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CodyEustice
Cody Eustice
Articles (530)  | Author's Website |

Icahn Enterprises: A Buy at Its Current Price

Carl Icahn (Trades, Portfolio)'s Icahn Enterprises (NASDAQ:IEP) has been wounded by the collapse in the price of oil. This has resulted in Icahn Enterprises' portfolio being bloodied with large paper quotation losses. Despite these paper losses Icahn Enterprise reported a profitable second quarter with profitsof $212 million or $1.56/unit. This profit was driven by profitable realized capital gains frominvestments like Netfix (NASDAQ:NFLX). Thanks to the company's diversified source of income from its manyequity holdings and operating subsidiaries protects Icahn Enterprises underlining economicearnings. The company has interest a multiple sectors of the economy and has a investment portfolio which includes Apple (NASDAQ:AAPL). Icahn Enterprises has fallen from a high of $120/unit toits current price $73/unit. Since the beginning of the year Icahn Enterprises units have fallen by over 20% mainly caused by the collapse in the company's energy stocks. Even with IcahnEnterprises having large paper losses from energy stock hasn't wiped out earnings for thefirm.

Icahn Enterprises

Icahn Enterprises is a diversified master limited partnership with interest in various sectors ofthe economy with a multi-billion dollar portfolio. Carl Icahn (Trades, Portfolio) owns 90% of Icahn Enterprisesunits and has massive control of the firm and its investment decisions. The firm spread itsinvestment capital over multi-industries which reduces investors risk with no one sourcemakes up the majority of earnings for Icahn Enterprises. Icahn Enterprises investment invarious industries ranging from Automotive to Energy. The firm's investments are long-termholdings that are held for over four years. There are holdings in Icahn Enterprises that Icahn has owned for over 20 years.

Icahn Enterprises Equity Portfolio:

Carl Icahn (Trades, Portfolio) and his management team at Icahn Enterprises have built a financially strongdiversified holdings company that can withstand the paper losses from energy stocks itsIcahn Enterprise's portfolio.

Diversified subsidiaries:

Icahn Enterprises has 10 operating subsidiaries the firm owns and some of these subsidiaries publicly trade the shares not known by Icahn Enterprises. These subsidiaries range from the industrial sector to the energy sector. Icahn Enterprises has built a diversified holding company with various interest throughout multiple industries. This protects unit holdings in the company for one business provides the bulk of revenues for the company. Icahn Enterprises operates is two segments one is operating subsidiaries and the other is investment portfolio. The company is looking more and more like Berkshire Hathaway without the insurance operations. Insurance float is the driver of Berkshire Hathaway while Activism by Icahn is the driver at Icahn Enterprises.

  • Icahn Capital LP is a 100% owned by Icahn Enterprises and has investments valued at fair market value of $4.5 billion in the investment funds.
  • PSC Metal Inc. is 100% owned by Icahn Enterprises. The company is the largest independent metal recycling company in the U.S.
  • AREP Real Estate Holdings LLC is 100% own by Icahn Enterprises. The company owns and operates rental commercial real estate and has resort activities.
  • Viskase Companies Inc. (VKSC) is 73% owned by Icahn Enterprise and the rest of the shares trade on the over the counter market. The company is a world leader in cellulosic,and plastic casing for processed meat industry.
  • American Railcar Industries Inc. (NASDAQ:ARII) is 54% owned by Icahn Enterprises. The company manufacturers hoppers and railcars. American Railcar also provides railcar repair and maintenance services.
  • American Railcar Leasing LLC is 75% owned by Icahn Enterprises. The company is the leading North America leaser of hoppers and tanker railcars.
  • Tropicana Entertainment Inc. (TPCA)
  • Federal-Mogul Holdings Corp. (NASDAQ:FDML) is 82% owned by Icahn Enterprises. The company is a leading global supplier to automotive, aerospace, energy, heavy duty trucks, industrial, marine and power generation.
  • CVR Energy Inc. (NYSE:CVI) is 82% owned by Icahn Enterprises. It is a energy holdings company that has interest in two seperate operating subsidiaries.

Icahn Capital Top Holdings:

Entity Amount Change
03/31/2015 to 06/30/2015
Position Size
($ in 1000's)
tpixel.gifICAHN ENTERPRISES LP 112,285,454 +3,474,609 $9,737,395
tpixel.gifAPPLE INC 52,760,848 UNCH $6,617,582
tpixel.gifCVR REFNG LP 77,198,718 UNCH $2,789,720
tpixel.gifEBAY INC 46,271,370 UNCH $2,787,387
tpixel.gifFEDERAL MOGUL HOLDINGS CORP 138,590,141 UNCH $1,572,998
tpixel.gifHOLOGIC INC 34,154,879 UNCH $1,299,935
tpixel.gifNUANCE COMMUNICATIONS INC 60,784,623 UNCH $1,064,339
tpixel.gifHERTZ GLOBAL HOLDINGS INC 51,922,405 UNCH $940,834
tpixel.gifHERBALIFE LTD 17,000,000 UNCH $936,530
tpixel.gifCHESAPEAKE ENERGY CORP 73,050,000 UNCH $815,969
tpixel.gifAMERICAN RAILCAR INDS INC 11,871,268 UNCH $577,418
open.gifTEGNA INC     $480,004
TGNA.WI 14,967,373 +14,967,373 $480,004
tpixel.gifMENTOR GRAPHICS CORP 16,120,289 UNCH $426,059
tpixel.gifNAVISTAR INTL CORP NEW 16,272,524 UNCH $368,247
tpixel.gifTRANSOCEAN LTD 21,477,900 UNCH $346,224
tpixel.gifMANITOWOC INC 10,582,660 UNCH $207,420
tpixel.gifGANNETT SPINCO INC 7,483,683 -7,483,690 $104,696
tpixel.gifCHENIERE ENERGY INC 1,075,000 +1,075,000 $74,455
tpixel.gifVOLTARI CORP 4,739,620 UNCH $26,778
tpixel.gifSEVENTY SEVEN ENERGY INC 4,746,421 UNCH $20,362

Second-quarter results:

Icahn Enterprises on August 6, 2015 reported second-quarter results which were down compared to the second quarter of last year. The company reported revenues of $5 billion and net income of $212 million or $1.53/unit. Revenues for the second quarter was down over $1 billion compared to the $6 billion in the previous second quarter of last year. The company's net income was half of last year's of $489 million or $4.06/units. Clearly the company's earnings and revenues were hurt by the collapse of the price of oil.

Enclosed

Icahn Enterprises is still profitable despite the the firms large quotational losses in its energy holdings. The firm is able to maintain its profits thanks to the diversifed source of revenues that protects the firms economic earnings from eroded. Icahn Enterprises is selling for a 16% premium to net asset value of $66.94/unit. I think paying a 16% premium to net asset value is reasonable to invest along side Carl Icahn (Trades, Portfolio). I believe in the short run Icahn Enterprise's unit will fall below $70/unit thanks to oil price falling below $45 a barrel. If the Iran deal go through Iran oil for flood oversupplied oil market causing the price for oil to fall more. This could lead to $30 a barrel oil by the end of 2015. This would caused Icahn's current paper losses to double leading to unit price falling below $70/unit.

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