This article is part of a series that provides an ongoing analysis of the changes made to Carl Icahn’s 13F portfolio on a quarterly basis. It is based on Icahn’s regulatory 13F Form filed on 08/14/2020. 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 Q1 2020.
This quarter, Icahn’s 13F portfolio value increased ~10% from $18B to $19.72B. The number of holdings decreased from 19 to 16. The portfolio is very concentrated with the largest five positions accounting for ~81% of the entire holdings: Icahn Enterprises, Occidental Petroleum, Herbalife, CVR Energy, and Caesars Entertainment.
Carl Icahn is best known for building sizable stakes in businesses and then pushing for changes to increase shareholder value.
Note 1: it was disclosed earlier this month that Icahn had made ~$1.3B shorting the CMBX 6 index (aka “mall short”). The position was put in place in November, well before COVID-19.
Note 2: 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 5).
HP Inc. (HPQ): The large (top five) ~6% HPQ stake was established in Q3 2019 at prices between $17.75 and $21.50. This quarter saw the position disposed at prices between $14 and $18. The stock currently trades at $18.33.
Note: Last November, Xerox offered $22 per share ($17 cash and 0.137 Xerox for each HP) to buy HP. The offer was later increased to $24 per share. In late March, Xerox abandoned the plan.
Hertz Global Holdings (HTZ): HTZ was a ~2% of the 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. Q4 2016 saw another ~125% increase at prices between $21 and $40. There was a ~17% selling in Q1 2019 at ~$19.45. Q3 2019 saw a ~73% stake increase as a result of a rights offering at $12.95 per share. There was ~25% further increase last quarter at a cost-basis of ~$7.50 per share. Hertz filed for Chapter 11 bankruptcy protection on May 27th. Following that, the entire 55.3M share position was disposed at $0.72 per share. The stock currently trades at $1.45.
Note: Icahn owned around 39% of the business. Their overall cost-basis was in the high-30s. The prices quoted above are adjusted for the Herc Holdings spinoff in Q2 2016.
Freeport-McMoRan Inc. (FCX): FCX was a ~1% of the portfolio stake established in Q3 2015 at prices between $7.50 and $18.50. Q4 2016 saw a ~12% trimming at prices between $9.50 and $16.50. Q3 2017 saw another ~16% selling at prices between $11.89 and $15.55 and that was followed with a one-third reduction in Q1 2018 at prices between $17 and $20. Last year saw another ~50% selling at prices between $8.75 and $14. The disposal this quarter was at prices between $6.30 and $11.50. The stock currently trades at ~$15.
Cloudera (CLDR): The 3.37% of the portfolio position in CLDR was purchased in Q3 2019 at a cost-basis of ~$5.41. The stock is currently at $12.42. His ownership interest is just under ~20%. This quarter saw a ~5% trimming.
Note: Last August, it was announced that Carl Icahn had reached an agreement with management at Cloudera: in exchange to keeping his ownership interest capped at ~20%, he got to nominate two directors to the company’s board.
Icahn Enterprises (IEP): IEP position has seen consistent increases over the years. The position size increased from ~98M shares to ~102M shares in 2013, to ~109M shares in 2014, to ~117M shares in 2015, to ~130M shares in 2016, to ~158M shares in 2017, 175.4M in 2018, 197M in 2019, and 205M shares in H1 2020. The stock currently trades at $49.41.
Note: IEP Book Value per share is ~$22 per share.
Cheniere Energy (LNG): LNG is a large ~5% 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. There was an about turn in Q2 2018: ~28% reduction at ~$65. The stock currently trades at ~$51. Last year saw a ~16% trimming while this year has so far seen a ~7% stake increase.
Note: Icahn’s ownership stake in the business is ~8.5%.
Tenneco Inc. (TEN): Tenneco is a small 0.35% portfolio position. It came as partial consideration for the acquisition of Federal-Mogul: Tenneco issued ~5.65M Class A shares and ~23.79M Class B (non-voting) shares. The stock is now at $8.46. This quarter saw a ~62% stake increase at prices between $2.32 and $12.56.
Note: The Class B non-voting shares are not in the 13F report.
Occidental Petroleum (OXY): OXY is a large (top three) 8.22% of the portfolio position established in Q2 2019 at ~$52 per share. Q3 2019 saw a ~23% selling at prices between $42 and $53 and that was followed with a ~15% reduction last quarter at prices between $37.25 and $44.50. The pattern reversed this quarter: ~300% stake increase at an average cost of ~$14.60. The stock is now at $12.96. Icahn controls ~8% of the business.
Note: Regulatory filings from earlier this month show them having a beneficial ownership of 99.71M shares (10.73% of business). This includes 12.28M in warrants (strike 22, 8/3/2027 expiry). The total outlay was $2.21B for a cost-basis of ~$22 per share.
Herbalife (HLF): HLF is a large (top three) ~8% of the 13F portfolio stake first purchased in Q1 2013 in the high-teens price range. Q3 2016 saw a ~15% increase at prices between $29 and $34 and that was followed with a similar increase the following quarter at prices between $24 and $32. Q2 2018 saw the position sold down by ~25% at $52.50 per share. The stock currently trades at $49.91.
Note 1: Regulatory filings from earlier this month show them owning 20.5M shares of Herbalife. This is compared to 35.23M shares in the 13F report. 14.72M shares were sold back to the company at $48.75 per share following Herbalife’s self-tender offer. Icahn still controls ~16% of the business.
Note 2: The prices quoted above are adjusted for a 2-for-1 stock-split done in April 2018.
CVR Energy Inc. (CVI): CVI is a large (top five) 7.26% of the 13F portfolio position first purchased in Q4 2011. The bulk of the current position (71.2M shares: ~71% of the whole business) was purchased through a $30 per share tender offer in H1 2012. The stock currently trades at $17.41.
Note 1: Two MLPs were carved out since the 2012 tender: CVR Refining the refining portion and CVR Partners (UAN) the nitrogen fertilizer unit. CVR Energy had majority ownership stake in both. In August 2015, CVR Partners agreed to merge with Rentech Nitrogen. Q2 2018 saw a tender offer whereby new CVR Energy shares were exchanged for CVRR at a valuation of $24.26 per common unit (0.6335 shares of CVI for one CVRR). ~22M new shares were issued.
Note 2: Icahn disclosed that CVI stock including dividends was up ~62% as of EOY2016 from the tender offer at $30. CVI stock was trading at $25.39 at the time. So, his adjusted cost-basis was $15.67 as of that date.
Caesars Entertainment (CZR): The original position (old Caesars) was disclosed in a regulatory filing last March which showed them owning 66.05M shares of Caesars Entertainment (~10% of the business). This included ~5.8M shares in convertible bonds. Total outlay was $646M for a cost-basis of $9.78 per share. The position was since increased to ~120M shares of beneficial ownership (17.55% of business, majority thru equity swaps and convertible bonds). Icahn pushed for a sale of the company and in April Anthony Rodio who previously ran Icahn’s Tropicana Entertainment was appointed CEO in a deal with the company. In June Eldorado Resorts (ERI) agreed to buy the company in a cash-and-stock deal ($8.40 cash and 0.0899 ERI shares for each share of old CZR held). The transaction closed last month, and the combined business took the Caesar’s name.
Newell Brands (NWL): NWL is 3.52% of the portfolio position established in Q1 2018 at a cost-basis of $27.40 per share. The stock is now well below that at $15.99. Q2 2018 saw a ~10% stake increase at prices between $23 and $28 and that was followed with a ~15% increase next quarter at prices between $20.50 and $28. Overall, their cost-basis is ~$25.60. Last quarter also saw a ~6% stake increase.
Note: In April last year, rival activist Starboard Value came to an agreement with Carl Icahn whereby they now together control Newell’s board.
Navistar International (NAV): NAV is 2.39% of the 13F portfolio long-term position. The last significant activity follows: ~22% increase in Q2 & Q3 2014 at prices between $29 and $38. The stock currently trades at $31.97.
Note: Icahn controls ~17% of the business.
Xerox Corporation (XRX): XRX is 1.82% of the portfolio position established in Q4 2015 at prices between $24 and $32. The stock is now at $18.79. There was a ~5% trimming in Q1 2018.
Note 1: Regulatory filings since the quarter ended show them owning 27.3M shares (12.82% of business). This is compared to 23.46M shares in the 13F report. Their overall cost-basis is now at $25.85 per share.
Note 2: In December 2017, Icahn launched a proxy battle nominating four new board members in an effort to stop the Xerox-Fujifilm deal announced earlier. Last May, Xerox scrapped the deal with Fujifilm in a settlement with Icahn and Darwin Deason (another activist alongside Icahn).
Note 3: Icahn’s activism earned him three board seats in 2016. Xerox spun-off Conduent and that transaction closed in January 2017. That was followed with a 1:4 stock-split in June. The prices quoted above are adjusted for these two transactions.
Delek US Holdings (DK): DK is a very small 0.93% of the portfolio position purchased at prices between $8.35 and ~$28 and the stock currently trades at $16.55. Icahn has a ~15% ownership stake in the business.
Herc Holdings (HRI): HRI is a very small 0.70% of the portfolio position established in Q2 2016 as a result of the spinoff of Herc Holdings from Hertz Global Holdings. There was a ~4% stake increase in Q3 2017 at ~$38.50. The stock started trading at ~$33 and currently goes for $40.82.
Note: Icahn controls ~16% of the business.
Conduent Inc. (CNDT): The very small 0.46% portfolio stake came about as a result of Conduent’s spinoff from Xerox that closed in January 2017. Terms called for Xerox shareholders to receive Conduent shares in the ratio 1:5. Icahn owned 99M shares of Xerox for which he received 19.8M shares of Conduent. CNDT started trading at ~$15 and currently goes for $3.66. Q2 2019 saw a ~60% stake increase at around $9 per share. That was followed with a ~21% increase in Q4 2019 at ~$6.50 per share.
Note: Their ownership interest in Conduent is at ~18% of the business. Earlier this month, Hunter Gray was appointed to the Board of Directors.
Welbilt Inc. (WBT) previously Manitowoc Foodservice: The very small 0.37% of the portfolio WBT stake was established as a result of the spin-off from Manitowoc. The spin-off terms called for one share of WBT for each share of MTW held. Icahn held 10.58M shares of MTW for which he received the same number of WBT shares. Regular-way trading started in early March 2016 with WBT at $13.41. It currently trades at $7.37 compared to Icahn’s overall cost-basis of ~$13. There was a ~18% stake increase last quarter.
Note: Icahn controls ~10% of the business.
SandRidge Energy (SD): SD is a 0.03% of the portfolio activist stake established in Q4 2017 at prices between $16 and $21 and the stock is now well below that range at $1.62.
Note: Icahn has a 13.51% ownership stake in the business. He lobbied the board and succeeded in ending the Bonanza Creek acquisition on December 28, 2017. In June 2018, Icahn gained control of SandRidge’s board by winning a proxy battle.
Note: Icahn also owns significant stakes in the following OTC stocks as per latest regulatory filings: ~15% of Enzon Pharmaceuticals (OTC:ENZN), and ~79% of Viskase Companies (OTCPK:VKSC). He is also known to have a position in Fannie/Freddie (OTCQB:FNMA) (OTCQB:FMCC). Also, Jordan Bleznick was appointed to the Board of Directors at Enzon Pharma earlier this month.
The spreadsheet below highlights changes to Icahn’s 13F stock holdings in Q2 2020:
Disclosure: I am/we are long FNMA, FMCC, NWL. 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.
Additional disclosure: I am long Fannie/Freddie pfds.