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 11/14/2016. Please visit our Tracking Carl Icahn's Portfolio series to get an idea of his investment philosophy and our previous update for the fund's moves during Q2 2016.
This quarter, Icahn's US long portfolio decreased ~2% from $20.28B to $19.80B. The number of holdings decreased from 21 to 19. The portfolio is very concentrated with the largest five positions accounting for two-thirds of the entire holdings: Icahn Enterprises, American International Group, Cheniere Energy, PayPal Holdings, and Federal Mogul.
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".
Note: Icahn's 13F filing is a consolidated report and so should not be viewed as a single portfolio. Specifically, Icahn Enterprises holds several of the businesses and the entities in turn hold Icahn Enterprises. For an idea on the business structure, check out Icahn Enterprises Investor Presentation (Slide 9).
Chesapeake Energy (NYSE:CHK): CHK was first purchased in 2010 but was quickly sold. Q2 2012 saw a huge build-up at prices between $12.50 and $21. The disposal this quarter was at prices between $4 and $8. The stock currently trades at $5.94. Icahn realized losses. He had a ~9% ownership stake in Chesapeake.
Transocean Ltd. (NYSE:RIG): RIG was a small ~1 % of the US long portfolio stake first purchased in Q4 2012 at prices between $44 and $49.50. The position was increased by ~250% in Q1 2013 at prices between $44 and $60. The elimination this quarter was at prices between $9 and $13. The stock currently is at $11.21. Icahn realized losses. Icahn had a ~6% ownership stake in Transocean.
Allergan plc (NYSE:AGN): AGN is a very small ~0.5% of the portfolio stake. It was established last quarter at prices between $202 and $278 and reduced by ~88% this quarter at prices between $230 and $260. The stock is now at $192. The quick about-turn indicates a bearish bias.
CVR Refining LP (NYSE:CVRR): CVRR is a minutely small 0.25% 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 well below that range at $8.60. There was a ~4% trimming this quarter.
Nuance Communications (NASDAQ:NUAN): NUAN is a 1.44% 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 and $20. Q1 2016 saw an about turn: ~50% stake reduction at prices between $16 and $20.50. Last quarter saw another ~28% selling at prices between $14.50 and $19.50. This quarter also saw a ~9% further reduction at prices between $14 and $16.50. The stock is now at $16.91. Icahn's ownership is currently at ~7% of the business (~19.68M shares).
Herbalife (NYSE:HLF): HLF is a ~6% of the US long portfolio stake first purchased in Q1 2013 in the high-30s price range. There were minor increases since. This quarter saw a ~15% further increase at prices between $58 and $68. The stock currently trades at $50.86.
Note: After the quarter ended, the position was increased from 19.6M shares to 22.5M shares (24.18% of business). The total outlay so far is ~$943M with an overall cost-basis of $41.91.
Icahn Enterprises (NYSE:IEP): IEP is a very long-term position that has seen consistent buying over the years. The position size saw increases from ~98M shares to ~102M shares in 2013, to ~109M shares in 2014, and to ~117M shares in 2015. The last big increase happened in 2012 when around 20M shares were purchased at prices between $36.50 and $42.50. This year has seen an ~8.5% increase at prices between $48 and $60. The stock currently trades at $55.68 and the stake is at ~92% of the business.
American International Group (NYSE:AIG): AIG was a minutely small 0.28% portfolio stake as of Q3 2015. It was increased to a top-three position the following quarter at prices between $57 and $64. H1 2016 also saw a minor increase. The stock currently trades at $63.91. The stake is now at 13.68% of the portfolio. It is an activist position and Icahn's ownership interest is at ~4%. For investors attempting to follow Icahn, AIG is a good option to consider for further research.
CVR Energy Inc. (NYSE:CVI): CVI is a fairly large ~5% of the US long portfolio position first purchased in Q4 2011. The bulk of the current position (71.2M shares: 82% of the whole business) was purchased through a $30 per share tender offer in H1 2012. The stock currently trades at $17.47.
Note: Two MLPs were carved out since the 2012 tender: CVR Refining, the refining portion, and CVR Partners (NYSE:UAN), the nitrogen fertilizer unit. CVR Energy owns 71% of CVR Refining and 53% of CVR Partners. In August 2015, CVR Partners agreed to merge with Rentech Nitrogen (NYSE:RNF).
Cheniere Energy (NYSEMKT:LNG): LNG is a large (top three) 7.19% portfolio position. The bulk of it was purchased in Q3 2015 at prices between $47.50 and $70.50. Q4 2015 saw a ~15% increase at prices between $36 and $54. The stock currently trades at $38.45. Icahn's ownership stake in the business is ~14%.
Federal Mogul (NASDAQ:FDML): FDML is a very long-term 6.72% stake (top five) 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. In Q3 2013, FDML had a rights offering and Icahn got 44M of the 51M shares in the offering at $9.78 per share. The stock currently trades at $9.73. Q1 2015 saw a ~14% increase at prices between $12.50 and $16. Icahn controls ~82% of the business.
Note: Icahn offered to acquire the rest of the company for $7 per share in February, raised the offer to $8 per share in June, and again raised the offer to $9.25 per share in September.
Freeport-McMoRan Inc. (NYSE:FCX): FCX is a fairly large 5.70% of the portfolio stake established in Q3 2015 at prices between $7.50 and $18.50. The stock currently trades at $13.73. Icahn controls ~10% of the business.
Herc Holdings (NYSE:HRI): HRI is a very small 0.73% of the portfolio position established last quarter as a result of the spinoff of Herc Holdings from Hertz Global Holdings. Following the transaction, there was a marginal increase in the position. Icahn controls ~15% of HRI.
Hertz Global Holdings (NYSE:HTZ): HTZ is a 2.62% of the US long portfolio position. It was established in Q3 2014 at a cost-basis of ~$105. In Q4 2014, the stake was increased by just over one-third at prices between $72 and $95. Q4 2015 saw another ~23% increase at prices between $51 and $74. The stock currently trades at $25.23. For investors attempting to follow Icahn, HTZ is a good option to consider for further research.
Note 1: After the quarter ended, the position was increased from 12.9M shares to 29.26M shares (35.27% of business). The total outlay so far is $1.66B at an overall cost-basis of $56.73.
Note 2: The shares owned went down significantly last quarter because of the spinoff of Herc Holdings. The net position had a marginal increase after accounting for the spinoff ratio (3:15). The prices quoted above are adjusted for this transaction.
Manitowoc Foodservice (MFS): The very small 0.87% of the portfolio MFS stake was established as a result of the spin-off from Manitowoc. The spin-off terms called for one share of MFS for each share of MTW held. Icahn held 10.58M shares of MTW for which he received the same number of MFS shares. Regular-way trading started in early March with MFS at $13.41. It currently trades at $17.50 compared to Icahn's cost-basis of ~$15. He controls ~8% of the business.
Manitowoc Company (NYSE:MTW): MTW is a very small 0.26% of the portfolio activist stake. It was established in Q4 2014 at prices between $3.50 and $5.50 and increased by ~136% in Q1 2015 at prices between $4 and $5.50. The stock currently trades at $5.37.
Note: The prices quoted above are adjusted for Manitowoc Food Service spin-off.
Navistar International (NYSE:NAV): NAV is a relatively small 0.94% of the US long portfolio long-term position. The last significant activity follow: ~22% increase in Q2 and Q3 2014 at prices between $29 and $38. The stock currently trades at $29. Icahn controls ~20% of the business.
PayPal Holdings (NASDAQ:PYPL): PYPL is a fairly large (top five) 7.01% of the 13F portfolio position. It was established as a result of the spinoff of PayPal Holdings from eBay Inc. (NASDAQ:EBAY) that closed in July 2015. Icahn sold the EBAY stake last year while keeping the PYPL position steady. This year saw selling in PYPL as well: Last two quarters had seen a combined ~30% reduction at prices between $34 and $40.50. The stock currently trades at $40.08.
Voltari Corporation (NASDAQ:VLTC): VLTC position was increased by ~600% in Q1 2015 to a 52.3% ownership stake. As a percentage of the portfolio, the position is minutely small. The stake increase came about from Voltari's rights offering in February: 95% of the issued shares were acquired by Icahn by making use of the oversubscription privilege at a cost-basis of $1.36. The stock currently trades at $2.55.
Xerox Corporation (NYSE:XRX): XRX is a fairly large ~5% of the portfolio position established in Q4 2015 at prices between $9 and $11. Last two quarters had seen minor increases. The stock is now at $9.44. For investors attempting to follow Icahn, XRX is a good option to consider for further research. Icahn controls ~10% of the business.
Note: XRX is an activist stake and Icahn got three board seats earlier this year. Xerox also announced plans to split into two companies.
American Railcar Industries (NASDAQ:ARII): ARII is a long-term 2.49% of the portfolio position held steady this quarter. Icahn owns ~61% of ARII.
Note: Icahn also owns significant stakes in the following OTC stocks as per latest 10-Q: ~73% of Viskase Companies (OTCPK:VKSC) and ~69% of Tropicana Entertainment (OTCQB:TPCA). He is also known to have a position in Fannie/Freddie (OTCQB:FNMA) (OTCQB:FMCC).
The spreadsheet below highlights changes to Icahn's US stock holdings in Q3 2016:
Disclosure: I am/we are long AIG, CVI, FNMA, FMCC, LNG, PYPL.
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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