Carl Icahn on $FRX, $CHK, $NAV, M&A, Iran and Why he Exists

Carl Icahn on $FRX, $CHK, $NAV, M&A, Iran and Why he Exists


Billionaire investor Carl Icahn spoke with Bloomberg Television’s Trish Regan and Adam Johnson, about various activist campaigns he is running. Surprisingly he can still keep track of them (well at least a few). Icahn explains why Forest Labs doesnt like him, CHK has a corrupt,  why Navistar is different from Forest Labs and Chesapeake, Iran and M&A.


Icahn also said that the market is “too high at this point” and stock prices “have gone a bit ahead of themselves.”

Video and excerpts below:

Icahn on Forest Labs hiring a search firm to replace Howard Solomon and whether this move is in direct response to his allegations:

“Hopefully, there will be secular changes in corporate governance where these board members, as far as labs, it is a little analogous to Chesapeake where the board is just sitting there doing nothing for years. Or not doing what they should be doing, collecting a great deal of money. Allowing the CEO to get tremendous amounts of money and not holding them responsible. You have the duty of loyalty, the duty of care. Hopefully, these board members will be held personally liable. When they are held personally liable, sometimes they wake up. That’s where I hope this is going to go in this country.”


On why Forest Labs management is trying to dismiss him:


“The boards are not made up of bad people necessarily. They just sit there. Howard Solomon, who I talk to, a nice enough guy, a friendly guy, but he said we would be a disturbance. I think we would be a disturbance to his plans. Again, swing for the fences, and two, to get his son as CEO. We would obviously stand up against that. That is where he does not want us on the board…They do know that our record is stellar. And we understand what should be done in these cases. And what harm is it to have representatives of the shareholders on the board.”


“The problem in our country is there is no accountability in many, many cases. There are good boards and good CEOs, no question. But there is no accountability. That is our problem right here. It is a quintessential example of what is wrong in corporate America, right here at Forest Labs.”


On how he justifies his existence:


“The companies I have taken over and controlled I have held for eight to 10 years. We are not just out for a quick buck. If you take it to the macro level, it’s not that you make money or that you lose money. It is the fact that we are not competitive in our society…Look at the companies I have taken over and cleaned up and they have suddenly blossomed. I can show you many companies where we have made a great deal of money, millions of dollars, taking risks.”


On Navistar:


“We haven’t really made a decision on what we’re going to do there. It is different. Navistar is quite a bit different from a Forest or even a Chesapeake where the board just sat around. I believe the CEO was out there working and you can say honest or dishonest, but he was doing what he felt was right for the company. He came up with this new type of engine. Obviously, it has had problems. I do not think it is the same problem. It may end up that we have to do something, but it is different than a Forest Lab or a Chesapeake.”


On the next step for Chesapeake:


“Chesapeake, as I said before, has great assets. I do not think natural gas is going away from this country. What I think is going to happen there is that you will have to cut spending drastically. It is not like a country where you can print up money. Chesapeake cannot just take a printing press and print it out. They have to meet the gap problem that they have. But I think it can be done.”


On why so many oil companies are not able to pay for exploration out of cash flow:
“It takes time. When you drill, it takes a few years before you see results. You are putting in a lot of capital. But the problem with a lot of companies and this happen in 2000 when we took four of them over and did very well. That is one of my examples of cleaning up these companies. The real problem is that they overspend. It is almost like a family that if you make a certain amount of income, you cannot live in the biggest house in town. So you cannot be Exxon or British Petroleum. Some of the guys come in and they think that they can. They just swing for the fences. This is part of the culture.”


On where he sees the most M&A activity happening this year:


“I think it goes in spurts. There are a lot of good candidates that could be taken over. You need more activism. Activism is very tough. It looks easy, but it is extremely tough. you have all of these institutions, all these extremely expensive lawyers come in and throw everything at you, so you have to the staying power…In my opinion, the market is too high at this point. There are a lot of things you have to worry about in this economy.”


On whether there will be a sharp downturn in energy prices:


“If you have a recession, you will. Obviously gas and oil in a very bad recession, they will come down. But I do not think it will be that bad. When I say that stock prices will be high, I do not think the economy is going to fall apart. I think the jury is still out on that. Stock prices have gone a little bit ahead of themselves. I think it’s because you have a lot of cash on the sidelines, but a lot of cash has been invested by a lot of people who don’t understand the risk of the market.”


On the biggest risks for the market right now:


“There are quite a few of them. You talk about the fiscal cliff coming up. That’s something that everybody talks about how we will get over it. I hope we do. But you have all of these guys and their political problems. Unemployment is very high. And you have problems, I think, with Europe. It is certainly not solved. The ECB is doing what the Fed is doing, but the Fed and the ECB cannot solve these problems alone from a monetary point of view. Western Europe is sort of a basket case at this time. I think it will be solved and I think they will muddle through. You can never forget completely the Iran situation. you have a lot of things you have to worry about and the market has come up a fair amount from where it fell apart in 2008 or 2009.”