP.

Related Link: Q3 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolios

Illustration by Joel Stralnic

 

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