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.
5. CVR Partners, LP (NYSE:UAN)
Carl Icahn’s Q2 2024 Stake: $294.47 Million
Number of Hedge Fund Investors as of Q2 2024: 4
CVR Partners, LP (NYSE:UAN) is a basic materials company that produces and sells nitrogen fertilizer products. It is one of the companies well positioned to benefit amid strong demand for nitrogen fertilizer, while prices are much higher than they were in 2023.
The company was under pressure in the second quarter due to weather interruptions affecting the spring planting season. Consequently, CVR Partners, LP (NYSE:UAN) delivered a net income of $26 million or $2.48 per share, down from $60 million last year. Net sales also dropped from $183 million as of Q3 2023 to $133 million.
Nevertheless, it achieved solid operating results with a combined ammonia production rate of 102%, which benefited from higher-than-expected planted acreage and strong nitrogen fertilizer demand. With the company projecting strong demand for nitrogen fertilizer for the remainder of the year, it should generate more earnings.
While trading at a price-to-earnings multiple of 14, CVR Partners, LP (NYSE:UAN) has always stood out as one of Carl Icahn’s best stocks, owing to its consistently returning value to shareholders. The company boasts a solid 10.33% dividend yield.
By the end of this year’s second quarter, four out of the 912 hedge funds in Insider Monkey’s database had invested in CVR Partners, LP (NYSE:UAN). The largest shareholder among them is Carl Icahn’s Icahn Capital LP, holding a $294.47 million stake.
4. International Flavors & Fragrances Inc. (NYSE:IFF)
Carl Icahn’s Q2 2024 Stake: $357.03 Million
Number of Hedge Fund Investors as of Q2 2024: 46
International Flavors & Fragrances Inc. (NYSE:IFF) is a basic materials company that manufactures and sells cosmetic active and natural health ingredients. The company boasts an impressive collection of top-tier products across various sectors.
Consequently, it boasts a broad economic advantage thanks to its distinct range of products and its leading role in producing essential scents, cultures, flavors, proteins, and probiotics. This wide product range allows the company to serve various markets and suppliers, enhancing its ability to diversify its income sources.
International Flavors & Fragrances Inc. (NYSE:IFF)’s choice to divest some of its units, such as Savory Solutions and Flavor Specialty Ingredients, showcases its strategic move to focus on refining its operations and boosting profits by concentrating on its main areas of growth.
According to Carl Icahn, it remains one of the best stocks to buy as it is in a robust growth phase. The fact that the company increased its full-year sales guidance to between $11.1 billion and $11.3 billion, as compared to $10.8 billion and $11.1 billion, underscores underlying growth.
International Flavors & Fragrances Inc. (NYSE:IFF) delivered solid second-quarter results, with adjusted EPS topping $1.16 against the $1.01 expected. Revenues totaled $2.89 billion, beating consensus estimates of $2.82 billion. While trading at a price-to-earnings multiple of 22, International Flavors & Fragrances rewards investors with a 1.53% dividend yield.
In the second quarter of 2024, 46 out of the 912 hedge funds in Insider Monkey’s database were shareholders of International Flavors & Fragrances Inc. (NYSE:IFF). Israel Englander’s Millennium Management is the largest hedge fund investor, holding shares worth $411.32 million.
3. Southwest Gas Holdings, Inc. (NYSE:SWX)
Carl Icahn’s Q2 2024 Stake: $775.77 Million
Number of Hedge Fund Investors as of Q2 2024: 15
Southwest Gas Holdings, Inc. (NYSE:SWX) is one of Carl Icahn’s best stocks to buy to diversify an investment portfolio in utilities. With consumer purchasing power poised to receive a significant boost amid a low interest rates environment, the company’s core business of distributing and transporting natural gas should receive a boost on strong demand.
It remains one of Carl Icahn’s favorite holdings owing to its track record in returning value to shareholders through dividends. Southwest Gas Holdings, Inc. (NYSE:SWX) has paid quarterly dividends since going public in 1956. It is also fresh from declaring a $0.62 a share quarterly dividend payable on December 2, 2024.
The dividend offering comes on top of the company reporting an $11 million increase in its operating margin and raising its full-year net income guidance by $5 million. In the second quarter, the company recorded operating earnings per share of 31 cents on operating revenues of $1.18 billion.
Southwest Gas Holdings, Inc. (NYSE:SWX) exited the second quarter in a solid financial position with $599.6 million in cash and cash equivalent, up from $106.5 million as of the end of last year. While offering a dividend yield of 3.36%, it is one of Carl Icahn’s top investment plays for passive income while trading at a price-to-earnings multiple of 22.
By the end of Q2 2024, 15 hedge funds in Insider Monkey’s database held stakes in Southwest Gas Holdings, Inc. (NYSE:SWX), down from 20 in the previous quarter. The largest stakeholder was Corvex Capital, with over 4. 76 million shares.
2. CVR Energy Inc. (NYSE:CVI)
Carl Icahn’s Q2 2024 Stake: $1.79 Billion
Number of Hedge Fund Investors as of Q2 2024: 15
CVR Energy, Inc. (NYSE:CVI) is Carl Icahn’s best stock to buy to diversify an investment portfolio in the energy sector. The company specializes in refining and supplying gasoline, crude oil, distillate, diesel fuel, and other refined products.
In addition to being the second biggest holding, Icahn controls 66% of the company’s shares. Nevertheless, it has been under immense pressure, with oil prices dropping close to $70 a barrel in recent months.
CVR Energy, Inc. (NYSE:CVI) has also come under pressure to face stiff competition in its bid to acquire Citgo Petroleum for $8 billion. An investment group led by Gold Reserve and a unit of Koch Industries has already placed a $9 billion acquisition bid as well.
Citgo was expected to be a value addition to CVR Energy, Inc. (NYSE:CVI) as it has been profitable, reporting a net income of $410 million in the first quarter. On the other hand, CVR posted a net income of $21 million in the second quarter with earnings per share of $0.21.
CVR Energy, Inc. (NYSE:CVI) stands out as one of Carl Icahn’s top investment plays because it pays a forward annual dividend yield of 8.74%. The company has also announced a 50 cents cash dividend per share and declared a $1.90 cash distribution per common unit. The company also exited the second quarter in a solid financial position, with its cash and cash equivalents increasing by $5 million to $586 million.
Insider Monkey’s second-quarter data shows that 15 hedge funds were optimistic about CVR Energy, Inc. (NYSE:CVI), down from 20 in the previous quarter. The largest stakeholder is Carl Icahn’s Icahn Capital LP.
1. Icahn Enterprises LP (NASDAQ:IEP)
Carl Icahn’s Q2 2024 Stake: $6.70 Billion
Number of Hedge Fund Investors as of Q2 2024: 3
Icahn Enterprises LP (NASDAQ:IEP) is Carl Icahn’s investment firm and biggest holding. It operates as a diversified holding company focused on opportunities in the energy, food, automotive, real estate, and Pharma businesses. The stock accounts for about 61% of Icahn’s Portfolio.
The massive holding concerns that Icahn Enterprises LP (NASDAQ:IEP) pays a dividend of $4 per share while offering a 25% yield. It is one of the highest in the industry and one reason the stock continues attracting income-focused investors.
Nevertheless, Icahn Enterprises has been a big disappointment, losing nearly two-thirds of market value amid negative publicity. It all started with short-seller Hindenburg Research accusing Icahn of running a Ponzi-like scheme with the company.
Hindenburg Research has always doubted Icahn Enterprise’s ability to pay the hefty $4 per share dividends, given the lack of sufficient cash flow to support the distribution. Suggestions that Icahn might be running a Ponzi-like scheme have already attracted the Securities and Exchange Commission, which has taken the billionaire investor to task for using his shares in the company to get loans.
Icahn Enterprises LP (NASDAQ:IEP) is submitting to sell $400 million worth of depository units in a market-based sale, which also appears to have rattled Wall Street. This action might lead to an additional reduction in the value of existing shareholders’ stakes, and the proposed sale is taking place when the shares are still 75% lower than their value before the Hindenburg report was issued the previous year.
As it stands, Icahn Enterprises LP (NASDAQ:IEP) remains under pressure even when trading at a price-to-earnings multiple of 28. The $4 a share dividend with a yield of about 29% is one of the positives that continues offering support to the stock.
By the end of Q2 2024, only three hedge funds held stakes in Icahn Enterprises LP (NASDAQ:IEP), up from one in the preceding quarter. The most significant holder was Carl Icahn’s Icahn Capital LP, with stakes valued at $6.70 billion.
The best stocks to buy, according to Carl Icahn, are companies that the legendary investor expects to generate long-term value. However, given that the artificial intelligence arms race is just but starting, there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than IEP, check out our report about the cheapest AI stock.
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