Icahn Capital Recovering from Last Year’s Setback as it Pushes Towards Green Territory in 2016

Famous activist investor Carl Icahn of Icahn Capital LP suffered some large losses last year due to his fund’s heavy bets on energy and commodities, as it ended the year down by over 18%. The start of 2016 was also gloomy for the fund, with several of its holding plummeting heavily amid a decline in the broader market. However, the rally in oil and commodity prices in the past few weeks seems to be helping the fund regain some of the lost ground. Insider Monkey’s analysis of Icahn Capital LP’s 13F holdings in companies worth at least $1 billion shows that the 19 long positions held by the fund delivered a weighted average loss of only 0.8% during the first three months of the year. In this article, we are going to take a look at the fund’s top five equity holdings going into 2016 and analyze how each one of them performed individually during the first quarter.

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#5 Paypal Holdings Inc (NASDAQ:PYPL)

 – Shares Owned by Icahn Capital LP (as of December 31): 46.27 million

 – Value of Holding (as of December 31): $1.67 billion

Unlike most other stocks, Paypal Holdings Inc (NASDAQ:PYPL) recouped the losses it suffered at the beginning of the year before January closed, after the company reported its fourth quarter financial numbers. However, the trade-off was that it didn’t rally much when the overall market started its rally in mid-February, as PayPal ended the first quarter with gains of 6.6%. On March 23, Paypal Holdings Inc’s stock suffered a large decline after Re/Code published a report revealing that Apple Inc. (NASDAQ:AAPL) will be expanding the presence of its payment platform Apple Pay to mobile sites by the end of this year. A day after this report was published, Piper Jaffray’s famous tech analyst Gene Munster released a note in which he reiterated his ‘Underweight’ rating and $33 price target on Paypal Holdings Inc. In his note, Mr. Munster also highlighted that Paypal could lose a lot of its transaction volume in the coming years, since almost 20% of the company’s total payment volume in 2015 was conducted on an iOS device. While Icahn Capital LP didn’t make any changes to its stake in Paypal Holdings Inc (NASDAQ:PYPL) during the fourth quarter, the family office of another legendary investor, George Soros, brought its holding in the company down by 34% to nearly 3.00 million shares during that period.

#4 American International Group Inc (NYSE:AIG)

 – Shares Owned by Icahn Capital LP (as of December 31): 42.24 million

 – Value of Holding (as of December 31): $2.62 billion

Icahn Capital increased its stake in American International Group Inc (NYSE:AIG) by greater than 30-fold in the fourth quarter and immediately launched an activist campaign on the company. For the last several months, Mr. Icahn and billionaire John Paulson have been persuading American International Group Inc (NYSE:AIG) to split up its business into three publicly-traded, independent companies. Mr. Paulson’s hedge fund Paulson & Co is also a large shareholder of American International Group, holding 11.6 million shares of the company at the end of December. While American International Group Inc (NYSE:AIG) hasn’t accepted the primary demand of these activist investors as of the present time, on February 11 it did reach an agreement with them, agreeing to expand the size of its Board to 16 from 14 members and giving Board seats to Mr. Paulson and Samuel Merksamer, who serves as a managing director at Icahn Capital. On March 30, AIG also accepted Mr. Icahn’s demand to abandon the use of CDS spreads as a measure for performance. However, this truce between American International Group and the activist investors doesn’t seem to have had a positive impact on the stock yet. Like most other banking stocks, AIG shares also ended the first quarter down by double digits at 12.2%.

Carl Icahn’s top three holdings are sized up on the next page.