Analyst firm Jefferies has started coverage of Icahn Enterprises LP (NASDAQ:IEP) with a buy rating. Jefferies was charmed by Carl Icahn’s aggressive brand of activism that has kept him active at so many fronts since last year. Analysts Daniel Fannon and Surinder Thind see Icahn Enterprises LP (NASDAQ:IEP) as an opportunity to profit off of Icahn’s brilliant ideas.
The holding company Icahn Enterprises LP (NASDAQ:IEP) can receive a significant boost as Icahn succeeds in his plans for companies like Netflix, Inc. (NASDAQ:NFLX)’, Dell Inc. (NASDAQ:DELL), Transocean LTD (NYSE:RIG), Chesapeake Energy Corporation (NYSE:CHK) and his babysitting of Herbalife Ltd. (NYSE:HLF).
IEP is not directly a hedge fund, although it owns 40 percent of it. The public holding company offers the chance to get a taste of Icahn’s activism. However, in a recent interview with Forbes, Icahn said that he is largely independent of Icahn Enterprises when he chooses to shakeup a company. Icahn has said that he has the assets to write a $10 billion check without having to answer his investors.
Just recently, Southeastern Asset Management said that they like the other two proposals for Dell Inc. (NASDAQ:DELL)’s buyout more than the original from the founder Michael Dell. One of the other two propsals comes from Carl Icahn so his chances of winning this battle have increased.
Other than the exposure to Carl Icahn’s hedging bets, IEP also owns 100 percent of eight different companies, Fannon notes in his analysis. An example of favorable acquisitions is CVR Energy, Inc (NYSE:CVI) which has seen a 60 percent increase in share price since it was bought by IEP.
However, the analysts think that the hedge funds will be contributing the major portion of growth to IEP in this year. Jefferies also sees the attractive dividend yield of 6 percent and the potential of growth in NAV as significant reasons to own the stock. The analysts expect the NAV to rise to $66 through the next twelve months which, when put together with the dividend, represents a 12 percent return.
The headwinds for Icahn Enterprises LP (NASDAQ:IEP) would be a slowdown in activist investment activity and growth in NAV discount.