Activist investor Carl Icahn (Trades, Portfolio) departs from consensus thinking, investing in out-of-favor companies and pushing for changes. The Icahn Management LP fund manager expanded his positions in four companies recently: Federal-Mogul Holdings Corp. (FDML, Financial), Hertz Global Holdings Inc. (HTZ, Financial), Icahn Enterprises LP (IEP, Financial) and Herbalife Ltd. (HLF, Financial). Icahn has been buying shares in these four companies in the past quarters.
Federal-Mogul Holdings
On Jan. 23, Carl Icahn (Trades, Portfolio) purchased 16,629,388 shares of Federal-Mogul Holdings at $9.99 per share. With this transaction, the billionaire investor increased his ownership to 155,219,529 shares, which represents about 91.82% of Federal-Mogul’s total shares outstanding.
Icahn’s company completed its acquisition of Federal-Mogul in an all-cash transaction for $10 per share. While the company is now a wholly owned subsidiary of Icahn Enterprises, Federal-Mogul Holdings will continue operating through its two business segments, each with a CEO reporting to the overall board of directors.
Hertz
During fourth-quarter 2016, Icahn increased his Hertz position 126.17%, adding 16,325,273 shares at an average price of $28.80 per share. With this transaction, the guru expanded his ownership to 29,263,869 shares, which represents 35.27% of shares outstanding.
Hertz’s board of directors appointed Kathy Marinello as the company’s new president and CEO Dec. 13, 2016. Icahn praised the CEO appointment, saying that Marinello is “the right person to lead Hertz as [the company] moves forward” due to her successful record in consumer, financial services and technology companies, including General Electric Co. (GE, Financial). With “strategic expertise and significant experience” interacting with direct customers and corporations, Marinello is eager to “earn sustained industry leadership” for the benefit of Hertz’s customers, shareholders and investors.
Icahn Enterprises
The billionaire investor added 2,926,203 shares to his stake in Icahn Enterprises at an average price of $53.90 per share during fourth-quarter 2016. With this transaction, Icahn increased his ownership to approximately 130 million shares, about 89.82% of the company’s shares outstanding.
Icahn’s company reported overall revenues of $4.899 billion and net income of $238 billion for the three months ending Sept. 30, 2016, outperforming third-quarter 2015 values by approximately $1.7 billion and $1.1 billion. The company’s automotive segment generated $2.476 billion in revenues albeit just $33 million in net income. The investing segment generated $362 million in net income, the highest among the segments. Even though the company reported $16 million in net loss attributable to Icahn Enterprises, the net loss significantly increased from net losses in the prior-year quarter.
Herbalife
During fourth-quarter 2016, Icahn added 14.73% to his Herbalife position, purchasing 2,888,471 shares at an average price of $54.60. With this transaction, the activist investor increased his ownership to 22.5 million shares, which represents about 24.18% of total shares outstanding.
The nutrition company reported a 3% CAGR of net sales for the period from 2012 to the trailing 12 months – i.e., an average revenue growth of 3% per year over the past five years. Net sales in the China region increased 36%, the largest CAGR of sales among Herbalife’s global regions. For 2017, Herbalife expects to increase volumes by approximately 2% to 5% and net sales by about 0.3% to 3.3%. The company also expects diluted earnings per share to fall between $3.55 and $3.95, or between $4.75 and $5.15 including currency adjustments.
Conclusions and see also
During the past few quarters, Icahn kept increasing his stake in the above four companies. As a Premium member, you can view a guru’s “High Conviction” buys by first clicking the “Current Portfolio” tab and then choosing “High Conviction.” As illustrated in the screen shot below, Icahn had double-digit share growth in Herbalife during the past two quarters–i.e., the guru increased his position in the company by over 10% during fourth-quarter 2016 and third-quarter 2016.
Disclosure: I do not have positions in the stocks mentioned in the article.
Start a free seven-day trial of Premium Membership to GuruFocus.
