Carl Icahn's Next Turnarounds
Mike is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
During the first quarter of this year, Carl Icahn and Icahn Associates held over 17 positions in the stock market, valued at almost $10 billion… not a bad little nest egg. But some of his biggest holdings aren’t making the returns Icahn might hope for.
Of course Icahn’s biggest holding, with a huge 41% of his total portfolio invested, is in Icahn Enterprises, L.P. (NASDAQ: IEP). It is his company. Following their offer to Clorox Co., a US manufacturer of food and chemical products, the value of Icahn Enterprises dropped until November 2011. Later, Icahn offered to purchase all outstanding common shares of Commercial Metals Company, however, Commercial Metals Company slapped down their offer. Later they did agree to review the deal again and things started to improve for Icahn Enterprises. Icahn Enterprises had a return of -3.42% in the past 52 weeks.
Icahn’s second biggest holding, Federal-Mogul Corp. (NASDAQ: FDML), isn’t doing extraordinary either. The automotive supplier worldwide offers products like cylinder liners, valves and engine bearings and employs more than 45,000 employees in 34 global locations. Icahn has 13.4% of his total portfolio invested in this company. After the President and CEO of Federal-Mogul, Jose Alapont, announced his retirement in March, Federal-Mogul has experienced a steady decline. They are currently sitting at -50.92% overall for the past year, down 3.89% from Icahn’s average purchase price.
Until late May, Icahn’s third biggest holding was Motorola Mobility Holdings Inc. Motorola Mobility Holdings was bought out by Google Inc., (NASDAQ: GOOG), on May 22, 2012 and Icahn was offered $40 per share in return. That’s quite a bit of dough.
His fourth biggest holding, Forest Laboratories Inc. (NYSE: FRX) is seen as a rather controversial investment...but isn’t that the case with most of his investments? With 9.4% of his total portfolio invested with Forest Labs, Icahn is planning to turn around yet another rotten company. A New York-based company, Forest Labs have invested a lot of money into research and development of their pharmaceutical lines. But they have received some scrutiny over current legal, but somewhat questionable, financial practices. In 2010, it was announced that Forest Laboratories had been moving profits to offshore accounts with an aim of "dodging taxes." Forest Labs pleaded guilty and was forced to pay over $300 million in fines. Currently they are sitting at -9.41% since July 2011. The turnaround is yet to come.
It would seem Icahn’s biggest holdings for the year are fraught with struggle and strife… but that is just where Carl likes to be. With his third biggest holding the only one of these four to end up in the green this past year -- because it was bought out by Google Inc. -- Icahn hasn’t had the greatest year. It is really in the long term that he makes his money though. It takes a while to change management, restructure a company and make other needed improvements. Fortunately, the struggle usually pays off for him in the end.
mthiessen has no positions in the stocks mentioned above. mthiessen runs a partnership that invests in public and private companies. The Motley Fool owns shares of Google. Motley Fool newsletter services recommend Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.
