I have an offer to make you. You have a chance to partner with one of the greatest businessmen to ever live. This may sound like a phony offer, but it's completely real. Today you have an unprecedented chance to become a "partner" with Carl Icahn. Typically, investing with a legend like Icahn requires a minimum hedge fund investment of $500,000.
But right now, you can actually invest alongside Icahn in his publicly traded "partnership," Icahn Enterprises (IEP). This company is technically a Master Limited Partnership, or MLP, and shareholders are literally partners with Icahn. Like many of the best investments, Icahn's public persona and media reputation distract from the real investment opportunity. If you ignore his public feuds with people like Bill Ackman and his headline-exploiting statements, you'll find that he's actually one of the most talented investors in the world -- with a unique approach.
Icahn is the master of the leveraged buyout. That is a high-wire act wherein an investor uses debt to buyout and overhauls a whole company, getting rid of waste and streamlining productivity. After returning the bought-out company to profitability, the buyers scalp a healthy profit for themselves. Typically, the debt is risk-free for the investor since they can use the company's own assets as collateral.
He's developed a reputation as a ruthless corporate raider after his 1985 takedown of troubled airline TWA. As you may recall, Ichan became one of the most notable "leveraged buyout" kings of the era. Time and again, he would use this type of transaction to gain control of a company using debt secured by the company's assets. Perhaps the best aspect is that Icahn was able to buy out these huge companies without risking much -- or, in some cases, any -- of his own capital. In the TWA transaction, for example, he was able to personally pocket $469 million in just three years.
Since then, he's used his powerful name and world-class connections as an activist investor in numerous companies. These include RJR Nabisco, Texaco, Western Union (WU), Time Warner (TWX), and most recently Herbalife (HLF). But Icahn's own holding company -- Icahn Enterprises -- is itself a company that offers individuals the chance to invest alongside the leveraged buyout master.
Through Icahn Enterprises, investors gain direct ownership alongside Icahn himself. These stakes include everything from energy company CVR Energy (CVI) to casino operator Tropicana (OTCQB:TPCA). Plus, investors get exposure to his high-profile activist investments in stocks like Chesapeake (CHK), Transocean (RIG), and Netflix (NFLX).
Some investors try to follow in Icahn’s footsteps, buying his favorite stocks after his investments have been made public in SEC filings. But this strategy means buying several weeks or months after Icahn, often at premium prices. They're not getting the same deal as his partners. Through Icahn Enterprises, individuals can literally invest alongside Icahn when he makes his investments. And you can have confidence that the company's CEO is committed to shareholders, since he personally owns 89% of the common stock in his own company.
The stock has been a great performer, soaring more than 500% over the last decade and surpassing returns of similar holding companies like Berkshire Hathaway (BRK.B). The stock performance alone has been enough to attract new investors recently, thanks to frequent news headlines. Icahn Enterprises is an $8 billion MLP. Like other "tax advantaged" corporations, the company is required to distribute profits to investors. The big and recent change at Icahn Enterprises is the size of that distribution. Starting this year the company hiked its quarterly dividends tenfold.
The company is now paying a quarterly dividend of $1. Annualized, that $4 dividend translates into a 5.5% dividend yield. If the company is able to keep the dividend at this level -- or potentially raise the dividend -- this stock could become an extremely lucrative income investment. Shares of Icahn Enterprises trade at $73, which is well below the recent high of $90. But the stock is up considerably from the around $40, where it traded from 2009 through 2012.
The company's latest financial report published a "net asset value" of $62. The value of the assets may be up in the last three months, along with the stock market. But until the next report in August, it will be difficult to know the current value of the stock. It's rare to find a stock that offers outstanding capital gains and a healthy dividend yield. Icahn certainly has its risks, including the stability of those dividend payments. Since the dividend is tied to investment performance, it may rise and fall.
But the stock performance alone and opportunity to invest alongside Carl Icahn may be sweet enough to sway even conservative income investors to consider buying this stock. I've personally been sitting on the sidelines, and am thinking of buying a small stake. I figured you might want to hear about this unique opportunity as well. After all, it isn't often that we have the chance to invest alongside one of the most talented investors -- and capture a 5% dividend along the way.