Icahn Enterprises’ Sargon Portfolio Achieves 36.6% Annualized Gross Returns

Sargon Portfolio generated 36.5% in annualized gross returns since its inception on April 1, 2010 as reported by Icahn Enterprises in a regulatory filing with the Securities and Exchange Commission (SEC).

Brett Icahn and David Schechter are the co-managers of Sargon Portfolio within the private investment funds comprising the Private Investment segment of Icahn Enterprises and its affiliate, High River Limited Partnership. Brett is Carl Icahn’s son.

Sargon Portfolio is subject to the control and supervision of Carl Icahn. It has $8 billion of assets under management (AUM) as of April 30, 2015.

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During the third quarter last year, the activist investor mentioned the performance of his son’s portfolio in a letter to Apple CEO Tim Cook. At the time, Sargon Portfolio had $6.6 billion AUM. Carl Icahn said, “We believe this performance speaks for itself with respect to our expertise.”

Sargon Portfolio: an opportunity to prove Brett Icahn’s mettle to be a successor

In 2012, Bloomberg reported that Carl Icahn allocated around $3 billion for Sargon Portfolio to expand the role of his son and Schechter in managing his investments. Based on their legal agreement, Brett Icahn and Schechter will invest companies with $750 million to $10 billion market valuation.

Carl Icahn sets the strategy and maintains oversight of Brett and Schechter. The co-managers are required to obtain approval for certain investments. Their agreement will expire in 2016 after Carl Icahn turns 80. Brett Icahn and Schechter will then be able to disclose their performance at Sargon Portfolio to “market a permitted fund” based on a regulatory filing with the SEC.

Brett Icahn & David Schechter started with $300 million

Carl Icahn hired Brett as an investment analyst more than a decade. In April 2010, he allocated $300 million for his son and Schechter to invest in loans and equities of companies with less than $2 billion in stock market value under Sargon Portfolio. By June that year, Sargon Portfolio generated a cumulative gain of 96%.

In a previous interview with Forbes, Carl Icahn recalled, “When Brett and his partner, David Schechter, started the Sargon Portfolio, they said, “Give us $300 million,” and I said, okay, I had the right to veto anything they did. They gave up their salaries to take a small percentage of the profits. There was a hurdle rate. This way it was their baby. The choices they made were a little bit different from what I would’ve done–they were more in growth areas, in technology–but they did great with it, basically doubling the money.”

Carl Icahn credited his son Brett and Schechter for the investment ideas on Apple, Netflix, Lions Gate and Genzyme. The three are currently pushing Apple to buyback more shares.

Carl Icahn treats Brett like normal employee

Carl Icahn treats Brett like a normal employee at his firm. He told his son, “Hey, look, you’re working here like everybody else: You start at the bottom, and you get no perks, and you have to understand that.” You’ve got to be almost tougher with them than anybody else. You don’t want others to think he’s got an advantage. Brett was always sensitive to that.”