"In life and business, there are two cardinal sins...The first is to act precipitously without thought, and the second is to not act at all.”
Carl Celian Icahn ranks as one of the world’s richest man, with a net worth of $25 billion. Real time net worth.
Carl Icahn: Background and bio
Carl Icahn was born on Feb. 16, 1936 in Brooklyn and lived in Far Rockaway, Queens, New York. From his childhood, he lived with his parents in a small American home. His mother was an educator, and his father was a lawyer.
His notoriety as an atheist was the biggest obstacle in his career. He studied at a local public school, Far Rockaway High. Subsequently he proceeded to Princeton University. His mother wanted him to be a doctor, so after earning his bachelor’s degree in philosophy in 1957, he started studying medicine.
He rapidly realized that surgery was not his genre. After two years, he was recruited by the army and soon after he finished serving, he returned to New York to venture into the business world on Wall Street.
His business turned into a success in 1961 when he was a listed agent of Dreyfus & Company. He worked hard and developed an insight into convertible arbitrage and built up a large enterprise.
Throughout 1968, he was able to secure a seat on the New York Stock Exchange and launched Icahn & Co. Inc., a brokerage firm. In 1978, he began to sprawl his interests into a variety of businesses.
Since his start, Icahn has developed an impressive resume over the years.
Over the years, he had won senior positions in various corporations including RJR, Nabisco, Texaco, Phillips Petroleum, Western Union, Gulf & Western, Viacom, American Can, USX, Marvel, Imclone, Federal-Mogul, Kerr-McGee, Medimmune, BEA Systems, and Time Warner. He was the head of Bayswater Realty & Capital Corp. in 1979; and Chairman of ACF Industries, Inc. in 1984, along with many others.
Now he is president of Icahn Enterprises LP (NASDAQ:IEP), a versatile company, involved in a myriad of business activities like metals, real estate, and FMCG.
He, along with his wife, serves on the board of a number of foundations, including the Icahn Charitable foundation, the Foundation for a Greater opportunity, and the Children’s Rescue Fund. Serving the Foundation for a Greater opportunity, he established three teaching institutions in the South Bronx.
In 2007, the New York State English dialect and Arts written tests revealed 80% of the children at the Carl C. Icahn School passed the written test, securing 36.7% higher than the neighborhood mean, and 97% passed the examination, securing 37.5% higher in mathematics.
Moreover, he sponsors the Icahn Scholars Program at Choate Rosemary Hall. The Children’s Rescue Fund began in the Icahn House in The Bronx, a 65-unit complex for destitute families, housing lone pregnant women and single women with young kids. Furthermore, he manages Icahn House East, a shelter for the homeless established in New York town.
He is one of the 10 greatest stock market maharishi of all times “whose unyielding strategies have earned billions for them”, with Benjamin Graham, Warren Buffett, George Soros, Peter Lynch, Kirk Kerkorian, Jesse Livermore, Edward Lampert, Philip Fisher, and William J. O’Neil.
Another peculiarity that he secured throughout all these years is that he is ranked third as one of the five most dreaded finance personalities in America, with such other differentiated personalities as Bill Gates, John D. Rockefeller, J.P. Morgan, and George Soros.
“The word terrifying is apt for these men. Gates, Soros, Icahn, Rockefeller, and Morgan all embody sufficient power (financial, mental, and political), to trigger awe, esteem, and, consequently, fright. It is improbable that they will ever inspire their own costume line, but they will forever run chills down the spines of bankers, investors, and financial figures alike.”
Yet another feature in his trail of unending achievements is the “Icahn Lift,” the title given to the escalation in the stock index that occurs when Carl Icahn begins buying shares in a company.
The Icahn lift happens because of his standing for creating value for the shareholders of the businesses in which he takes an interest. He buys shares in a company that he believes is undervalued, and then conceives a design to rectify the difficulties. This generally includes spinning off revenue earning segments, altering administration, axing costs, and buying back stock.
Carl Icahn keeps shaking up companies through his brand of activist investing. In August 2014 he took a position in Hertz Global Holdings, saying he wanted to talk to the board about the "lack of confidence in management." By early September, Mark Frissora was out as Hertz's CEO. Over the summer he scored big buying up shares of Family Dollar Stores, helping push the company to strike a deal to sell itself to Dollar Tree, Inc. (NASDAQ:DLTR) for $8.5 billion.
Carl Icahn: Investments philosophy
Investopedia has put together a great description of Icahn's investment style:
Icahn’s Investment Style
Despite his widespread reputation as a buyout specialist, Icahn at heart is a value investor looking for so-called “cigar butt” companies that still offer value to investors, even as most investors don’t see those opportunities. It’s simply the way Icahn travels to that value destination that differentiates him from other contrarians like Buffett and George Soros.
Icahn’s target is high, but unusually simple – target a specific company, and go about the business of acquiring enough shares to give him controlling interest in the firm, thus making him “first” among company shareholders.
Achieving majority control gives Icahn three advantages:
- It allows him to control board of director appointees.
- It enables him to make high profile changes in management, and then rally shareholders to support those changes.
- He then uses that control to roll out a new “turnaround” strategy that shapes the company’s image into the image Icahn wants in all of his companies.
With his new management and board team in place, and with increasingly enthusiastic shareholders and investors pushing the firm’s stock price upward, Icahn’s pockets are padded in the process.
“They call him ‘King Icahn’ for a reason – he’s a legend,” notes Vijay Marolia, MBA, CFP and managing partner of Regal Point Capital in Orlando, Fla. Marolia, who has tracked Icahn’s investments for years, says that the financier’s investment style isn’t exactly new, but it is effective.
“In essence, Icahn’s a value investor, but he sees value where other value investors don’t,” Marolia said in an interview. “He’s known as a tough negotiator, and you don’t want to go against him. I actually have exited a short position solely because he was on the long side, and he has the money and power to do what he wants to do – including turning a losing company into a profitable one.”
Icahn has also mastered the art of mergers and acquisitions, especially the key element of capital structure (how a firm finances its overall operations and growth by using different sources of funds). Once he unlocks a company’s hidden value, Icahn begins remaking the company in his image.
Icahn’s approach involves targeting a business he thinks is badly managed and whose stock price is undervalued. He succeeds when the markets are in a recession; when everyone shows a bearish trend, he starts buying.
He secures a large ownership position to gain entrance for a position on the company’s board of directors. More often than not, his first requirement is to dump the CEO and mostly, devolving the company into many parts for a convenient sell off.
Wall Street experts say that most of the time he is triumphant, since he is frightening and unyielding. He has been viewed as such a dependable gold mine that investment managers characteristically set up buying the company’s shares, and whether Icahn is victorious or not, he does leave with vigorous stock price profits.
1. Strategic M&A is one of Carl Icahn’s favorite investment themes and currently represents around 30% of Icahn Fund ltd. Private equity firms, now without cheap financing options, can no longer outbid strategic buyers. In a number of industries, such as healthcare, software, and energy, large consolidators can achieve significant synergies and use strong balance sheets to complete transactions.
2. The “Icahn Lift;” This is the Wall Street catchphrase that describes the upward bounce in a company’s stock price that typically happens when Carl Icahn starts buying the stock of a company he believes is poorly managed. Since the mid 1980s, Icahn has had titanic battles with multiple U. S. corporations, resulting, most of the time, in significant capital gains for these companies’ shareholders and, of course, making Icahn a multi-billionaire, whom Forbes ranked as the 46th richest in the world in 2008. Icahn is viewed either as one of history’s most ruthless corporate raiders, or as a positive force for increased shareholder activism, who seeks to correct the abuses of greedy and/or incompetent corporate management.
3. Icahn’s strategy involves targeting a company he thinks is in bad shape from a management point of view and whose stock price is trading below value. He thrives when the markets are on a downtrend; when everyone else is selling, he starts buying. He accumulates enough of an ownership position to lobby for a position on the company’s board of directors. Usually his first demand is to dump the CEO and, oftentimes, to consider breaking up the company into separate parts and selling them off.
4. A classic example of Icahn’s business principles happened in 2006 he planned to oust CEO Richard Parsons and break up Time Warner. He could not do exactly what he had planned for. When Icahn was questioned about his abortive attempt (in a February 2007 Time Magazine interview) Icahn said “Dick Parsons agreed to do what we wanted most, that is a $20 billion buyback of the stock. He did what he promised, and the stock is up 30%. That helps shareholders. Our [hedge] fund made $250 million. It’s a nice way to lose.”
5. During the 1980s, Icahn used another approach. He bought controlling interests in undervalued companies with financing from Wall Street investment banks and then sold the individual parts of those businesses separately to other companies. Often, Icahn pocketed more than what he paid for the company as a single entity.
6. Icahn has a notorious penchant for buying distressed companies, railing against their CEOs, and then reaping sweet financial rewards. When he increased his Lionsgate stake from 4% to 9%, Nikki Finke issued the following caveat to Jon Feltheimer, Lionsgate’s president: “Be afraid. Be very afraid, Jon Feltheimer.”
Carl Icahn: Some activist examples
1. Icahn bought into Blockbuster half a decade ago, its stock was worth $10, give or take. He ultimately spent well over $300 million stocking up on shares. Largely it was to lead the effort that would lead to the ousting of then CEO John Antioco, a battle that began at the May 2005 shareholders meeting, where Icahn and his slate of “dissidents”, as The The New York Times Company (NYSE:NYT) put it at the time, were elected to Blockbuster’s board of directors. Carl Icahn at the time was “elated by this grand victory for corporate governance.”
2. Carl Icahn’s four-month campaign to win a board seat on Motorola ended in May 2007 at the cell phone maker’s annual shareholder’s meeting in Chicago. The vote could help determine the future strategy for Motorola, the second-largest maker of cell phones in the world. The company, which had gained significant market share in the past, has seen its profits plummet as competition heats up. The fight intensified as Icahn and Motorola each issue dueling letters, press releases and advertisements to try to persuade shareholders to take their side. Icahn, who initiated the battle after Motorola reported disappointing earnings, believes that the company is mismanaged and he wants to see the company spend its cash differently. He has also called for a management change if the situation does not improve, personally criticizing Motorola CEO Ed Zander. In a full-page advertisement in The Wall Street Journal, Icahn cited a remark attributed to Zander: “I love my job. I hate my customers.” “It sounds like something straight out of Alice in Wonderland,” Icahn said in his letter to shareholders.
3. Yahoo! Inc. (NASDAQ:YHOO) and the nation’s most famous activist investor, Carl Icahn, reached a deal that will end the high-stakes proxy fight for control of the Internet Company. Icahn has a record of trying to push corporate executives to do what they do not want to. Proxy fights are always risky and they often devalue the very asset that the two sides are fighting for. Therefore, in this case, Yahoo gave up some seats and, as Mahaney notes, Icahn gave up the chance to take control over the entire board of directors. Investor Carl Icahn was trying to take over the board of directors and get Yahoo to sell to Microsoft Corporation (NASDAQ:MSFT). With today’s deal, Icahn gets three seats on the board including one for him. It is a victory of sorts for Yahoo’s CEO, who will remain in charge, but it also reflects Icahn’s influence. Icahn is frustrated with Yahoo management’s refusal to make a deal with Microsoft.
4. Investor Carl C. Icahn and Time Warner Inc (NYSE:TWX). had announced an agreement in 2006, under which, Icahn had to drop his bid to seek control of the company and Time Warner to do some of the things the dissident shareholder had recommended. The agreement called for Icahn not to contest the company’s slate of directors at its shareholders meeting in May, 2006. In return, Time Warner was to increase its share repurchase program from $12.5 billion to $20 billion, matching a figure proposed in a report Icahn released later calling for a major restructuring of the media giant.
Carl Icahn: Quotes
“In life and business, there are two cardinal sins, the first is to act precipitously without thought, and the second is to not act at all. Unfortunately the board of directors and top management of Times Warner already committed the first sin by merging with AOL, Inc. (NYSE:AOL), and we believe they are currently in the process of committing the second; now is not a time to move slowly and suffer the paralysis of inaction.”
“You learn in this business: It you want a friend, get a dog.”
“Too often it’s not the most creative guys or the smartest. Instead, the ones are best at playing politics and soft-soaping their bosses. Boards don’t like tough, abrasive guys.”
“I believe there are and will be major opportunities to enhance Time Warner’s value in future combinations. However these transactions might not be achievable if Time Warner enters into long-term arrangements that preclude future flexibility such as an agreement regarding search functionality.”
“We’re not about liquidating companies. But if you do that, why is that terrible? We’re not blowing up the factories. The person who buys it should be able to make the asset more productive.”
“We have bloated bureaucracies in Corporate America. The root of the problem is the absence of real corporate democracy.”
“A great company in the media business needs visionary leaders, not a conglomerate structure headquartered in Columbus Circle that second guesses.”
“I can go in and save 30% in almost any company because there is so much waste and mismanagement.”
“I learned a long time ago that in big business and big poker, there are no nice guys,”
Carl Icahn: Books
- The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds
- King Icahn: The Biography of a Renegade Capitalist
- Masters of the Universe: Winning Strategies of America’s Greatest Dealmakers
- The Outsider’s Edge: The Making of Self-Made Billionaires
- Becoming Rich: The Wealth-Building Secrets of the World’s Master Investors Buffett, Icahn, Soros
- The Vulture Investors, Revised and Updated
Carl Icahn: Articles
- As Deal To Save Trump Taj Mahal Falls Through, Icahn Pledges $20 Million In Financing
- The 15 Most Famous Carl Icahn Quotes
- Carl Icahn Just Raised His Stake In Hertz
- Carl Icahn Bulks Up on EBay, Sells Some Netflix Stock
- Carl Icahn Offers $5M Bankruptcy Loan to Trump Entertainment
- Carl Icahn raises stake in car rental company Hertz
- Did Carl Icahn cause the private equity bubble?
- For Some CEO Candidates the Interviewer Is Carl Icahn
- This Oil Crash Is Blowing A Hole In Carl Icahn's Portfolio
- Carl Icahn Thinks Apple Should Buy Some Stock
- Carl Icahn Talks Raised Clorox (CLX) Bid, Potential Breakup
- Corporate Hell-Raiser
- 10 Questions for Carl Icahn: Time Magazine
- Clorox is ‘Very Undervalued': Carl Icahn
- Carl Icahn is still looking for trouble
- Carl Icahn: Wall Street Back To Its Old Tricks
- Alan Murray’s Interview with Carl Icahn
- Carl Icahn Top Hedge Fund Managers of 2010
- Carl Icahn: Yes, I Want to Buy Clorox. Really
Carl Icahn: Interviews
- Carl Icahn: Warren Buffett Is Too Easy on Some Companies
- Carl Icahn: 'No-Brainer' High-Yield Market Is in a Bubble
- Carl Icahn: Western Europe Is Really a Problem
Carl Icahn: News
- Carl Icahn Basically Just Made One Of His Top Men Sign A Pre-Nup
- Carl Icahn Made $535 Million Last Week
- Phil Falcone: This Generation’s Carl Icahn
- Carl Icahn Just Got A $415 Million Present
- This Is Why The Dodd-Frank Hedge Fund Regulation Failed
- With George Soros Out, These Are The 10 Hedge Fund Managers Most Likely To Retire Next
- The 20 Biggest Poker Players On Wall Street
- Here Are The Real Highlights Of The Ira Sohn Conference
- 31-Year Old Brett Icahn’s Hedge Fund Returned 50% Last Year
- The Top 25 Hedge Fund Earners In 2010
Carl Icahn: Newspaper cuttings
- Icahn’s Out, But Pan Am Could Fly – New York Daily News 1998
- Ever Contrary, Arnold Will Support Icahn In Texaco Battle .
- Icahn ready to step down at TWA 1992
- Icahn Battle With USX Is Expected to Be Close. 1990
- PROSPECTS; What’s Carl Icahn Up To? – New York Times 1988
- Uniroyal May Be Target Of Takeover Artist Carl Icahn . 1985
- Carl Icahn, Still Raiding After All These Years
- Carl Icahn Reports He's An Sec Target
- Carl Icahn: Just Call Him A 'deal Man'
- Carl Icahn Turned Down Wall Street'
- Corporate Raider Carl Icahn Sees New Era After Junk Bonds
- In This Corner Carl Icahn
- Corry Agrees To Hold Talks With Agents Of Carl Icahn
- Uniroyal May Be Target Of Takeover Artist Carl Icahn
- Corporate Raider Carl Icahn Has Imclone In His Sights