In the wild world of Wall Street, most would agree that no investor is more polarizing or grabs the investment public's attention more raptly than Carl Celian Icahn. Being the wealthiest man in New York city and one of the wealthiest in the world certainly adds to his credibility, but perhaps nothing is more convincing (at least for myself) than his stellar and perhaps ultimate investment track record of all-time. Well-accomplished and a stunning investor in his own right, Warren Edward Buffett, is certainly worthy of his praise. However, few know that Icahn simply crushes his returns: from 1968-2011 (a span of 43 years which many would agree is a long enough time to judge one's investment success) Berkshire Hathaway grew book value at an outstanding 20% compounded annual growth rate. Outstanding, yes, but pales in comparison to Icahn's compounded annual growth rate during that time of an astonishing 31%! In other words, a $1,000 over that time put into Berkshire would yield just over $2.5 million while Icahn would yield over $110 million, which to me is quite a disparity. This leads me into why I recommend Icahn Enterprises (NASDAQ:IEP) for the long-term investor and back it up by having it as by far my largest stock holding ever since I opened a position at $62 earlier in the year (I like to eat my own cooking).
It is always preferred that management has its interests aligned with investors and in the case of IEP, that is as true as it gets with Mr. Icahn owning approximately 90% of the total limited partner units outstanding. This is especially important when we see routinely cases such as the recently closed Dell Inc. acquisition where management and the board of directors seemed not to do enough due diligence to perform its main fiduciary duty: that is to maximize shareholder value. This did not occur until Mr. Icahn stepped up in this well-publicized fight as the second largest shareholder and demanded that the Michael Dell/Silver Lake consortium pay a higher price. Amazingly, even though Mr. Icahn was able to raise for all Dell shareholders (including this author) approximately $500 million in new wealth through the special dividend and subsequent raise in offer price, this was labeled by the general media as a failed investment on his part (I would like to personally thank you Carl for your great persistence in making that happen as it yielded me a considerable amount of money as I was holding a sizeable number of common shares). Moreover, to me, this further adds to his credibility as you know you are stellar when an investment you make is deemed a failure just due to the fact that you did not make as much money as originally planned and yet still made market-beating returns.
Looking over the numbers in the most recently completed quarter, we see that the results were simply fantastic with net income per LP unit surging more than 400% from the prior year to $4.10 per LP unit, net asset value rising an impressive 33% for the nine months ended September 30, 2013 (handily beating the approximate 25% return of the S&P 500 over the same time-frame), and the company being able to easily maintain the approximate 4.2% dividend yield (more than twice the 1.9% dividend yield of the average S&P 500 stock). More importantly, looking forward in the six weeks since that time, major investments of IEP including Transocean (NYSE:RIG), Forest Laboratories (NYSE:FRX), Federal-Mogul (NASDAQ:FDML), have continued to explode higher leading us to reasonably conclude in the upcoming quarter that net asset value will rise substantially yet again. In addition, Mr. Icahn in my opinion has wisely shown when to book profits, with his well-publicized investment in Netflix (NASDAQ:NFLX) serving as a great example by shedding 50% of his shares after enjoying an astounding 457% return in just twelve months time. Of course, it is worth noting that Netflix came to Mr. Icahn's attention through his apparently astute son, Brett Icahn, which leads me to the final reason why I believe that Icahn Enterprises is my top pick for the next twenty plus years. With Mr. Icahn still performing very well for a 77-year-old, an investor must still consider this long-term risk of aging if planning for ten, fifteen, or even twenty years out as I typically choose to invest. However, we clearly see that Icahn Enterprises has a very able and young fund manager (Brett is only 33 years of age) to succeed the ultra-successful Carl Icahn for the many decades to come. Besides, his ultra-successful investments in stocks like Netflix, he has shown just recently in 2011 that his hedge fund returned an astonishing 50% putting him at the top .1% of all hedge fund managers that year.
To conclude, Mr. Icahn eloquently stated 25 years ago at Texaco's annual meeting that "A lot of people die fighting against tyranny. The least I can do is vote against it." Well after seeing seemingly so many self-serving/tyrannical acts by so many companies over my close to 20 years of investment experience, I have come to conclude that investors are best served avoiding this risk by voting for Mr. Icahn by owning Icahn Enterprises.