Carl Icahn (Trades, Portfolio) manages Icahn Capital Management LP, a $27.8 billion hedge fund. It is important to analyze key holdings from prominent fundamental-oriented hedge funds because hedge funds have more analytical resources to analyze stocks than the majority of individual investors. Let's analyze Icahn's most interesting stock selections:
Largest position - Icahn Enterprises LP (IEP, Financial)
Icahn Capital Management LP holds 27.54% of its portfolio in Icahn Enterprises LP. Here is a snapshot of Icahn Enterprises' recent quarterly performance.
In the third quarter, revenue declined by 27% year over year. In the previous two quarters, the company had reported EPS declined by 61% and 66%, while revenues declined by 22% and 10%. It is essential to look for companies with solid growth in both EPS and sales because that is what ultimately drives the shares.
Another important aspect to take a look is the level of annual EPS growth.
EPS declined by 121% in FY2014 and consensus analyst expects 1% decline in 2016.
Earnings surprises
One important aspect in analyzing stocks is evaluating the level of surprises in the past, and most importantly in the last reported quarter. In the last quarter, IEP reported per share loss of $3.4 compared to consensus expectations of $1.5 per share. This is a $4.90 difference earnings surprise. In the past three quarters, IEP surprised analyst consensus estimates by -326.67%, -29.41% and -4.51%.
Second position - Apple Inc. (AAPL, Financial)
Icahn Capital Management holds 20.88% of its portfolio in Apple. Here is a snapshot of Apple's recent quarterly performance.
In the third quarter, AAPL reported EPS growth of 38% year over year and revenue growth of 22%. In the previous two quarters, the company had reported EPS growth of 45% and 40%, while revenues grew at 33% and 27%. It is essential to look for companies with solid growth in both EPS and sales because that is what ultimately drives the shares.
Another important aspect to take a look is the level of annual EPS growth.
Apple Inc. generated 43% growth in EPS in FY2015 and consensus analyst expects 7% growth in 2016 and 10% in 2017.
Earnings surprises
In the last quarter, AAPL reported EPS of $1.96 compared to consensus expectations of $1.88 per share. This is an 8-cent difference earnings surprise and is a good element to see in the stock. In the past three quarters, AAPL surprised analyst consensus estimates by 4.26%, 2.21% and 7.87%.
Third position - CVR Energy Inc. (CVI, Financial)
Icahn Capital Management LP holds 10.48% of its portfolio in CVR Energy. Here is a snapshot of CVR Energy's recent quarterly performance.
In the third quarter, CVI reported EPS growth of 37% year over year and revenue decline of 6%. In the previous two quarters, the company had reported EPS growth of 18% and 17%, while revenues declined by 4% and 2%. It is essential to look for companies with solid growth in both EPS and sales because that is what ultimately drives the shares.
Another important aspect to take a look is the level of annual EPS growth.
CVR Energy's EPS declined by 37% in FY2014 and consensus analyst expects 17% decline in 2015 and 23% growth in 2016.
Earnings surprises
One important aspect in analyzing stocks is evaluating the level of surprises in the past, and most importantly in the last reported quarter. In the last quarter, CVI reported EPS of 67 cents compared to consensus expectations of 96 cents per share. This is a 29-cent difference. In the past three quarters, CVI surprised analyst consensus estimates by -30.21%, -3.49% and -12.50%.
