This article is part of a series that provides an ongoing analysis of the changes made to Carl Icahn's US stock portfolio on a quarterly basis. It is based on Icahn's regulatory 13F Form filed on 05/15/2014. Please visit our Tracking Carl Icahn's Portfolio series to get an idea of his investment philosophy and our previous update highlighting the fund's moves during Q4 2013.
This quarter, Icahn's US long portfolio went up from $30.46B to $32.93B, an increase of 8%. The portfolio increased 24% and 14.50% respectively in the last two quarters as well. The number of holdings in the portfolio increased from 18 to 19: a fairly large 4.66% of the US long portfolio position in eBay was established this quarter. The largest holding is Icahn Enterprises with an allocation of 32.09% of the US long portfolio. It is followed by Apple Inc. with an allocation of 12.29%. It is a very concentrated portfolio with the largest five positions accounting for just below 69% of the entire portfolio.
Carl Icahn is best known for building sizable stakes in businesses and then pushing for changes to increase shareholder value. To learn more about his investing style and philosophy check-out "King Icahn: The Biography of a Renegade Capitalist".
Ebay Inc. (NASDAQ:EBAY): EBAY is a 4.66% of the US long portfolio position (~2.2% of the business) established this quarter at prices between $51 and $59. The stock currently trades at $52.33. The initial stake was first disclosed in eBay's FY 2013 earnings release when it was also revealed that Carl Icahn proposed spinning off PayPal and had nominated two board members. On 4/10/2014, an agreement was reached that prevented an immediate proxy fight.
Netflix Inc. (NASDAQ:NFLX): NFLX is a 2.40% 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. Last quarter saw an about-turn as more than half the position was disposed of at prices between $304 and $342. The pattern continued this quarter as the position was reduced by another ~16% at prices between $328 and $455. The stock currently trades at around $365. Icahn is harvesting large gains from the position. It was an activist stake and NFLX adopted a poison-pill provision to defend itself. Icahn backed-off as the company also started posting strong financial results.
Icahn Enterprises (NASDAQ:IEP): IEP is a very long-term position that has seen consistent buying over the years. Last year, the position size increased from ~98M shares to ~102M shares and this quarter saw an additional ~1M share purchase at prices between $100 and $118. The last big stake increase happened in 2012 when around 20M shares were purchased at prices between $36.50 and $42.50. The stock currently trades at around $100.
Apple Inc. (NASDAQ:AAPL): On 08/13/2013, Icahn revealed a "large position in APPLE" through a Twitter tweet. AAPL price-per-share spiked from $475 to close that day at $489.57. The original stake was increased by ~22% last quarter. This quarter, another 2.8M shares (~60% stake increase) of AAPL stock was purchased at prices between $500 and $561. The stock currently trades at $605. Apple is now the second largest position in the portfolio at 12.29%. Icahn had pushed Apple to do a $50B buyback but in February the call was abandoned - the campaign was partly successful as Apple is buying back more shares.
Herbalife (NYSE:HLF): HLF is a 2.96% of the US long portfolio stake first purchased in Q1 2013 in the high-30s price range. The position was marginally increased in Q2 2013 to almost 17M shares. This quarter saw a very minor stake increase. The stock currently trades at around $63. Bill Ackman is on the other side of this trade - short 20M shares since Q4 2012. Bill Ackman and Carl Icahn ended their feud late last month and they have apparently agreed to disagree on HLF. It will be interesting to see how their respective stakes progress in the coming quarters. HLF stock experienced a drop below $50 in March after disclosing that they are being investigated by the FTC (Civil Investigative Demand - CID).
CVR Energy Inc. (NYSE:CVI): CVI is a huge 10.15% 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 $46.72: it has been a roller-coaster ride with the stock reaching as high as $72.32 in May 2013 and a low of $33.62 in Nov 2013. The stock has returned ~11% for the year so far.
Two MLPs were carved out since the tender: CVR Refining (NYSE:CVRR) the refining portion and CVR Partners (NYSE:UAN) the nitrogen fertilizer unit. CVR Energy owns 71% of CVR Refining and 53% of CVR Partners.
Chesapeake Energy (NYSE: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 $27.96. Icahn successfully engaged in a proxy fight alongside Southeastern Asset Management that led to the eventual departure of the CEO. Icahn increased the position by another ~10% in Q3 2013. He currently owns around 10% of Chesapeake (66.5M shares).
Federal Mogul (NASDAQ: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. In Q3 2013, his share count increased by ~58% (over 44M shares) - the new shares were purchased by exercising FDML's rights offering (In May, Federal-Mogul launched a $500 million rights offering whereby shareholders could purchase an additional share for each one they currently held) at $9.78 per share - Icahn got 44M of the 51M shares purchased in the offering. The move paid off as the stock currently trades at around $16.66. Icahn now controls just over 80% of the business. It is Icahn's fourth-largest position at 7.83% of the US long portfolio.
Navistar International (NYSE:NAV): NAV is a relatively small 1.67% of the US long portfolio position that was increased by ~12% in Q3 2013 at prices between $27.50 and $40. The stock currently trades at $33.49. Icahn controls around 16% of the business.
Forest Labs (NYSE:FRX): FRX is an 8.59% of the US long portfolio activist stake first purchased in Q2 2011 at prices between $32.50 and $40. Over the years, the position has been increased by around 10%. Icahn engaged in two proxy battles and prepared for a third in 2012. A deal with the company in June 2013 resulted in an Icahn representative being appointed to the company's board as the eleventh member. The CEO was replaced in October 2013 and in December the company announced an accelerated repurchase program to be funded with a $1B debt offering and also announced plans to cut $500M in costs by 2016. Icahn holds 11.5% of the outstanding shares of FRX.
On 2/18/2014, Actavis plc (ACT) agreed to buy FRX in a $25B cash-and-stock deal ($26.04 cash and 0.3306 ACT shares for each FRX common stock held). The stock has returned ~55% YTD and that is following a stellar 72% return last year.
CVR Refining LP : CVRR is a small 0.42% of the US long portfolio position established in Q1 2013 as a result of the spin-off (carve-out) of CVR Refining from CVR Energy. The position was increased by 50% in Q2 2013 at prices between $28 and $35. The stock currently trades below that range at $26.09.
Transocean Ltd. (NYSE:RIG): RIG is a small ~2.70% of the US long portfolio stake first purchased in Q4 2012 at prices between $44.20 and $49.50. The position was increased by ~250% in Q1 2013 at prices between $44 and $60. The stock currently trades below those ranges at around $41.43.
Hologic Incorporated (NASDAQ:HOLX): HOLX is a 2.23% of the US long portfolio activist stake established last quarter at around $21 per share. Icahn currently has a 12.5% stake in the business and have nominated two representatives to the board. In early December, a new CEO (Stephen MacMillan formerly of Stryker) was appointed stemming hopes that Icahn might immediately push for the sale of the business. The stock currently trades at $23.91.
Talisman Energy (NYSE:TLM): TLM was a new 0.30% of the US long portfolio position established in Q3 2013. Last quarter, the stake was increased by over ten-times to a 2.91% of the US long portfolio position at an average cost-basis of around $11.79. The stock currently trades below that price range at $10.56. Icahn has already succeeded in nominating two new board members.
Nuance Communications (NASDAQ:NUAN): NUAN is a 3.17% of the US long portfolio stake established in Q1 2013 at prices between $18 and $25. The position was increased by roughly two-thirds in Q3 2013 at prices between $18.31 and $20. The stock currently trades below the low end of those ranges at $15.45. Icahn's ownership is currently at over 17% of the company (~60M shares). Nuance adopted a poison-pill provision that allowed shareholders to purchase additional shares, if any one shareholder acquired more than 20% of the outstanding shares. On October 8, 2013 Nuance yielded somewhat by appointing two new Icahn recommended directors, thus avoiding a proxy fight, at least for the time being. For investors attempting to follow Icahn, Nuance is a very good option to consider.
Voltari Corporation (NASDAQ:VLTC), American Railcar Inds. (NASDAQ:ARII), Enzon Pharmaceuticals (NASDAQ:ENZN), and Mentor Graphics (NASDAQ:MENT): 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 percentages owned of the businesses concerned are very significant. Icahn owns 14%, 55.60%, 13.7%, and 14.2% of VLTC, ARII, ENZN, and MENT respectively.
The spreadsheet below highlights changes to Icahn's US stock holdings in Q1 2014:
Disclosure: I am long NUAN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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