Carl Icahn is known for his activist investing and his investment performance has been good: since inception of 2004, his partnership Icahn Captial returned a total of 41.3%, beating S&P500’s 5.9%. In 2009, the partnership returned 31.9%, also beating S&P 500, as he disclosed in his 4Q09 letter to shareholders (see a copy at the end of this articles).
But Icahn did not necessarily achieved his good performance through stocks. According to GuruFocus, which tracks Icahn Capital Management’s long equity position together with that of 70+ other investment gurus, as of March 31, 2010, he held only 3.18 $billion allocated among 16 stocks. We know Icahn manages far more money than this amount. long equity position was only 15.4% of his total portfolio at Icahn Capital L.P.. The rest is long credit (34.6%), short equity and short credit.
In the 4Q09 letter, Icahn seemed to be very reserved for the future. He was definitely not forecasting a “V”-shaped economic recovery, rather, he saw possibility of a double-dip recession, and the equity and credit market simply went ahead of the fundamental in 2009. As he stated in the letter:
Icahn would not see victory unless nation’s employment picks up and corporate balance sheets cleaned up:
One had to question whether Icahn was talking down the economy as a gloom and doom economy is actually good for a distressed investor like himself – a point he is very frank about in the letter:
The current environment is ripe for some M&A activities, another area activist Icahn knows how to create value for his investors. Particularly, he sees marriages between cash-rich big pharma and tech-savvy biotech companies:
These are the top holdings of Icahn Capital as of March 31, 2010:
No. 1: Motorola Inc. (MOT, Financial), Weightings: 34.51% - 156,220,000 Shares
Motorola, Inc. is a global leader in providing integrated communications solutions and embedded electronic solutions. Motorola Inc. has a market cap of $15.85 billion; its shares were traded at around $6.85 with a P/E ratio of 48.93 and P/S ratio of 0.72.
Icahn bought about 37 million shares of this stock in1Q10.
No. 2: Biogen Idec Inc (BIIB, Financial), Weightings: 23.21% - 12,860,205 Shares
IDEC Pharmaceuticals Corporation is a biopharmaceutical company engaged primarily in the research, development and commercialization of targeted therapies for the treatment of cancer and autoimmune and inflammatory diseases. Biogen Idec Inc has a market cap of $12.79 billion; its shares were traded at around $47.43 with a P/E ratio of 11.74 and P/S ratio of 2.92.
Icahn kept his position in this stock steady for the quarter. Click here to access Icahn’s full holding history of this stock.
No. 3: Genzyme Corp. (GENZ, Financial), Weightings: 17.09% - 10,480,000 Shares
Genzyme Corporation is a global biotechnology company. Genzyme Corp. has a market cap of $12.95 billion; its shares were traded at around $48.65 with a P/E ratio of 34.75 and P/S ratio of 2.87. Genzyme Corp. had an annual average earning growth of 17.5% over the past 10 years. GuruFocus rated Genzyme Corp. the business predictability rank of 2.5-star.
Icahn bought an additional 5.7 million shares of this stock. Click here to access Icahn’s full holding history of this stock.
No. 4: Amylin Pharmaceuticals Inc. (AMLN, Financial), Weightings: 9.18% - 12,971,328 Shares
Amylin Pharmaceuticals is a biopharmaceutical company committed to improving lives through the discovery, development and commercialization of innovative medicines. Amylin Pharmaceuticals Inc. has a market cap of $2.37 billion; its shares were traded at around $16.52 with and P/S ratio of 3.12.
Icahn kept his position in this stock steady for the quarter. Click here to access Icahn’s full holding history of this stock.
No. 5: Lions Gate Entertainment Corp. (LGF, Financial), Weightings: 3.45% - 17,581,750 Shares
Lions Gate Entertainment is a independent producer and distributor of motion pictures, home entertainment, television programming, animation and video-on-demand content. Lions Gate Entertainment Corp. has a market cap of $847.89 million; its shares were traded at around $6.8 with and P/S ratio of 0.58.
Icahn bought about an additional 1 million shares of this stock in 1Q10. Click here to access Icahn’s full holding history of this stock.
No. 6: TakeTwo Interactive Software Inc. (TTWO, Financial), Weightings: 2.88% - 9,296,422 Shares
Take-Two Interactive Software, Inc. is a developer, publisher and distributor of interactive software games. Taketwo Interactive Software Inc. has a market cap of $978.26 million; its shares were traded at around $11.57 with and P/S ratio of 1.01.
Icahn bought about 2.5 million shares of this stock in 1Q10. Click here to access Icahn’s full holding history of this stock.
Conclusion
Icahn tends to take very concentrated positions in his stock portfolio. When he does take a position in a stock, he tends to play an active role to force the management to unleash the value of the stock.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Carl Icahn for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
Icahn Partners Q4
But Icahn did not necessarily achieved his good performance through stocks. According to GuruFocus, which tracks Icahn Capital Management’s long equity position together with that of 70+ other investment gurus, as of March 31, 2010, he held only 3.18 $billion allocated among 16 stocks. We know Icahn manages far more money than this amount. long equity position was only 15.4% of his total portfolio at Icahn Capital L.P.. The rest is long credit (34.6%), short equity and short credit.
In the 4Q09 letter, Icahn seemed to be very reserved for the future. He was definitely not forecasting a “V”-shaped economic recovery, rather, he saw possibility of a double-dip recession, and the equity and credit market simply went ahead of the fundamental in 2009. As he stated in the letter:
The contrast between the investment environments of 2008 and 2009 could hardly be more stark. 2008 was defined by an utter lack of liquidity, while 2009 came to be a year of excess liquidity. With cash yielding close to nothing last year, yield-hungry investors felt that they could no longer sit on the sidelines. They plunged head first into both equity and credit, aggressively driving up the markets. Yet where and what were the signs suggesting that the fundamentals had changed and that the economy was on the mend? While some economic indicators showed signs of improvement towards year end, a key indicator, unemployment, still remains high.
Icahn would not see victory unless nation’s employment picks up and corporate balance sheets cleaned up:
We belive that until employment picks up, both the housing market and the overall economy will remain weak as debt-laden consumers will be unwilling (and unable) to open their wallets. Many consumers seem down-right scared to spend money. In short, we believe that a true economic recovery will require a healthier and more confident consumer. In addition, many corporate balance sheets are still impaired with too much leverage. I believe that this combination of obstacles will not be bypassed as quickly and easily as many seem to think.
One had to question whether Icahn was talking down the economy as a gloom and doom economy is actually good for a distressed investor like himself – a point he is very frank about in the letter:
an environment in which good companies with bad balance sheets are forced to file and reorganize is an environment in which we have the ability to earn outsized returns. Our team of investment and legal professionals is certainly one of the best in terms of its understanding of distressed debt, distressed of control situation, as well as the bankruptcy process.
The current environment is ripe for some M&A activities, another area activist Icahn knows how to create value for his investors. Particularly, he sees marriages between cash-rich big pharma and tech-savvy biotech companies:
One benefit of the increase in liquidity is a potential uptick in M&A activity due to the fact that some companies may begin to feel cash-rich while others may find themselves on the auction block. This paradigm is tailor made for the activist investor. While we don’t believe that the stars have aligned quit yet in many sectors, a notable exception is biotech. Big pharma is notoriously cash-rich, which means they are not dependent on financing, and we believe their appetite for biotech is as big as ever.
These are the top holdings of Icahn Capital as of March 31, 2010:
No. 1: Motorola Inc. (MOT, Financial), Weightings: 34.51% - 156,220,000 Shares
Motorola, Inc. is a global leader in providing integrated communications solutions and embedded electronic solutions. Motorola Inc. has a market cap of $15.85 billion; its shares were traded at around $6.85 with a P/E ratio of 48.93 and P/S ratio of 0.72.
Icahn bought about 37 million shares of this stock in1Q10.
No. 2: Biogen Idec Inc (BIIB, Financial), Weightings: 23.21% - 12,860,205 Shares
IDEC Pharmaceuticals Corporation is a biopharmaceutical company engaged primarily in the research, development and commercialization of targeted therapies for the treatment of cancer and autoimmune and inflammatory diseases. Biogen Idec Inc has a market cap of $12.79 billion; its shares were traded at around $47.43 with a P/E ratio of 11.74 and P/S ratio of 2.92.
Icahn kept his position in this stock steady for the quarter. Click here to access Icahn’s full holding history of this stock.
No. 3: Genzyme Corp. (GENZ, Financial), Weightings: 17.09% - 10,480,000 Shares
Genzyme Corporation is a global biotechnology company. Genzyme Corp. has a market cap of $12.95 billion; its shares were traded at around $48.65 with a P/E ratio of 34.75 and P/S ratio of 2.87. Genzyme Corp. had an annual average earning growth of 17.5% over the past 10 years. GuruFocus rated Genzyme Corp. the business predictability rank of 2.5-star.
Icahn bought an additional 5.7 million shares of this stock. Click here to access Icahn’s full holding history of this stock.
No. 4: Amylin Pharmaceuticals Inc. (AMLN, Financial), Weightings: 9.18% - 12,971,328 Shares
Amylin Pharmaceuticals is a biopharmaceutical company committed to improving lives through the discovery, development and commercialization of innovative medicines. Amylin Pharmaceuticals Inc. has a market cap of $2.37 billion; its shares were traded at around $16.52 with and P/S ratio of 3.12.
Icahn kept his position in this stock steady for the quarter. Click here to access Icahn’s full holding history of this stock.
No. 5: Lions Gate Entertainment Corp. (LGF, Financial), Weightings: 3.45% - 17,581,750 Shares
Lions Gate Entertainment is a independent producer and distributor of motion pictures, home entertainment, television programming, animation and video-on-demand content. Lions Gate Entertainment Corp. has a market cap of $847.89 million; its shares were traded at around $6.8 with and P/S ratio of 0.58.
Icahn bought about an additional 1 million shares of this stock in 1Q10. Click here to access Icahn’s full holding history of this stock.
No. 6: TakeTwo Interactive Software Inc. (TTWO, Financial), Weightings: 2.88% - 9,296,422 Shares
Take-Two Interactive Software, Inc. is a developer, publisher and distributor of interactive software games. Taketwo Interactive Software Inc. has a market cap of $978.26 million; its shares were traded at around $11.57 with and P/S ratio of 1.01.
Icahn bought about 2.5 million shares of this stock in 1Q10. Click here to access Icahn’s full holding history of this stock.
Conclusion
Icahn tends to take very concentrated positions in his stock portfolio. When he does take a position in a stock, he tends to play an active role to force the management to unleash the value of the stock.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Carl Icahn for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
