Carl Icahn's Favorite Holdings: A Brief Analysis

by: Efsinvestment

Carl Icahn is the 24th richest individual in America, with a personal wealth of $11 billion. He is widely known as an activist investor. Icahn actively engages in stakes of stressed public companies, and then pushes for change in management policy. By doing so, Icahn fixes these companies by transforming them into profit machines. When his investments reveal the fruits, he sells the accumulated stocks. According to I-Metrix Edgar Online, Icahn Capital LP has a diversified portfolio of 23 positions inclined towards technology and health care stocks. Here is a list of Icahn Capital’s portfolio with thoughts on its top 10 holdings:

Company Name Ticker $ Market Value # Shares % Δ in Shares % of TSO
MOTOROLA SOLUTIONS MSI 1,354,040,701 30,634,405 7.24% 9.08%
BIOGEN BIIB 1,282,162,439 12,860,205 0.00 5.32%
CHESAPEAKE ENERGY CHK 682,587,697 20,880,627 25.46% 3.18%
SANOFI AVENTIS SNY 398,449,600 10,480,000 0.00 0.40%
LIONS GATE LGF 223,567,480 35,713,655 0.00 26.12%
AMYLIN PHARMA AMLN 185,239,194 14,381,925 10.87% 9.87%
MENTOR GRAPHICS MENT 183,126,494 12,896,232 0.00 11.51%
HAIN CELESTIAL HAIN 178,948,509 5,351,331 6.17% 12.44%
LAWSON LWSN 168,008,672 13,581,946 3.21% 8.28%
TAKE-TWO INTERACTIVE TTWO 153,475,786 9,844,502 0.00 11.51%
REGENERON PHARMA REGN 121,593,030 2,444,081 0.00 2.78%
CYBERONICS CYBX 74,327,093 2,107,972 0.00 7.44%
MATTEL MAT 64,688,618 2,425,520 0.00 0.70%
COMMERCIAL METALS CMC 60,823,446 3,692,984 50.30% 3.2%
MASCO MAS 55,985,146 4,177,996 -16,8% 1.16%
DYNEGY DYN 55,104,006 9,600,001 0.00 7.89%
NRG ENERGY NRG 54,335,477 2,376,880 0.00 0.96%
ENZON ENZN 52,340,712 4,723,891 67.70% 8.63%
FOREST LABS FRX 39,487,056 1,213,120 0.00 0.42%
EXELIXIS EXEL 27,766,756 2,357,110 0.00 1.85%
CADENCE DESIGN CDNS 3,524,848 355,686 -87.5% 0.13%
NAVISTAR NAV 640,883 9,326 100% 0.01%
ADVENTRX PHARMA ANX 326,57 138,377 0.00 0.52%
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MSI is a spinoff from Motorola Inc. and is involved in communication technologies, systems and services. MSI has a market cap of $14.92 billion, and is going through significant structural changes. Recently, Chinese regulators approved the acquisition of MSI’s network equipment assets by Nokia Siemens. MSI has a P/E ratio of 58.93 and forward P/E ratio of 17.82. EPS is expected to grow by 167.12% this year, and by 14.80% during the next five years. Stocks currently trade for around $44. If you are willing to invest in a distressed company going through structural changes, MSI could be a good choice.

BIIB, incorporated in 1985, provides medicines used for treatment of serious diseases, especially neurological diseases. BIIB has market cap of $24.02 billion. The company’s P/E ratio is 25.24 while forward P/E ratio is 16.40. In the last five years, the company’s EPS growth was 53.14%. This ratio is outstanding when compared with others in the biopharma business. In the next five years, EPS growth is expected to be 7.82%. Biogen is an immensely profitable company with a net profit margin of 19.05%. Shares trade around $99.

GENZ was one of the best investments by Icahn. Sanofa Avensis acquired Genzyme with a great premium. As the Sanofa Avensis investor report suggests, “The completion came after the successful conclusion of a subsequent offering period relating to sanofiaventis’ exchange offer to acquire all of Genzyme’s outstanding shares of common stock for $74.00 in cash and one Contingent Value Right (CVR) per share.”

CHK is the second-largest natural gas producer in the United States; the company also focuses on discovering new reserves. The market cap of Chesapeake is $21.50 billion and P/E ratio is 13.97. The forward P/E ratio of 10.12 is one of the best in the industry. Chesapeake had an EPS growth of 0.04% over the last five years, which is expected to increase to 7.47% in the next five years. Chesapeake’s net profit margin is 18.94% and the company yields 0.92%.

LGF provides motion pictures, television programming, home entertainment, family entertainment and other digitally-delivered content. The market cap of Lions Gate is $855.99 million and forward P/E ratio is 156.50. It had EPS growth of -18.89%, while EPS growth is estimated to be 8.55% in the next five years. Profit margin is -7.62%. Although some companies paid dividends in the industry, Lions Gate did not pay any dividends until now. Stocks currently trade for $6.26. Icahn owns 26% of the company. It is one company to watch for significant managerial transformation.

AMLN focuses on the development and commercialization of medicine. Amylin has a market cap of $1.88 billion. Over the last five years, it had EPS growth of 0%. However, this year, EPS growth is 19.83%, and it is expected to be 55% in the next five years. AMLN does not offer dividends. However, given Genzyme’s acquisition process, it could be another takeover target. Currently stocks trade around $12.

MENT engages in software and hardware design and their components. The company focuses on the design of very different technological tools, ranging from automobile electronics to digital simulation products. Mentor has a market cap of $1.60 billion. Its P/E ratio is 61.14 while its forward P/E ratio is 11.93. Mentor had EPS growth of 29.13% during the last five years. EPS growth estimation about the next five years is 15.00%. It has a profit margin of 3.12%, and the stock trades at around $14.

HAIN, incorporated in 1993, sells natural and organic products. In addition, the company provides personal care product, like skin care and hair care. It has a market cap of $1.44 billion. Its P/E ratio of 41.80 looks like a warning signal, but the forward P/E ratio is 22.59. HAIN had annualized EPS growth of 1.26% during the last five years, which is expected to be 11.50% in the next five years. It has a profit margin of 3.49%. Its stock currently trades at around $33.

LWSN is a provider of enterprise software, services and support. It has services in the United States, Europe, the Middle East and Africa and Asia-Pacific. Lawson has a market cap of $2.03 billion and a P/E ratio of 45.81, while its forward P/E ratio is 20.28. It had annualized EPS growth of 9.40% in the last five years, which is expected to raise to 14.46% in the next five years. It has a profit margin of 6.04%. Currently, its stock trades at around $12.

TTWO focuses on interactive entertainment software systems. The company provides software to most known video game consoles, like Playstation 3 and Xbox 360. It has a market cap of $1.33 billion and its P/E ratio is 16.24, while forward P/E ratio is 13.21. It had EPS growth of 17.78%, which is expected to be around 12.70% in the next five years. Its net profit margin of 7.26% is a healthy indicator.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MENT over the next 72 hours.