In this piece, we will take a look at Carl Icahn’s stock portfolio: 7 best stocks to buy.
Carl Icahn is a force to reckon with, having made a name and billions of dollars on questioning decisions and strategies of corporate leaders on Wall Street for decades. Often referred to as the ‘lone wolf of Wall Street,’ he will go down in history for his reputation and legacy as the most feared man on Wall Street.
At 88 years old, one would expect the billionaire investor to slow down. However, that is not the case. Icahn continues to send shockwaves with his moves and sentiments about the economy and the stock market.
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Nevertheless, bad press has been putting pressure on the legendary investor recently. He remains embroiled in allegations that he has been issuing unsustainably high dividends through his investment firm while also obtaining large amounts of personal loans through his holdings in the company. In 2023, short-selling firm Hindenburg Research questioned the dividends on offer and Icahn’s borrowing spree, terming the action a Ponzi-like scheme.
Without admitting wrongdoing, the legendary investor has already agreed to pay $2 million to settle US Securities and Exchange Commission charges that he failed to disclose significant borrowing against his shares. Everything broke loose as Icahn’s investment firm lost more than 70% in market value, and the firm remains under scrutiny from Wall Street investors.
According to Gordon Haskett of Gordon Haskett Research Advisors, investors on Wall Street might lose confidence in the billionaire investor. For starters, there are concerns that further losses to Icahn’s investment firm could force investors to sell companies they currently hold.
Icahn rose to prominence by diversifying his investments on Wall Street into various sectors. His diversification has seen him invest in some of the market leaders in real estate, energy, financials, and the technology sectors.
The billionaire investor boasts an impressive track record of an average annualized return of 14%, trumping the S&P 500 return by 6%, between 2000 and 2022. The solid return stems from the billionaire investor leveraging an assertive investment strategy to acquire stakes in companies he believes are trading below their fair value.
Icahn has always used his influence to drive strategic changes as part of activist campaigns to unlock hidden value. He is best known for engaging in proxy fights, making public demands, and launching hostile takeovers as long as he believes there is an opportunity to unlock hidden value.
Given that Icahn is known for the high-risk high, reward strategy, his portfolio comprises stocks that have some hidden value that can be unlocked by doing the hard things. While more opportunistic and less focused on specific sectors, Icahn’s holdings are spread across the technology, healthcare, and energy sectors.
Carl Icahn has amassed a fortune worth billions by investing in and advocating for profitable transformations in undervalued companies. Given his impressive history, it’s understandable that both Wall Street and Main Street investors are always eager to learn about the best stocks to buy.
His portfolio is well positioned to benefit from the US Federal Reserve cutting interest rates by 50 bases to support the struggling economy. The impact of lower interest rates on stocks largely depends on the underlying fundamentals—namely, the performance of corporate profits and the direction of the US economy, whether it’s moving towards a gentle or severe downturn. Analysts at Wells Fargo think that the global economy will also see advantages, given that major central banks globally have already reduced interest rates or are planning to do so soon.
Should the economy navigate a soft landing, a mix of lower interest rates and strong economic fundamentals will favor specific market segments, including real estate and smaller companies in which Icahn is heavily invested.
Moreover, Wall Street is optimistic that the decrease in interest rates will encourage well-established and financially solid companies to boost their spending and investments, which is expected to be reflected in their stock prices during the second half of 2024 and the beginning of 2025.
Our Methodology
To compile the list of the best stocks to buy, according to Carl Icahn, we scanned the legendary investor’s 13F portfolio at the end of Q2 2024. We analyzed the top seven stocks based on Icahn’s holdings focusing on why they stand out as solid investment plays. Finally, we ranked the stocks in ascending order based on the value of Icahn Capital’s stake in them.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Carl Icahn Stock Portfolio: Best Stocks to Buy
7. Dana Incorporated (NYSE:DAN)
Carl Icahn’s Q2 2024 Stake: $173.15 Million
Number of Hedge Fund Investors as of Q2 2024: 25
Dana Incorporated (NYSE:DAN) is one of Carl Icahn’s top consumer cyclical investment players specializing in providing power conveyance and energy management solutions for vehicles. It offers drive systems, including axles, driveshafts, transmission, wheel and track drives, and motion systems.
The company delivered better than expected second quarter financial results despite facing challenges such as increasing inflation and decreased demand for electric vehicles. Earnings hit the $2.7 billion mark as adjusted EBITDA was robust at $244 million.
Management remains optimistic about Dana Incorporated (NYSE:DAN) hitting the $925 million mark on profits by year-end as they continue to ink new business seals in traditional hybrid and EV market segments. A lower interest rate environment should result in improved consumer purchasing power, fueling demand for EV cars. Consequently, Dana should be able to cater to the needs of the growing Hybrid and EV markets with its arsenal of products.
Amid the challenges characterized by slowing demand in the EV market, Dana Incorporated (NYSE:DAN) has remained one of the best stocks to buy, owing to an impressive track record of paying dividends for 13 years. The company boasts of a solid 3.85% dividend yield.
Insider Monkey’s second-quarter data reveals that 25 hedge funds showed optimism towards Dana Incorporated (NYSE:DAN), a slight decrease from the 27 funds in the previous quarter. Carl Icahn’s Icahn Capital LP is the most significant position holder in the company, with 14.29 million shares worth $173.15 million.
6. Bausch Health Companies Inc. (NYSE:BHC)
Carl Icahn’s Q2 2024 Stake: $242.01 Million
Number of Hedge Fund Investors as of Q2 2024: 32
Bausch Health Companies Inc. (NYSE:BHC) is a diversified specialty pharmaceutical and medical device company that manufactures and sells a range of products in gastroenterology, hepatology, neurology, dermatology, and international pharmaceuticals.
It is one of Carl Icahn’s top holdings in the limelight. The company has had to refute claims that it was mulling filing for bankruptcy, and its financial position has been brought into question. Likewise, there are reports that the company is considering selling its eye care unit and has engaged Goldman Sachs’ services.
The sale will raise much-needed capital to keep Bausch Health Companies Inc. (NYSE:BHC) afloat. In August 2020, BHC revealed plans to split its eye care division, which includes its Bausch + Lomb worldwide Vision Care, Surgical, and Pharmaceutical divisions, into a stand-alone publicly listed company, Bausch + Lomb, from the rest of the corporation.
Another concern is the impending loss of exclusivity for Bausch Health Companies Inc. (NYSE:BHC)’s key drug, Xifaxan, which could significantly impact the company’s revenue base.
Amid the bankruptcy rumors, the company delivered mixed second-quarter results whereby revenues were up 11% yearly to $2.4 billion. Its consolidated operating income fell to $389 million from $412 million delivered last year in the same quarter. Likewise, net income attributable to shareholders fell to $10 million from $26 million as of the second quarter of 2023.
Insider Monkey’s analysis of second-quarter 2024 shareholdings from 912 hedge funds revealed that 32 had invested in Bausch Health Companies Inc. (NYSE:BHC). Carl Icahn’s Icahn Capital LP is the largest hedge fund shareholder, holding a $242.01 million stake.
