We recently published a list of Carl Icahn Stock Portfolio: Top 10 Stock Picks. In this article, we are going to take a look at where Icahn Enterprises L.P. (NASDAQ:IEP) stands against other top stock picks from Carl Icahn’s portfolio.
Billionaire hedge fund manager Carl Icahn was known as a corporate raider in the 1980s, although he is now more commonly referred to as an activist investor. Icahn is a relentless and self-consciously contrarian investor with a keen eye for undervalued opportunities. Valuing hard assets, he has often stated that he prefers to purchase unglamorous, out-of-favor companies. The same is true for his investment wheel, Icahn Capital LP, which is well-known for its aggressive and high-stakes activism efforts, establishing itself as one of the world’s most powerful and prominent hedge funds. Boasting an impressive track record, the billionaire investor achieved an average annualized return of 14% between 2000 and 2022, outperforming the S&P 500 by 6%.
One of the most well-known examples of Icahn’s corporate raiding is his aggressive purchase of TWA in 1985. He obtained a majority share in the airline and then fought bitterly with management over the company’s future. Despite criticism from TWA management, Icahn eventually emerged triumphant, turning the firm around and increasing its worth. Another significant example of Icahn’s activism was his participation in the Dell acquisition in 2013. Icahn invested heavily in the firm and then mounted a public campaign opposing Michael Dell and Silver Lake Partners’ proposed takeover. Icahn claimed that the planned takeover undervalued the firm and sought that the buyout price be raised.
Although the 89-year-old investor earned a name for himself (alongside billions of dollars) by criticizing business executives’ policies and plans and advocating for reform within firms, it appears that the tide has shifted, as Icahn is now under heavy scrutiny from Wall Street investors, who are swiftly dumping his company’s shares. Shares of Icahn Enterprises, his publicly traded investment business, have fallen more than 48% in the last year. Shares began to fall in May 2023, when Nate Anderson’s short-selling firm, Hindenburg Research, issued a study doubting the company’s financials. Among other things, Hindenburg accused the company of paying an unsustainable dividend. In a September 2024 interview, Anderson predicted that its shares would continue to plummet, claiming Icahn’s frequent use of personal debts remains a threat to the company’s viability. As an illustration of the troubles the activist investor faces, Icahn Capital LP saw losses exceeding $3 billion from Q4 2023 to Q4 2024.
Our Methodology
For our list of Carl Icahn’s top stock picks, we scanned the legendary investor’s 13F portfolio at the end of Q4 2024. We ranked the top 10 stocks in ascending order based on the value of Icahn Capital’s stake in them as of the end of the quarter.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Icahn Enterprises L.P. (NASDAQ:IEP)
Carl Icahn’s Q4 2024 Stake: $3.9 billion
Icahn Enterprises L.P. (NASDAQ:IEP) is Carl Icahn’s largest holding and investing company. It engages in a variety of industries, including investing, energy, automotive, real estate, and medicines, among others.
Notably, the company pays a dividend of $0.50 per share while delivering a 19.94% yield, one of the highest in the market, and one of the reasons why the company continues to draw income-focused investors. On the opposite end, it is also one of the reasons why the company’s detractors criticize Carl Icahn.
Icahn Enterprises L.P. (NASDAQ:IEP) announced a smaller fourth-quarter net loss on February 26, meeting analyst estimates despite a minor sales dip. The diversified holding company had a net loss of $98 million, or $0.19 per depositary unit, in the fourth quarter of 2024. This is compared to a $139 million net loss, or $0.33 per unit, in the same period last year. Revenue also declined somewhat, to $2.6 billion from $2.7 billion the previous year. However, Icahn Enterprises’ adjusted EBITDA increased to $12 million from $9 million in Q4 2023.
Overall, IEP ranks 1st on our list of top stock picks from Carl Icahn’s portfolio. While we acknowledge the potential of IEP as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IEP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.