Legendary value investor Carl Icahn is one of my favorite
investors. And when he invests, I pay attention.
In August, Icahn announced he had an established "a large
Apple Inc. (
. He subsequently added to his position last week after Apple
shares sold off on mixed reviews of its iPhone 5S and technicolor
Today, Icahn sees an opportunity and calls Apple a
"no-brainer." He believes any issues are simply exaggerated. In a
CNBC interview, Icahn declared, "I really think Apple is one of
my best [investments] right now."
Icahn could be right. Apple might be one of his best
investments. But this doesn't mean I'm buying the stock…
After all, I said I "pay attention" to Icahn. But I didn't say
I mimic him. I'm not following him into Apple because I've not
yet to analyze Apple. I'm also not privy to Icahn's analysis; nor
am I privy to any of his value targets that would trigger a
Many investors like to follow well-known investors like Icahn.
After Icahn announced his Apple position, the share price shot up
8%. These shares weren't bought on thoughtful analysis. Rather,
they were bought in the wake of one prominent investor buying the
Mimicking is risky behavior, even if one mimics an investor of
To be sure, Icahn has been right more than he has been wrong.
You don't amass a $20-billion fortune by making frequent
mistakes. But every legendary investor - including Warren
Buffett, Peter Lynch, and even Carl Icahn - has been wrong.
Icahn was recently proven wrong on
Dell Inc. (NASDAQ: DELL
). The company was valued far lower in a recent management-led
buyout than Icahn had anticipated. There are of course many other
examples as well.
I pay attention to Icahn because I am interested in learning
where he perceives value. My intention is not to follow lock
step. If you're unwilling to undertake your own analysis
and you appreciate Icahn's skills, the better and safer strategy
is to invest with him in all his investments.
Lost in the chatter on Icahn's Apple purchase, is just how he
actually bought the shares. It turns out Icahn bought Apple
through his publicly traded investment fund
Icahn Enterprise LP (
By investing with Icahn through Icahn Enterprises, investors
not only gain exposure to Apple's potential, they gain exposure
to a diversified portfolio of other profitable value investments.
The portfolio includes
CVR Energy (
Forest Labs (
Nuance Communications (NASDAQ: NUAN
), and other notable value plays.
Icahn has proven he can produce wealth for investors in a
portfolio setting. Since 2000, Icahn Enterprises has generated a
1,085% total return, far outpacing
Berkshire Hathaway's (NYSE: BRK.B)
gain of 208%.
A portion of Icahn Enterprises' exceptional return is
attributed to a lush distribution. The company currently pays a
$5.00 annual dividend that produces a 6.3% yield on the current
unit price. This is more than double Apple's 2.6%
Superior long-term performance and a high yield make Icahn
Enterprises a perfect holding in the
High Yield Wealth
portfolio. Icahn Enterprises was recommended to
High Yield Wealth
subscribers this past July. Since then, it has generated a 12%
return and a $1.25 quarterly distribution.
Though I haven't invested directly to Apple, I have exposure
to Apple and Icahn's investment thesis through my shares of Icahn
Enterprises. More important, I have exposure to a portfolio of
investments (which offsets Apple's risk) complied by a value
investor with a long record of generating superior investment