Because I'm a value investor I love bargains. You can imagine,
then, the anticipation when I found a bargain opportunity to
invest alongside one of the great value investors - Carl Icahn.
Icahn is the chairman and 89%-percent owner of publicly traded
Icahn Enterprises LP (
. Through Icahn Enterprises, he has established an enviable
record of creating value for himself and his partners. Since
2000, Icahn Enterprises' shares are up 1,025%.
I've followed Icahn for years, because I've shared an affinity
for his strategy for creating value. He simply buys companies at
depressed prices, and then actively agitates to create value in
The more depressed the company, the greater the value
Forest Labs (
in May 2012, two months after its top drug, the antidepressant
Lexapro, lost its patent. He repurchased Chesapeake Energy in May
2012 as natural gas prices crashed and it looked as if the
company might drown in debt. Both companies have since created
significant value for Icahn Enterprises investors.
Big game is also in the offing. Through Icahn Enterprises,
Icahn bought 4.7 million shares of moribund
in August when its shares were trading around $400. After Icahn
announced his position and his recommendations to create value -
namely share buybacks and dividends. Apple shares subsequently
took flight and are well above $500 today.
Back in July, Icahn Enterprises was on sale. Its units were
languishing near $70. A recent offering of 1.6 million units,
which raised dilution concerns, put off some investors.
At the depressed price, Icahn Enterprises was simply too
obvious a value to pass. Given Icahn's track record, I felt
assured any new capital would be efficiently allocated to
generate future value.
My confidence was further buttressed by a 25% increase in
Icahn Enterprises' quarterly distribution to $1.25 per unit,
which lifted the yield to over 7%. You don't issue more units and
then hike the distribution on all outstanding units unless you
have faith in your value-creating ability.
In short, the value I expected to materialize has subsequently
materialized. Icahn has efficiently allocated capital to Apple
(as well as to other lesser investments) to produce another win
for Icahn Enterprise investors.
Today, other investors are finally seeing what I saw
mid-summer. Icahn Enterprises units change hands for more than
High Yield Wealth
subscribers who followed my recommendation have realized a 40%
gain in past four months.
I remain on board with Icahn Enterprises and believe Icahn
will continue to create value for his investors. Opportunities
abound, and will continue to abound for years to come. Icahn has
said as much himself.
In a letter to Wyatt Investment Research commending us on our
insight and research on Icahn Enterprises, Carl Icahn wrote: "I
believe activism done correctly, combined with staying power,
creates by far the greatest risk/reward ratio in markets. And
this will hold true for the next decade."
I couldn't agree more.