This article is first in a series that provides an ongoing analysis of the changes made to Carl Icahn's U.S. stock portfolio on a quarterly basis. It is based on Icahn's regulatory 13F Form filed on 08/14/2013. Carl Icahn ran a hedge fund from 2004 but in 2011 returned outside money to shareholders. The fund currently invests Icahn's own money which is estimated at over $25B. In addition, he is also the Chairman of Icahn Enterprises (IEP) and a few other businesses. IEP is a publicly listed private equity enterprise 88% owned by Carl Icahn. IEP adopted an activist philosophy since 1999 and has cumulatively returned over 800% from that point on compared to just over 30% cumulative for the S&P 500 index. Icahn's other assets are also invested using the same philosophy - build sizable stakes in businesses and push for changes to increase shareholder value.
This quarter, Ichan's US long portfolio went up from $16.96B to $21.52B, an increase of ~27%. The number of holdings in the portfolio remained steady at 19. The largest holding is Icahn Enterprises, which has an allocation of just over one-third of the U.S. long portfolio followed by CVR Energy (CVI) with an allocation of 15.69%. It is a very concentrated portfolio with the largest five positions accounting for over 70% of the portfolio.
On August 13th, Icahn revealed a "large position in APPLE" (AAPL) through a Twitter tweet. He has since said that the price of Apple Inc. can go up a lot if they announce a large buyback with borrowed money. AAPL price-per-share spiked from $475 to close that day at $489.57. It currently trades at around $503.
Voltari Corporation (VLTC): VLTC is a minute 0.01% of the US long portfolio position established this quarter at prices between $3.40 and $7.42. The stock currently trades at $5.25. Although the position size is small on a relative basis, Icahn owns over 14% of the business, indicating a bullish bias.
Icahn Enterprises: IEP is a very long-term position that has seen consistent buying over the years. This quarter, about ~1.4M shares were purchased. Last year the position size increased from ~79M shares to ~98M shares and since then the purchases have slowed. Most of that buying happened in Q1 2012 at prices between $36.50 and $42.50. The stock currently trades at $74.66.
Dell Inc. (DELL): DELL is a huge 9.46% of the US long portfolio position first established last quarter. The bulk of the stake was purchased this quarter at a cost-basis of around $13.89. Icahn along with Southeastern Asset Management is preparing for a proxy fight in October for control of the company. Together, they own about 14% of the outstanding shares.
Transocean Ltd. (RIG): RIG was a small ~2% of the US long portfolio stake established in Q4 2012 at prices between $44.20 and $49.50. The position was increased by ~250% last quarter at prices between $44 and $60. This quarter, the stake was marginally increased. The stock currently trades at the low-end of those ranges at around $46.
Herbalife (HLF): HLF is a 3.56% of the US long portfolio stake first purchased last quarter in the high-30s price range. The position was marginally increased this quarter to almost 17M shares. The stock currently trades at $63.50. Bill Ackman is on the other side of this trade - short 20M shares since Q4 2012.
Nuance Communications (NUAN): NUAN is a 2.69% of the US long portfolio stake established last quarter at prices between $18 and $25. The stock currently trades near the low-end of that range at $19.20. Icahn has disclosed in an August 8th 13G filing that his overall ownership is at 16% of the company (~51M shares). Since then, NUAN has adopted a poison-pill provision that allows shareholders to purchase additional shares if any one shareholder acquires more than 20% of the outstanding shares.
CVR Refining LP (CVRR): CVRR is a small 0.84% of the US long portfolio position established last quarter as a result of the spin-off (carve-out) of CVRR from CVR Energy . The position was increased by 50% this quarter at prices between $28 and $35. The stock currently trades below that range at $27.34.
The rest of the positions were kept steady:
CVR Energy Inc.: CVI is a huge 15.69% of the US long portfolio position first purchased in Q4 2011. The bulk of the current position (71.2M shares: 80% of the whole business) was purchased through a $35 per share tender offer. The stock currently trades at $45. Since then, two MLPs were carved out: CVR Refining the refining portion and CVR Partners (UAN) the nitrogen fertilizer unit. CVI owns 71% of CVRR and 53% of UAN.
Forest Labs (FRX): FRX is a 5.84% of the US long portfolio activist stake first purchased in Q2 2011 at prices between $32.50 and $40. The stock currently trades at $43. Over the years, the position has been increased by around 10%. Icahn engaged in two proxy battles in the interim and was preparing for a third one this year. A deal with the company in early June avoided that and an Icahn representative was appointed to the company's board as the eleventh member. Icahn holds 11.5% of the outstanding shares of FRX.
Chesapeake Energy (CHK): CHK was first purchased in 2010 but was quickly sold. The bulk of the current stake was purchased in Q2 2012 at prices between $14.50 and $23. The stock currently trades at $25.51. Icahn successfully engaged in a proxy fight alongside Southeastern Asset Management that led to the eventual departure of the CEO. Since the end of the quarter, Icahn has increased the position by another ~10% indicating a clear bullish bias. He currently owns around 10% of CHK (66.5M shares).
Netflix Inc. (NFLX): NFLX is 5.44% of the US long portfolio position first purchased in Q3 2012 at prices between $53 and $85. The stake was increased by ~300% in Q4 2012 in the 50s price-range. The stock currently trades at $270. It was an activist stake and NFLX adopted a poison-pill provision to defend itself. Since then, Icahn has backed-off as the company started posting strong financial results.
Federal Mogul (FDML): FDML is a very long-term stake first purchased in 2000. It went through an asbestos-claim related bankruptcy and emerged in 2007 with Icahn owning over 75% of the outstanding shares as debt he owned got converted into equity. The position was increased marginally in the last two quarters of 2011 at prices between $13 and $23. Since then, the position has been kept steady. The stock currently trades at $16.41.
Hain Celestial (HAIN): HAIN is a relatively small 2.19% of the US long portfolio stake first purchased in 2010. The bulk of the current position was purchased in Q2 2011 at prices between $31 and $36. The stock currently trades at $81.
American Railcar Inds. (ARII), Enzon Pharmaceuticals (ENZN), Mentor Graphics (MENT), Navistar International (NAV), Take-Two Interactive Software (TTWO), & Webmd Health Corp. (WBMD): These are relatively small (less than 2% of the US long portfolio) positions that were held steady this quarter. Although the stakes are small on a relative basis, the percentage ownership of the businesses is very significant. Icahn owns 55.60%, 13.7%, 14.2%, 14.7%, 12.9%, and 13.4% of ARII, ENZN, MENT, NAV, TTWO, and WBMD respectively.
The spreadsheet below highlights changes to Icahn's US stock holdings in Q2 2013: