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Carl Icahn
Billionaire Investor
Carl Icahn
Known for the “Icahn Lift”
79 years old, $20B+ net worth
Raised in NYC
Princeton (BA in Philosophy)
NY University School of Medicine (dropped out)
Started as a stockbroker on Wall Street in 1961
Founded Icahn & Co in 1968
Icahn Enterprises (IEP)
Investment
Strategy
<->
Contrarian
!
Activist
$
Value
1
2
3
Purchase of
Stock or Debt
Promulgate
Change
Unlock
Hidden Value
Significant Financial Capital,
Human Capital
(experienced investment team)
Experienced management
teams, media coverage to
bring about change, rapid exe-
cution
Financial expertise, ability
to extract synergies through
bolt-on acquisitions with port-
folio companies
• Dealing with board and
management
• Proxy wars
• Tender offers
• Taking control
• Financial restructuring
• Operational turnarounds
• Strategic initiatives
• Corporate governance
changes
Resources
Required
Via subsidiaries
IEP to issue debt
Icahn’s personal
money and funds
from IEP
Sources of Funds
2
Types
of Investments
Subsidiaries
Significant
holdings
Subsidiaries
Icahn Enterprise
GP
Icahn Enterprise
LP
Icahn Enterprise
Holdings
Icahn Capital LP
PSC Metals Inc.
AREP Real Estates
Holdings
WestPoint Home
LLC
Viskase Companies
Inc. (VKSC)
IEH Auto Holdings
LLC
Ferrous Resources
American Railcar In-
dustries Inc. (ARII)
American Railcar
Leasing LLC
Tropicana Entertain-
ment Inc. (TPCA)
Federal-Mogul Hold-
ings Corp. (FDML)
CVR Energy (CVI)
CVR Refining, LP
(CVRR)
CVR Partners, LP
(UAN)
1%
1%
99% LP interest
100%
100%
100%
100%
100%
73%
77%
56%
75%
68%
82%
82%
66%
53%
Current
Holdings
Significant Position
Public Companies
Significant
Holdings
Timeline of Recent Investments
‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15
Oil and gas assets
Gain of $0.6b
Acquired Icahn Capital
Management
Acquired 100%
PCS Metals
America Casino &
Entertainment:
$0.7b gain casino sale
Majority interest
in Federal Mogul
54.4% of ARI
contributed by Carl
Icahn
71.4% of Viskase
contributed by
Carl Icahn
Majority stake
in Tropicana
Entertainment
Majority interest
in CVR Energy
CVR Refining (IPO and
secondary offering)
CVR Partners (secondary
offering)
Majority interest
(75%) in ARL
‘16
IEP Auto acquired all
assets of Uni-Select Inc.
in the U.S.
Controlling
interest in
Ferrous Resource
Total Assets
$4.2b
Total Assets
$37.3b
Example 1: Failure in Blockbuster
‘04 ‘05 ‘06
Icahn bought
9.8m shares
‘07 ‘08 ‘09 ‘10
Blockbuster makes
bid to buy Hollywood
Entertainment
Doubled his
stake
Won a Board seat
Drove CEO Antioco
out of company
Sold majority of
stake,
at loss of 97%
‘11
Blockbuster
filed for
bankruptcy
“Worst investment I ever made.”
Example 2: PayPal Spinoff
$ b
2006 2007 2008 2009 2010 2011 2012 2013
eBay’s Revenue by Business Segment
Marketplaces Payments
Example 2: PayPal Spinoff
‘14 ‘15
eBay announces
PayPal spinoff
Share price
↑7.5% or $56.63
Icahn (2% of eBay)
proposes to spin-off
PayPal
Settles proxy fight,
re: PayPal spinoff
Spinoff completed
eBay acquired PayPal in 2002, after its IPO
‘16
Icahn now owns 4%
of each company;
Revenue Growth
eBay 10%
PayPal 19%
Example 3: Herbalife
‘12 ‘13
SEC filing reveals
Icahn’s 13% in
HLF
HLF falls 41% as Bill
Ackman announces his
$1b short
Increased stake to
16.5%, $250mm
FTC opened probe to
investigate HFL
His opposing position against Bill Ackman
‘14
Bill Ackman explains
his short;
HFL ↑25%
‘15
Icahn Capital Historical Return
Time Period IEP Berkshire Leucadia Loews S&P 500 Dow
Jones
Russell
2000
3y ended Jun
30, 2015
154% 64% 22% -4% 61% 47% 64%
5y ended Jun
30, 2015
190% 71% 35% 19% 122% 105% 120%
7y ended Jun
30, 2015
61% 70% -44% -14% 88% 88% 100%
Apr 1, 2009 -
Jun 30, 2015
327% 136% 77% 81% 195% 173% 222%
Jan 1, 2000 -
Jun 30, 2015
1426% 265% 261% 334% 9% 122% 204%
Apr 1, 2009 -
Jun 30, 2015
26.1% 14.7% 9.6% 10.0% 18.9% 17.4% 20.6%
Jan 1, 2000 -
Jun 30, 2015
19.2% 8.7% 8.6% 9.9% 4.2% 5.3% 7.4%
Gross Return
on
Investment
in Stock
Annualized
Return
Overall Performance Record
Taking a
Step Back
Are there
economic conditions
where the the strategy
works better?
Low interest rates
Acquisitions therefore are less costly.
Abundance of cash rich
companies
Icahn believes that many companies are holding
cash because they do not have positive NPV proj-
ects to invest in.
Prevalence of mediocre
top management
and non-caring boards.
Conclusion
Actual activism is difficult
To participate:
	 • Icahn Lift
	 • Invest in IEP
Appendices
NASDAQ: IEP
Company (Proposed) Acquisition Multiple Current Trading Multiple
CVR Energy 4.7x 8.7x
Lions Gate 4.4x 22.6x
Clorox (failed) 11.9x 14x
Dynergy (failed) 8.6x 18.5x
Value Investing

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Billionaire Investor Carl Icahn: Activist Investing Strategy & Holdings

  • 2. Carl Icahn Known for the “Icahn Lift” 79 years old, $20B+ net worth Raised in NYC Princeton (BA in Philosophy) NY University School of Medicine (dropped out) Started as a stockbroker on Wall Street in 1961 Founded Icahn & Co in 1968 Icahn Enterprises (IEP)
  • 4. 1 2 3 Purchase of Stock or Debt Promulgate Change Unlock Hidden Value Significant Financial Capital, Human Capital (experienced investment team) Experienced management teams, media coverage to bring about change, rapid exe- cution Financial expertise, ability to extract synergies through bolt-on acquisitions with port- folio companies • Dealing with board and management • Proxy wars • Tender offers • Taking control • Financial restructuring • Operational turnarounds • Strategic initiatives • Corporate governance changes Resources Required
  • 5. Via subsidiaries IEP to issue debt Icahn’s personal money and funds from IEP Sources of Funds
  • 7. Subsidiaries Icahn Enterprise GP Icahn Enterprise LP Icahn Enterprise Holdings Icahn Capital LP PSC Metals Inc. AREP Real Estates Holdings WestPoint Home LLC Viskase Companies Inc. (VKSC) IEH Auto Holdings LLC Ferrous Resources American Railcar In- dustries Inc. (ARII) American Railcar Leasing LLC Tropicana Entertain- ment Inc. (TPCA) Federal-Mogul Hold- ings Corp. (FDML) CVR Energy (CVI) CVR Refining, LP (CVRR) CVR Partners, LP (UAN) 1% 1% 99% LP interest 100% 100% 100% 100% 100% 73% 77% 56% 75% 68% 82% 82% 66% 53%
  • 9. Timeline of Recent Investments ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 Oil and gas assets Gain of $0.6b Acquired Icahn Capital Management Acquired 100% PCS Metals America Casino & Entertainment: $0.7b gain casino sale Majority interest in Federal Mogul 54.4% of ARI contributed by Carl Icahn 71.4% of Viskase contributed by Carl Icahn Majority stake in Tropicana Entertainment Majority interest in CVR Energy CVR Refining (IPO and secondary offering) CVR Partners (secondary offering) Majority interest (75%) in ARL ‘16 IEP Auto acquired all assets of Uni-Select Inc. in the U.S. Controlling interest in Ferrous Resource Total Assets $4.2b Total Assets $37.3b
  • 10. Example 1: Failure in Blockbuster ‘04 ‘05 ‘06 Icahn bought 9.8m shares ‘07 ‘08 ‘09 ‘10 Blockbuster makes bid to buy Hollywood Entertainment Doubled his stake Won a Board seat Drove CEO Antioco out of company Sold majority of stake, at loss of 97% ‘11 Blockbuster filed for bankruptcy “Worst investment I ever made.”
  • 11. Example 2: PayPal Spinoff $ b 2006 2007 2008 2009 2010 2011 2012 2013 eBay’s Revenue by Business Segment Marketplaces Payments
  • 12. Example 2: PayPal Spinoff ‘14 ‘15 eBay announces PayPal spinoff Share price ↑7.5% or $56.63 Icahn (2% of eBay) proposes to spin-off PayPal Settles proxy fight, re: PayPal spinoff Spinoff completed eBay acquired PayPal in 2002, after its IPO ‘16 Icahn now owns 4% of each company; Revenue Growth eBay 10% PayPal 19%
  • 13. Example 3: Herbalife ‘12 ‘13 SEC filing reveals Icahn’s 13% in HLF HLF falls 41% as Bill Ackman announces his $1b short Increased stake to 16.5%, $250mm FTC opened probe to investigate HFL His opposing position against Bill Ackman ‘14 Bill Ackman explains his short; HFL ↑25% ‘15
  • 15. Time Period IEP Berkshire Leucadia Loews S&P 500 Dow Jones Russell 2000 3y ended Jun 30, 2015 154% 64% 22% -4% 61% 47% 64% 5y ended Jun 30, 2015 190% 71% 35% 19% 122% 105% 120% 7y ended Jun 30, 2015 61% 70% -44% -14% 88% 88% 100% Apr 1, 2009 - Jun 30, 2015 327% 136% 77% 81% 195% 173% 222% Jan 1, 2000 - Jun 30, 2015 1426% 265% 261% 334% 9% 122% 204% Apr 1, 2009 - Jun 30, 2015 26.1% 14.7% 9.6% 10.0% 18.9% 17.4% 20.6% Jan 1, 2000 - Jun 30, 2015 19.2% 8.7% 8.6% 9.9% 4.2% 5.3% 7.4% Gross Return on Investment in Stock Annualized Return Overall Performance Record
  • 16. Taking a Step Back Are there economic conditions where the the strategy works better? Low interest rates Acquisitions therefore are less costly. Abundance of cash rich companies Icahn believes that many companies are holding cash because they do not have positive NPV proj- ects to invest in. Prevalence of mediocre top management and non-caring boards.
  • 17. Conclusion Actual activism is difficult To participate: • Icahn Lift • Invest in IEP
  • 20. Company (Proposed) Acquisition Multiple Current Trading Multiple CVR Energy 4.7x 8.7x Lions Gate 4.4x 22.6x Clorox (failed) 11.9x 14x Dynergy (failed) 8.6x 18.5x Value Investing