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Graham Griffin
Graham Griffin
Articles (170) 

Carl Icahn Boosts Icahn Enterprises Stake

Long-term holding soon to enter second decade of ownership

Carl Icahn (Trades, Portfolio) has revealed a boost in his stake of Icahn Enterprises LP (NASDAQ:IEP) according to GuruFocus' Real-Time Picks, a Premium feature.

Icahn is known for taking activist positions in undervalued, struggling companies and working with management in order to improve profitability as well as unlock value for shareholders. He seeks to avoid consensus thinking and believes the momentum with trends will always fall apart.

The Icahn Enterprises holding has been growing since it was first established in the second quarter of 2011. Since then, Icahn has sold a miniscule 205 shares out of the current 221.74 million shares held.

On Dec. 29, Icahn purchased an additional 8.15 million shares to boost the holding by 3.82%. On the day of the transaction, the shares traded at an average price of $50.54 per share. The purchase had an overall impact of 2.32% on the portfolio and GuruFocus estimates Icahn has lost 5.45% throughout the lifetime of the holding.

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Icahn Enterprises is a provider of diversified business services in the United States. The company operates its business through varied segments, which include investment, automotive, energy, railcar, food packaging, metals, mining, real estate and home fashion. Among these, the energy segment derives maximum revenue to the company. Geographically, it generates maximum revenue from the United States.

On Dec. 31, the stock was trading at $50.25 per share with a market cap of $11.66 billion. According to the GF Value Line, the stock is trading at a modestly undervalued rating.

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GuruFocus gives the company a financial strength rating of 3 out of 10, a profitability rank of 4 out of 10 and a valuation rank of 2 out of 10. There are currently five severe warning signs, including declining revenue per share and poor financial strength. The Altman Z-Score of 1.08 places the company square into the distress column with bankruptcy a possibility in the next two years. The weighted average cost of capital outweighs the return on invested capital, meaning the company is likely to destroy capital as it grows.

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Icahn is by far the largest shareholder with 95.55% of shares outstanding. Other shareholders include Citigroup Inc. (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Morgan Stanley (Trades, Portfolio) and Geode Capital Management LLC (Trades, Portfolio).

Portfolio overview

At the end of the third quarter, Icahn's portfolio contained 16 stocks with no new holdings purchased in the recent over the recent reporting period. It was valued at $17.37 billion and has seen a turnover rate of 3%. The top holdings are Icahn Enterprises, Herbalife Nutrition Ltd. (NYSE:HLF), Cheniere Energy Inc. (LNG), Occidental Petroleum Corp. (NYSE:OXY) and CVR Energy Inc. (NYSE:CVI).

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By weight, the top three sectors represented are industrials (66.26%), energy (16.27%) and consumer defensive (9.83%).

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Disclosure: Author owns no stocks mentioned.

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