This article is part of a series that provides an ongoing analysis of the changes made to Carl Icahn’s 13F portfolio on a quarterly basis. It is based on Icahn’s regulatory 13F Form filed on 08/14/2017. Please visit our Tracking Carl Icahn’s Portfolio series to get an idea of his investment philosophy and our previous update for the fund’s moves during Q1 2017.
This quarter, Icahn’s 13F portfolio value decreased ~2% from $19.94B to $19.55B. The number of holdings remained steady at 16. The portfolio is very concentrated, with the largest five positions accounting for ~78% of the entire holdings: Icahn Enterprises (NYSE:IEP), American International Group (NYSE:AIG), Herbalife (NYSE:HLF), Cheniere Energy (NYSEMKT:LNG), and CVR Energy (NYSE:CVI).
Carl Icahn is best known for building sizable stakes in businesses and then pushing for changes to increase shareholder value. To learn more about his investing style and philosophy, check out “King Icahn: The Biography of a Renegade Capitalist”.
Note: Icahn’s 13F filing is a consolidated report, and so should not be viewed as a single portfolio. Specifically, Icahn Enterprises holds several of the businesses, and the entities in turn hold Icahn Enterprises. For an idea of the business structure, check out the Icahn Enterprises Investor Presentation (Slide 5).
American International Group: AIG was a minutely small 0.28% portfolio stake as of Q3 2015. It was increased to a top-three position the following quarter at prices between $57 and $64. H1 2016 also saw a minor increase. The stock currently trades at $62.97. The stake is now at 13.75% of the portfolio. It is an activist position, and Icahn’s ownership interest is at ~4%. There was a ~6% trimming this quarter. For investors attempting to follow Icahn, AIG is a good option to consider for further research.
PayPal Holdings (NASDAQ:PYPL): PYPL is a 2.74% of the 13F portfolio position. It was established as a result of the spin-off of PayPal Holdings from eBay Inc. (NASDAQ:EBAY) that closed in July 2015. Icahn sold the EBAY stake soon after but held on to the PYPL position. Last year saw selling in PYPL as well: Q2 and Q3 2016 had seen a combined ~30% reduction at prices between $34 and $40.50. There was another two-thirds reduction this quarter at prices between $42.50 and $54.50. The stock currently trades at $60.29.
Icahn Enterprises: IEP is a very long-term position that has seen consistent buying over the years. The position size saw increases from ~98M shares to ~102M shares in 2013, to ~109M shares in 2014, to ~117M shares in 2015, to ~130M shares in 2016, and to ~149M shares currently. Last quarter had seen a ~10M share increase at a cost basis of $53.71, and that was followed with a ~9M share increase this quarter at a cost basis of ~$49. The stock currently trades at $50.87.
Note: Icahn controls 90.6% of the business.
Freeport-McMoRan Inc. (NYSE:FCX): FCX is a fairly large 5.63% of the portfolio stake established in Q3 2015 at prices between $7.50 and $18.50. Q4 2016 saw a ~12% trimming at prices between $9.50 and $16.50. The stock currently trades at $14.77. There was a marginal increase this quarter at $11.41 per share.
Note: Icahn controls ~6.3% of the business.
Herbalife : HLF is a large (top-three) 8.34% of the US long portfolio stake first purchased in Q1 2013 in the high $30s price range. Q3 2016 saw a ~15% increase at prices between $58 and $68, and that was followed with a similar increase the following quarter at prices between $48 and $64. The stock currently trades at $63.13. Last quarter saw a marginal ~2% increase at an average cost basis of $51.35. The total outlay so far is ~$950M with an overall cost basis of ~$42.
Note: Icahn controls ~25% of the business.
Cheniere Energy: LNG is a large (top-five) 8.14% portfolio position. The bulk of it was purchased in Q3 2015 at prices between $47.50 and $70.50. Q4 2015 saw a ~15% increase at prices between $36 and $54. The stock currently trades at $42.04.
Note: Icahn’s ownership stake in the business is ~14%.
CVR Energy Inc.: CVI is a fairly large ~7% of the US long portfolio position first purchased in Q4 2011. The bulk of the current position (71.2M shares: 82% of the whole business) was purchased through a $30 per share tender offer in H1 2012. The stock currently trades at $17.81.
Note 1: Two MLPs were carved out since the 2012 tender: CVR Refining (NYSE:CVRR), the refining portion, and CVR Partners (NYSE:UAN), the nitrogen fertilizer unit. CVR Energy owns 71% of CVR Refining and 53% of CVR Partners. In August 2015, CVR Partners agreed to merge with Rentech Nitrogen Partners.
Note 2: Icahn disclosed that CVI stock including dividends was up ~62% as of EOY2016 from the tender offer at $30. CVI stock was trading at $25.39 at the time. So, his adjusted cost basis is $15.67.
Xerox Corporation (NYSE:XRX): XRX is a 3.64% of the portfolio position established in Q4 2015 at prices between $24 and $32. The stock is now at $32.41. For investors attempting to follow Icahn, XRX is a good option to consider for further research.
Note 1: Icahn controls ~10% of the business.
Note 2: XRX is an activist stake, and Icahn got three board seats last year. Xerox spun off Conduent and that transaction closed in January, and that was followed with a 1:4 stock split in June. The prices quoted above are adjusted for these two transactions.
American Railcar Industries (NASDAQ:ARII): ARII is a long-term 2.45% of the portfolio position held steady this quarter. Icahn owns ~62% of ARII.
Navistar International (NYSE:NAV): NAV is a ~2% of the US long portfolio long-term position. Among the last significant activity, there was a ~22% increase in Q2 and Q3 2014 at prices between $29 and $38. The stock currently trades at $30.05. There was a very minor ~3% increase last quarter at ~$25.70.
Note: Icahn controls ~17% of the business.
Hertz Global Holdings (NYSE:HTZ): HTZ is a 1.72% of the US long portfolio position. It was established in Q3 2014 at a cost basis of ~$105. In Q4 2014, the stake was increased by just over one-third at prices between $72 and $95. Q4 2015 saw another ~23% increase at prices between $51 and $74. Q4 2016 saw another ~125% increase at prices between $21 and $40. The stock currently trades at $18.89. For investors attempting to follow Icahn, HTZ is a good option to consider for further research.
Note 1: Icahn controls ~35% of the business. The total outlay so far is ~$1.85B, and the market value is ~$553M.
Note 2: The prices quoted above are adjusted for the Herc Holdings spin-off in Q2 2016.
Conduent Inc. (NYSE:CNDT): The stake came about as a result of Conduent’s spin-off from Xerox that closed in January this year. The terms of the spin-off called for Xerox shareholders to receive Conduent shares in the ratio 1:5. The current CNDT stake is consistent with this ratio: Icahn owned 99M shares of Xerox, for which he received 19.8M shares of Conduent. CNDT started trading at ~$15 and currently goes for $17.11.
Welbilt Inc. (NYSE:WBT) (previously Manitowoc Food Service (MFS)): The very small ~1% of the portfolio WBT stake was established as a result of the spin-off from Manitowoc. The spin-off terms called for one share of WBT for each share of MTW held. Icahn held 10.58M shares of MTW, for which he received the same number of WBT shares. Regular-way trading started in early March with WBT at $13.41. It currently trades at $19.89, compared to Icahn’s cost basis of ~$15.
Note: Icahn controls ~8% of the business.
Herc Holdings (NYSE:HRI): HRI is a very small 0.87% of the portfolio position established in Q2 2016 as a result of the spin-off of Herc Holdings from Hertz Global Holdings. Following the transaction, there was a marginal increase in the position. The stock started trading at ~$33 and currently goes for $38.03.
Note: Regulatory filings this week show Icahn owns ~4.5M shares of HRI. This is compared to 4.3M shares in the 13F. The increase happened at ~$38.50 per share. Icahn controls 15.9% of the business.
Manitowoc Company (NYSE:MTW): MTW is a very small 0.33% of the portfolio activist stake. It was established in Q4 2014 at prices between $3.50 and $5.50 and increased by ~136% in Q1 2015 at prices between $4 and $5.50. The stock currently trades at $7.95.
Note: The prices quoted above are adjusted for the Welbilt spin-off.
CVR Refining LP: CVRR is a minutely small 0.27% of the US long portfolio position established in Q1 2013 as a result of the spin-off (carve-out) of CVR Refining from CVR Energy. The position was increased by 50% in Q2 2013 at prices between $28 and $35. The stock currently trades at $6.80.
Note: Icahn also owns significant stakes in the following OTC stocks, as per the latest 10-Q and regulatory filings: ~15% of Enzon Pharmaceuticals (NASDAQ:ENZN), ~75% of Viskase Companies (OTCPK:VKSC), and ~73% of Tropicana Entertainment (OTCQB:TPCA). He is also known to have a position in Fannie Mae (OTCQB:FNMA)/Freddie Mac (OTCQB:FMCC). Icahn started a tender offer for Tropicana in June ($38-45 price range, modified Dutch auction for 5.58M shares), and it was last extended to August 9.
The spreadsheet below highlights changes to Icahn’s US stock holdings in Q2 2017:
Disclosure: I am/we are long AIG, CVI, LNG.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I am long Fannie/Freddie preferreds.
Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.