Part I: Carl Icahn on Wall Street Week
In this episode of Wall Street Week Anthony Scaramucci and Gary Kaminsky talk to Carl Icahn, the majority shareholder and chairman of the board of Icahn Enterprises, a company listed on Nasdaq (ticker IEP).
In part one Carl Icahn talks about several different topics, among other:
- His time at Princeton
- Briefly about his father and mother
- His concern about the market and his thoughts about interest rates and earnings outlook
- Portfolio hedging (via CDS, Credit Default Swap)
- High-yield market (junk-bonds as “ridiculous high”, with credit spread “way to narrow” compared to treasuries)
- Proprietary trading (prop desks and the Volcker rule)
- Activist investors (the pros and cons)
- The CEO role as the most important person in a company
- CEO pay (great CEO’s should get paid, bad ones shouldn’t)
- Big regrets (Apple, “I should have bought more.”)
- Barack Obama (some things he does is good, don’t think he’s terrible, but wouldn’t want to see him president again)
Icahn mentions Apple when talking about the hedging strategy of his portfolio, and says:
With Apple you can’t really hedge it that much. But I feel so secure with Apple, you know maybe I hope I’m not gonna be wrong, that if it goes down I just buy more.
On whether 2015 or 2016 is going to be the new 2008, Icahn has the following to say:
I can’t predict year to year. I think anyone who does is a fool. You can’t really say. I’m worried about next month or even next year. You worry about the system and what’s going on.
Gary Kaminsky brought up the question about activists, asking Carl when he did start about thinking on not just being an investor and how Icahn defines activism?
You look at a company, and we looked at the beginning and we’d studying it, and again, you know, I’d spend five hours at night to two in the morning looking for companies. And you look at them and say; This company is amazingly cheap, it’s got great assets. It was easier to do it then. Great assets but do not make any money. And then you look at it and say; Why don’t it make any money? And you’d start talking to guys that understood the company better than I did, you know, an analyst. He said, the reason Carl is that it’s not that’s it not great and doesn’t have a great name, greatest. It’s the guy that runs it that’s an idiot and just shouldn’t be there. So I say, why can’t we get rid of him? So they say, well how are you gonna get rid of him. There’s no accountability in that company.
Icahn on the market:
Market’s an art not a science.
Further comments from Icahn about Apple:
We haven’t sold a share, in fact bought a lot more. Listen, I can’t tell you whether the stock is up a lot, even though it’s going at such a low multiple. It’s amazing how low. How do you justify the S&P going at 18x earnings, losing two percent of earnings, negative. These guys are talking about, I forgot, a 30% increase. When you take the cash out it’s 11x earnings. It’s absurd. I think it’s one of the, every fifty years you get a company like this that has everything going for it.
Part II: Carl Icahn on Wall Street Week
In the second part of the conversation with Carl Icahn a few of the topics discussed are:
- His background and the early Wall Street years
- Losing money (don’t confuse a bull market with brains)
- Personal drive
- His early career
- The current market and interest rates
Check out wallstreetweek.com to read more about the show.
King Icahn: The Biography of a Renegade Capitalist
If you want to learn more about Carl Icahn, check out the biography King Icahn written by Mark Stevens. This book introduces the reader to Carl Icahn’s classic activist investments. It’s a great book.
In the book the author quotes the Icahn Manifesto, that is Carl Icahn’s theory about how to take on undervalued businesses:
“It is our contention that sizeable profits can be earned by taking large positions in ‘undervalued’ stocks and then attempting to control the destinies of the companies in question by:
a) trying to convince management to liquidate or sell the company to a ‘white knight’; b) waging a proxy contest; c) making a tender offer and/or; d) selling back our position to the company.”
To read more about the Icahn Manifesto, see one of my earlier posts here.
Book description below taken from Amazon:
King Icahn is an unparalleled human drama. It is the story of a man who rose from humble beginnings to emerge as the most powerful, eccentric, galling, pugnacious and successful force in the business world. The Icahn drama is rife with contradictions, juxtapositions, paradoxes and epic power plays. All have led to a reshuffling of the business\financial landscape, to the electric fear on the part of CEOs when they hear the terrorizing words “Carl Icahn is on the phone” and to one of the world’s greatest fortunes. King Icahn is the only book written about Icahn, completely independent but with full access to the man himself. It reveals the back story of the greatest financier/pit bull of his generation, his multi-billion dollar epiphany, his real motive for taking on the CEO elite as well as his loves, feuds, idiosyncrasies and intellectual brilliance. Reading this book is the equivalent of earning an MBA squared!
Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company or individual mentioned in this article. I have no positions in any stocks mentioned.