Carl Icahn: The Genesis Of The Great Corporate Activist

Carl Icahn: The Genesis Of The Great Corporate Activist

One of the best books written about Carl Icahn is King Icahn: Biography of a Renegade Capitalist, by Mark Stevens. The book is the story of a man who rose from humble beginnings to emerge as one of the the most powerful activists in corporate America.

Get Our Icahn eBook!

Get our entire 10-part series on Carl Icahn and other famous investors in PDF for free! Save it to your desktop, read it on your tablet or print it! Sign up below. NO SPAM EVER

Check out our H2 hedge fund letters here.

Mohnish Pabrai On Value Investing, Missed Opportunities and Autobiographies

Mohnish PabraiIn August, Mohnish Pabrai took part in Brown University's Value Investing Speaker Series, answering a series of questions from students. Q3 2021 hedge fund letters, conferences and more One of the topics he covered was the issue of finding cheap equities, a process the value investor has plenty of experience with. Cheap Stocks In the Read More

Two passages in particular encapsulate the early thinking of Icahn. The first discusses the two lessons Icahn learnt from his early disappointment on Wall Street, and the second is the roots of Icahn’s manifesto, which can be found in the conclusion of his Princeton thesis.

Here are two excerpts from the book:

Icahn’s first experience with a Wall Street boom-to-bust cycle was certainly a disappointment, but it also taught him two lessons he never forgot. First, no one makes money playing the market. A small investor dabbling in stocks is always vulnerable to bigger, more powerful forces that time after time will wipe him out.

Second, if he was going to emerge as a dominant force, he needed more than a broker’s training. He had to gain expertise in a market niche overlooked by the hordes of brokers content to sit by the phone and take orders. His study of empiricism had taught him that “there is a strategy behind everything,” and now he had to determine what that strategy was.

Unlike his peers, who viewed the peaks and valleys of the stock market as an inevitable part of the business, Icahn the empiricist, Icahn the chess player, was determined to outsmart the system or at least to find a void he could exploit.

That the stock market had bested him would prove for Icahn to be a blessing in disguise. The swiftness of his gains and losses made him realize that this was a business of enormous complexity and equally enormous rewards for those who could decipher the codes. To succeed required patience, intelligence, determination, and the ability to concoct shrewd strategies involving intricate and interrelated moves—precisely the kind of process that had always appealed to Carl Icahn.


“It is our contention that sizeable profits can be earned by taking large positions in ‘undervalued’stocks and then attempting to control the destinies of the companies in question by:

a) trying to convince management to liquidate or sell the company to a ‘white knight’; b) waging a proxy contest; c) making a tender offer and/or; d) selling back our position to the company.”

With this “Icahn Manifesto,” the one-time bookworm from Queens had found a way to intimidate corporate America, driving the CEOs of the Fortune 500 into a corner, using his opponents’ own greed and imperiousness to defeat themselves.

Interestingly, the roots of Icahn’s theory can be found in the conclusion of his Princeton thesis.

“It seems to me that the quest for an explication of the empiricist meaning criterion, as it has progressed, may be likened to the tale of the city that suddenly finds itself in possession of a great homogeneous mixture of gold and sand. If the gold could be separated from the sand it would prove a great deal more valuable to the inhabitants. The wise men of the city diligently search for a method of separation. By so doing they not only vastly increase their insight into the nature of gold, sand, homogeneous mixtures, etc., but also produce a series of increasingly potent methods of separating the chaff from the gold, the meaningless from the significant.”

For more articles like this, check out our recent articles here.


Updated on

The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates. It examines several financial statement items that other multiples like the price-to-earnings ratio do not, including debt, preferred stock, and minority interests; and interest, tax, depreciation, amortization. The Acquirer’s Multiple® is calculated as follows: Enterprise Value / Operating Earnings* It is based on the investment strategy described in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations, written by Tobias Carlisle, founder of The Acquirer’s Multiple® differs from The Magic Formula® Earnings Yield because The Acquirer’s Multiple® uses operating earnings in place of EBIT. Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations. Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up. Tobias Carlisle is also the Chief Investment Officer of Carbon Beach Asset Management LLC. He's best known as the author of the well regarded Deep Value website Greenbackd, the book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law. Articles written for Seeking Alpha are provided by the team of analysts at, home of The Acquirer's Multiple Deep Value Stock Screener. All metrics use trailing twelve month or most recent quarter data. * The screener uses the CRSP/Compustat merged database “OIADP” line item defined as “Operating Income After Depreciation.”
Previous article Where Is Bitcoin And Other Cryptocurrencies Heading?
Next article Connor Browne – FAANG Stocks Dominance

No posts to display