IEP - Icahn Enterprises L.P.

[giofranchi]

June 2013 Investor Presentation:

Across all of our businesses, our success is based on a simple formula: we seek to find undervalued companies in the Graham & Dodd tradition, a methodology for valuing stocks that primarily looks for deeply depressed prices. However, while the typical Graham & Dodd value investor purchases undervalued securities and waits for results, we often become actively involved in the companies we target. That activity may involve a broad range of approaches, from influencing the management of a target to take steps to improve shareholder value, to acquiring a controlling interest or outright ownership of the target company in order to implement changes that we believe are required to improve its business, and then operating and expanding that business. This activism has brought about very strong returns over the years.

 

giofranchi

Investor_Presentation_06.13.pdf

[giofranchi]

Yesterday I started rereading (actually, re-listening to) "King Icahn - The Biography of a Renegade Capitalist".

 

Great book! :)

 

giofranchi

1993-King-Icahn.pdf

[giofranchi]

Here is how IEP has performed relative to BRK, LUK, and L since 2000.

 

This board is full of very shrewd investors: is there someone who was so shrewd as to invest with Mr. Icahn in 2000? ;)

 

giofranchi

[bargainman]

Here is how IEP has performed relative to BRK, LUK, and L since 2000.

 

This board is full of very shrewd investors: is there someone who was so shrewd as to invest with Mr. Icahn in 2000? ;)

 

giofranchi

 

giofranchi,

 

I haven't done a deep analysis here, but looking at this chart:

 

http://finance.yahoo.com/echarts?s=IEP+Interactive#symbol=iep;range=my;compare=;indicator=dividend+volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

the returns over the last 3 decades appear rather inconsistent..  Especially when compared to BRK:

http://finance.yahoo.com/echarts?s=BRK-A#symbol=brk-a;range=my;compare=;indicator=dividend+volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

Do you have any thoughts on that?  or on the plan going forward?  What is Icahn's succession plan?  Is his company structured like BRK where the units are independent enough to manage without him?

[giofranchi]

giofranchi,

 

I haven't done a deep analysis here, but looking at this chart:

 

http://finance.yahoo.com/echarts?s=IEP+Interactive#symbol=iep;range=my;compare=;indicator=dividend+volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

the returns over the last 3 decades appear rather inconsistent..  Especially when compared to BRK:

http://finance.yahoo.com/echarts?s=BRK-A#symbol=brk-a;range=my;compare=;indicator=dividend+volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

Do you have any thoughts on that?  or on the plan going forward?  What is Icahn's succession plan?  Is his company structured like BRK where the units are independent enough to manage without him?

 

Hi bargainman,

first of all IEP was founded in 1987, so it is not three decades old yet. It was founded as American Real Estate Partners and for the first 13 years was basically just involved in real estate deals. Then in 2000, IEP began to expand its business beyond its traditional real estate activities to fully embrace its activist strategy. IEP stock has increased 1,085% from January 1, 2000, representing an annualized return of 20.2%.

So I don’t think it would be meaningful to compare IEP with BRK, LUK, or L during its whole 26 years of existence: for the first half of that period of time IEP was a completely different business than it is now, and a very different business than BRK, LUK, or L have always been. Just to give you an idea of the changes IEP went through, today only 3% of its assets are in real estate…

 

As far as succession is concerned, Carl Icahn’s son, Brett Icahn, has been working with and learning from his father for 11 years now, and at 34 he is still very young and will surely take the helm when Carl Ichan is gone. No assurance here he will be as good as his father, but Brett has already proven himself a very good investor, doubling the first $300 million he was put in charge of in a matter of a few years. His abilities were so convincing that Carl now wants him to oversee $3 billion. Not bad at all for someone so young! :)

 

giofranchi

 

[AchilliesValue]

I'd be a bit concerned about the son. I remember reading an interview with Carl where he said his son was investing in technology and other things he (Carl) didn't understand but was generating solid returns. I know a lot of his out performance came from the Netflix investment which a lot of value investors would argue is a short rather than a long.

[giofranchi]

I'd be a bit concerned about the son. I remember reading an interview with Carl where he said his son was investing in technology and other things he (Carl) didn't understand but was generating solid returns. I know a lot of his out performance came from the Netflix investment which a lot of value investors would argue is a short rather than a long.

 

Well, I guess the Netflix short thesis depends on its share price, right? As far as its business model is concerned, people like Mr. Ergen and Mr. Malone have expressed no doubts about its many strengths… and as far as management is concerned, don’t forget IEP looks for undervaluation caused by bad management… So, if they have overpaid for Netflix, it will turn out to be a poor investment, otherwise Mr. Brett Icahn might be ultimately proven right. Time will tell! :)

 

giofranchi

[giofranchi]

http://video.cnbc.com/gallery/?video=3000183755&play=1

 

I know this interview has already been posted in another thread. But I think the investment thread about a specific company should contain as much info about that business as possible. The more complete the thread, the better. In the future I think it is difficult that anyone will look specifically for this interview… Instead, I think a lot of people will continue to visit the IEP thread and learn about the company. And in so doing they will also automatically find and listen to this interview.

Parsad, if my reasoning is wrong, please delete this post of mine! :)

 

Cheers!

 

giofranchi

 

[giofranchi]

At The Poker Table With Icahn And Dell, Playing For High Stakes

 

http://seekingalpha.com/article/1570842-icahn-enterprises-lp-iep-at-the-poker-table-with-icahn-and-dell-playing-for-high-stakes?source=email_rt_article_title

 

giofranchi

[valueorama]

I just finished reading "King Icahn". The Dell saga is no different from what is narrated in that book.

 

 

[constructive]

Yes, thanks for posting King Icahn a couple of weeks ago Gio. I found it very interesting.

 

The description of Icahn's incredibly profitable greenmail tactics reminded me why I don't invest in IEP. I realize that his legal approach has evolved over the years but the philosophy of cutting inside deals and flipping businesses is just too far from my own.

 

Icahn's misadventure at TWA reminds me quite a bit of Lampert at SHLD. I don't think it's necessarily fair to castigate him as a bad manager. After all, every single legacy airline went bankrupt at some point. His biggest mistake was buying an airline, everything else was just a footnote.

 

"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."

[giofranchi]

Yes, thanks for posting King Icahn a couple of weeks ago Gio. I found it very interesting.

 

The description of Icahn's incredibly profitable greenmail tactics reminded me why I don't invest in IEP. I realize that his legal approach has evolved over the years but the philosophy of cutting inside deals and flipping businesses is just too far from my own.

 

Icahn's misadventure at TWA reminds me quite a bit of Lampert at SHLD. I don't think it's necessarily fair to castigate him as a bad manager. After all, every single legacy airline went bankrupt at some point. His biggest mistake was buying an airline, everything else was just a footnote.

 

"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."

 

Well, my view is clearly different here.

If you buy a bad business with poor management, and you think it will turn out to be a financially rewarding investment, just because you fix the management problem, well, then you are looking for trouble… And Mr. Icahn learnt his lesson well after the TWA episode full of misjudgments!

Instead, if you buy a good business, which is selling at a discount to IV, because of bad management, and then you proceed to fix the management problem, well, that’s just great! And as sure a way to make a lot of money as ever existed!

The businessman in me cannot but deeply respect and admire whoever is able to tackle and fix the management problem. I myself strive each day to put together the best team of people that I can afford, and I personally experience how much of a difference it really makes.

 

giofranchi

[giofranchi]

High Yield With Icahn

 

 

giofranchi

high-yield-with-icahn.pdf

[CorpRaider]

I love Icahn, but he has looked pretty ragged in his last few public appearances.  Seems like the Dell fight took a lot out of him.  I worry about how much longer he can keep going at this pace.  WEB on the other hand looks like he's got another great 20 years in him!

[giofranchi]

Reuters was completely accurate that I am concerned about the level of the market.  But I also made it clear on the conference call (and I believe as Reuters reported it), that it is almost impossible to predict what a market will do in the short term.  There are too many variables.

 

Often when we are concerned about the market, we hedge to some extent and this is one of those times. Interestingly, our investment funds had an annualized return of approximately 27% since January 1, 2009, and that return would have been greater if we had not hedged. As I have often said, picking short term moves in the market is like predicting how many sevens the “hot” dice player will continue to roll.

 

Concerning Apple, I told Reuters I believe that Apple is not a bank and that a large buyback should be put into place, as well as taking advantage of other ways this cash can be made more productive.  While I do not micromanage, at the risk of being immodest, I believe that in the area of allocating capital there are very few better then we and we hope to be able to be involved, as a large shareholder, with Apple, in this area.

--Carl Icahn

 

http://www.shareholderssquaretable.com/personal_views/

 

 

Gio

 

[giofranchi]

AAPL Full Letter

 

 

Gio

Carl_Icahn_AAPL_Full_Letter.pdf

[xtreeq]

AAPL Full Letter

 

 

Gio

 

Thanks Gio

[giofranchi]

2013 Annual Letter

 

http://www.shareholderssquaretable.com/unitholders_iep/

 

 

Gio

[giofranchi]

An activist manifesto by Carl Icahn

 

 

Gio

Carl-Icahn-Nov182014.pdf

[bargainman]

Is anybody getting interested here? Getting close to the 52-week low. But I'm not sure exactly how to value these guys? Has anyone done valuation work on them?

[Liberty]

http://www.reuters.com/article/2015/02/27/us-icahn-results-idUSKBN0LV1X320150227

 

Billionaire activist investor Carl Icahn's publicly traded investment fund posted its first annual loss since 2008 last year, undone by plummeting oil prices, the company said in a regulatory filing on Friday.

 

Icahn Enterprises LP (IEP.O) lost $373 million, or $3.08 per depositary unit, in 2014, with much of it due to a loss of $478 million in the fourth quarter. Results were hurt by a halving of oil prices between June and December amid a global supply glut.

 

The company earned a profit of $1.03 billion in 2013.

[LowIQinvestor]

Is anybody getting interested here? Getting close to the 52-week low. But I'm not sure exactly how to value these guys? Has anyone done valuation work on them?

 

Might want to start with NAV?:

 

Indicative Net Asset Value $ 8,385

 

It looks overvalued to me.

[cheerlee]

Don't understand these statements in Annual Report. Can anyone explain that? Does Icahn charge management fee from IEP?

"Prior to March 31, 2011, incentive allocations generally ranged from 15% to 25% of the net profits (both realized and unrealized) generated by fee-paying investors in the Investment Funds and were generally subject to a “high watermark," whereby the General Partners did not earn incentive allocations during a particular year even though the fund had a positive return in such year until losses in prior periods were recovered. In general, these allocations had been calculated and distributed to the General Partners annually other than incentive allocations earned as a result of investor redemption events during interim periods. For the period January 1, 2008 through March 31, 2011, the Investment Fund Limited Partnership Agreements provided that the applicable General Partner was eligible to receive a special profits interest allocation at the end of each calendar year from each applicable fee-paying capital account maintained at the Investment Fund. Special profits interest allocations ranged from 1.5% to 2.5% per annum and were allocated to the General Partners to the extent the Investment Funds had sufficient profits to cover such amounts."

[KinAlberta]

Does anyone know much about Icahn and his history regarding shorts?

 

 

Carl Icahn Says the Market Is ‘Extremely Overheated’

Jun 24, 2015

 

http://blogs.wsj.com/moneybeat/2015/06/24/carl-icahn-says-the-market-is-extremely-overheated/

[giofranchi]

Here is How Carl Icahn’s Picks Lost Twice As Much As The Market in Q3

 

http://www.insidermonkey.com/blog/here-is-how-carl-icahns-picks-lost-twice-as-much-as-the-market-in-q3-377233/

 

Cheers,

 

Gio