The Greatest Investors: Carl Icahn

Born: 1936 (New York City)

Key Positions: Icahn & Company (securities firm)

Icahn Enterprises, LP (IEP)

Icahn Partners (hedge fund)

Personal History:
Carl Icahn, best known for the “Icahn Lift” which describes the quick upward trajectory in a company’s stock price when Icahn begins to invest in the company, has made a name for himself in the often-turbulent world of activist investing. Icahn grew up in a middle-class family in Queens, New York City. He graduated from Princeton University with a degree in philosophy in 1957 and enrolled at New York University’s School of Medicine but did not complete his coursework. In 1961, Icahn began to work for Dreyfus & Company as an entry level stockbroker. In 1968, Icahn bought a seat on the New York Stock Exchange and launched his individual finance career with an emphasis in trading options.

Over time, Icahn developed a reputation as a tough negotiator and an ingenious strategist, and he began to use his positions in companies to exert influence on the business practice of those companies, a procedure known as activist investing. Icahn has been involved in many battles with corporations across an array of sectors, including Western Union, Phillips Petroleum, Texaco, Viacom, Revlon, Time Warner, Motorola, and others. In 2006, Icahn worked to break Time Warner into four separate companies. Some of Icahn’s most recent investment efforts have included Netflix, Lyft, Vanguard Group, Hertz, and more.

Icahn has become increasingly political in recent years. He publicly endorsed Donald Trump in the 2016 U.S. presidential election and was rumored to be in consideration for the position of Treasury Secretary. Since late 2016 Icahn has served as Special Advisor to Trump on financial matters. Icahn is also known for his philanthropy and has made major contributions to Princeton University, and various public and private organizations in the New York City area.

Investment Philosophy:
Icahn’s investment strategy shifted over time. His earliest experiences as an options trader eventually morphed into his position as an activist investor, not afraid to use his ownership positions in publicly traded companies to pressure those companies into making changes which he felt would boost the value of his shares. Icahn’s activism began in earnest in the late 1970s, and one of his first highly public takeovers was of TWA in 1985. His activism has garnered him enemies in the past, but the strategy has proven to be a highly successful one. Icahn continues to search out companies that he feels are poorly managed and underperforming in order to buy up controlling stakes and exert influence.

Key to Icahn’s investment strategy is moving in opposition to those around him. When most people are selling, Icahn begins to buy, eventually accumulating enough of a position to lobby for a position on the company’s board of directors. Icahn will often move to fire the CEO and, in many cases, to break up the company into different parts to facilitate a sale. Icahn has developed a reputation as an intimidating, relentless, and highly competitive investor.

Noteworthy Publications:

"King Icahn" by Mark Stevens (1993)

Quotes:

"I make money. Nothing wrong with that. That's what I want to do. That's what I'm here to do. That's what I enjoy."

"CEOs are paid for doing a terrible job. If the system wasn't so messed up, guys like me wouldn't make this kind of money.”