We recently compiled a list of the Carl Icahn Stock Portfolio: 7 Best Stocks to Buy. In this article, we are going to take a look at where CVR Partners, LP (NYSE:UAN) stands against the other stocks in the Carl Icahn Stock Portfolio.
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).
A farmer in traditional attire inspecting a field of nitrogen fertilized crops.
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.
Overall UAN ranks 5th on our list of the best stocks to buy according to Carl Icahn. While we acknowledge the potential of UAN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UAN, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.