"Tracking Carl Icahn’s Portfolio – Q4 2018 Update"
"Carl Icahn’s 13F portfolio value decreased from $25.22B to $20.43B this quarter.Newell Brands stake was increased and a new Tenneco position was added during the quarter.Icahn Enterprises, CVR Energy, and Herbalife are the three largest positions.This article is part of a series that provides an ongoing analysis of the changes made to Carl Icahn’s 13F portfolio on a quarterly basis. It is based on Icahn’s regulatory  filed on 02/14/2019. Please visit our  to get an idea of his investment philosophy and our  for the fund’s moves during Q3 2018.This quarter, Icahn’s 13F portfolio value decreased ~19% from $25.22B to $20.43B. The number of holdings decreased from 20 to 18. The portfolio is very concentrated with the largest five positions accounting for ~82% of the entire holdings: Icahn Enterprises, CVR Energy, Herbalife, Cheniere Energy, and Newell Brands.Carl Icahn is best known for building sizable stakes in businesses and then pushing for changes to increase shareholder value. To learn more about his investing style and philosophy check out “”.Note 1: Regulatory filings since the quarter ended show them owning 66.05M shares of Caesars Entertainment (CZR) – 9.78% of business. This includes ~5.8M shares in convertible bonds. Total outlay was $646M for a cost-basis of $9.78 per share. This is compared to the current quote of $9.05.Note 2: Icahn’s 13F filing is a consolidated report and so should not be viewed as a single portfolio. Specifically, Icahn Enterprises holds several of the businesses and the entities in turn hold Icahn Enterprises. For an idea on the business structure, check-out  (Slide 5).New Stakes:Dell Technologies (DELL), Diamondback Energy (FANG), and Tenneco Inc. (TEN): These are the new 13F stakes this quarter. The 3.06% of the portfolio DELL stake came about as a result of the tracking stock buyback. Icahn held 18.53M shares of DVMT for which they received partial consideration in the ratio 1.3665:1. The 2.83% FANG stake came about as a result of the merger with Energen. Icahn held 9.67M shares of Energen for which they received 6.23M shares of Diamondback Energy in the ratio 0.6442:1. Tenneco is a small 0.76% portfolio position that came as partial consideration for the acquisition of Federal-Mogul: Tenneco issued ~5.65M Class A shares and ~23.79M Class B (non-voting) shares.Note 1: Regulatory filings since the quarter ended show them owning 10.9M shares (6.3% of business) of DELL. This is compared to 12.8M shares in the 13F report.Note 2: Overall, Icahn’s cost-basis on Diamondback Energy is ~$107 per share. Currently, it trades at $104.Stake Disposals:Dell VMWare Tracking Stock (DVMT): The 3.39% DVMT stake was established in Q2 2018 at prices between $70 and $90 and increased by ~270% last quarter at prices between $92 and $99. The disposal was due to the tracking stock buyback by Dell.Note: Icahn built the position after Dell revealed plans to buy the tracking stock back at a discount. Icahn filed a lawsuit and threatened a proxy fight. Dell came back with a somewhat better offer of $120 per share with a $14B cap. In response, Icahn dropped the lawsuit and walked away from the proxy fight saying it would be unwinnable as they have 17% favoring the current offer.VMWare Inc. (VMW): VMW was a 1.38% of the portfolio position purchased in Q2 2018 at prices between $119 and $151 and almost eliminated last quarter at prices between $145 and $163. The minutely small 0.26% remainder stake was disposed this quarter.Energen Corp. (EGN): EGN was a 2.62% of the portfolio stake purchased in Q2 2018 at prices between the low-60s and the low-70s. Last quarter saw a ~48% stake increase at prices between $71 and $87. Icahn controlled ~8% of the business. The disposal was due to the acquisition by Diamondback Energy.American Railcar Industries (ARII): In October, an ITE Rail Fund subsidiary agreed to buy ARII for $70 per share and that transaction closed in December thereby eliminating this position. Icahn had a ~62% ownership position in ARII.AmTrust Financial (AFSI): AFSI is a 1.06% of the portfolio stake established at a cost-basis of ~$13 per share. AFSI went private at $14.75 per share cash thereby eliminating this position. Icahn had control over 9.38% of the business.Note: The initial offer by the controlling family (Zysking/Karfunkel) was at $13.50 per share and Icahn sued successfully to up the price.Stake Decreases:Manitowoc Company (MTW): MTW is a very small 0.12% of the portfolio stake. It was established in Q4 2014 at prices between $14 and $22 and increased by ~136% in Q1 2015 at prices between $16 and $22. The stock currently trades at $19.19. There was a ~36% selling in Q1 2018 at prices between $32.50 and $34.50. Last quarter saw a marginal increase while this quarter there was a ~8% trimming.Note: The prices quoted above are adjusted for the Welbilt spin-off in March 2016 and the 1-for-4 stock-split last November.Stake Increases:Icahn Enterprises (IEP): IEP position has seen consistent buying over the years. The position size increased from ~98M shares to ~102M shares in 2013, to ~109M shares in 2014, to ~117M shares in 2015, to ~130M shares in 2016, to ~158M shares in 2017 and 175.4M as of EOY 2018. The stock currently trades at ~$70.Note: IEP Book Value per share was $30.07 and Net Asset Value per share is $46.20 as of Q3 2018.Newell Brands (NWL): NWL is a 3.74% of the portfolio position established in Q1 2018 at a cost-basis of $27.40 per share. The stock is now well below that at $17.06. Q2 2018 saw a ~10% stake increase at prices between $23 and $28 and that was followed with a ~15% increase last quarter at prices between $20.50 and $28. For investors attempting to follow Icahn, NWL is a good option to consider for further research. This quarter also saw a ~6% stake increase. Overall, their cost-basis is $26.40.Note: In April, rival activist Starboard Value came to an  with Carl Icahn whereby they now together control Newell’s board.Kept Steady:CVR Energy Inc. (CVI): CVI is a large (top tree) ~12% of the 13F portfolio position first purchased in Q4 2011. The bulk of the current position (71.2M shares: ~71% of the whole business) was purchased through a $30 per share tender offer in H1 2012. The stock currently trades at $42.70.Note 1: Two MLPs were carved out since the 2012 tender: CVR Refining (CVRR) the refining portion and CVR Partners (UAN) the nitrogen fertilizer unit. CVR Energy has majority ownership stake in both. In August 2015, CVR Partners agreed to merge with Rentech Nitrogen. Q2 2018 saw a tender offer whereby new CVR Energy shares were exchanged for CVRR at a valuation of $24.26 per common unit (0.6335 shares of CVI for one CVRR). ~22M new shares were issued.Note 2: Icahn disclosed that CVI stock including dividends was up ~62% as of EOY2016 from the tender offer at $30. CVI stock was trading at $25.39 at the time. So, his adjusted cost-basis was $15.67 as of that date.Herbalife (HLF): HLF is a large (top three) ~10% of the 13F portfolio stake first purchased in Q1 2013 in the high-teens price range. Q3 2016 saw a ~15% increase at prices between $29 and $34 and that was followed with a similar increase the following quarter at prices between $24 and $32. Q2 2018 saw the position sold down by ~25% at $52.50 per share. The stock currently trades at $56.45.Note 1: Icahn controls ~22% of the business. In March 2018, Icahn disclosed that his profit on HLF was ~$1B. The stock was trading at ~$46 at the time.Note 2: The prices quoted above are adjusted for a 2-for-1 stock-split done in April 2018.Cheniere Energy (LNG): LNG is a large (top five) 6.78% portfolio position. The bulk of it was purchased in Q3 2015 at prices between $47.50 and $70.50. Q4 2015 saw a ~15% increase at prices between $36 and $54. There was an about turn in Q2 2018: ~28% reduction at ~$65. The stock currently trades at $65.20. There was a marginal trimming last quarter.Note: Icahn’s ownership stake in the business is 9.8%.Freeport-McMoran Inc. (FCX): FCX is a 2.53% of the portfolio stake established in Q3 2015 at prices between $7.50 and $18.50. Q4 2016 saw a ~12% trimming at prices between $9.50 and $16.50. Q3 2017 saw another ~16% selling at prices between $11.89 and $15.55 and that was followed with a one-third reduction in Q1 2018 at prices between $17 and $20. The stock currently trades at $13.22.Xerox Corporation (XRX): XRX is a 2.27% of the portfolio position established in Q4 2015 at prices between $24 and $32. The stock is now at $31.49. There was a ~5% trimming in Q1 2018.Note 1: Icahn controls 9.21% of the business. In December 2017, Icahn launched a proxy battle nominating four new board members in an effort to stop the Xerox-Fujifilm deal announced earlier. In early May, Xerox scrapped the deal with Fujifilm in a settlement with Icahn and Darwin Deason (another activist alongside Icahn).Note 2: Icahn’s activism earned him three board seats in 2016. Xerox spun-off Conduent and that transaction closed in January 2017. That was followed with a 1:4 stock-split in June. The prices quoted above are adjusted for these two transactions.Navistar International (NAV): NAV is a 2.13% of the 13F portfolio long-term position. The last significant activity follow: ~22% increase in Q2 & Q3 2014 at prices between $29 and $38. The stock currently trades at $38.49.Note: Icahn controls ~17% of the business.Hertz Global Holdings (HTZ): HTZ is a ~2% of the portfolio position. It was established in Q3 2014 at a cost-basis of ~$105. In Q4 2014, the stake was increased by just over one-third at prices between $72 and $95. Q4 2015 saw another ~23% increase at prices between $51 and $74. Q4 2016 saw another ~125% increase at prices between $21 and $40. The stock currently trades at $18.77.Note 1: Icahn controls ~35% of the business. The total outlay so far is ~$1.85B and the market value is ~$550M.Note 2: The prices quoted above are adjusted for the Herc Holdings spinoff in Q2 2016.Conduent Inc. (CNDT): The stake came about as a result of Conduent’s spinoff from Xerox that closed in January last year. Terms called for Xerox shareholders to receive Conduent shares in the ratio 1:5. The current CNDT stake is consistent with this ratio: Icahn owned 99M shares of Xerox for which he received 19.8M shares of Conduent. CNDT started trading at ~$15 and currently goes for $15.28.Note: Regulatory filings since the quarter ended show them owning 24.6M shares (11.64% of business). This is compared to 19.8M shares in the 13F report. The difference is due to forward contracts they also hold.Herc Holdings (HRI): HRI is a very small 0.57% of the portfolio position established in Q2 2016 as a result of the spinoff of Herc Holdings from Hertz Global Holdings. There was a ~4% stake increase in Q3 2017 at ~$38.50. The stock started trading at ~$33 and currently goes for $42.19.Note: Icahn controls ~16% of the business.Welbilt Inc. (WBT) previously Manitowoc Food Service: The very small 0.55% of the portfolio WBT stake was established as a result of the spin-off from Manitowoc. The spin-off terms called for one share of WBT for each share of MTW held. Icahn held 10.58M shares of MTW for which he received the same number of WBT shares. Regular-way trading started in early March 2016 with WBT at $13.41. It currently trades at $15.98 compared to Icahn’s overall cost-basis of $16.52. There was a ~5% trimming in Q4 2017.Note: Icahn controls 8.52% of the business.CVR Refining LP (CVRR): CVRR is a minutely small 0.29% of the 13F portfolio position established in Q1 2013 as a result of the spin-off (carve-out) of CVR Refining from CVR Energy. The position was increased by 50% in Q2 2013 at prices between $28 and $35. The issue was withdrawn last month as the shares were consummated at $10.50 per share.Sandridge Energy (SD): SD is a 0.18% of the portfolio activist stake established in Q4 2017 at prices between $16 and $21 and the stock is now below that range at $8.23.Note: Icahn has a 13.51% ownership stake in the business. He lobbied the board and succeeded in ending the Bonanza Creek acquisition on December 28, 2017. In June 2018, Icahn gained control of Sandridge’s board by winning a proxy battle.Note 1: Icahn also owns significant stakes in the following OTC stocks as per latest regulatory filings: ~15% of Enzon Pharmaceuticals (ENZN), and ~79% of Viskase Companies (VKSC). He is also known to have a position in Fannie/Freddie (FNMA) (FMCC).Note 2: Icahn had a ~53% of Voltari Corp (VLTC) and earlier this month has offered to buy the remaining shares for 68c per share. The price is up from 58c offered previously.The spreadsheet below highlights changes to Icahn’s 13F stock holdings in Q4 2018:11/13 – Dell  the offer to $120 per share with a $14B cap – Icahn dropped the suit & proxy fight in response – basically, although they believed a much higher figure was possible, with 17% in support of the offer, they consider a proxy contest unwinnable and so decided to walk away…10/16/2018 – CNBC Interview –  - Michael Dell plan opposed on DVMT – he has 16.5M shares (~8.3%) now - $109 final offer – he thinks $144 is the value – he thinks he can coerce shareholders (Icahn says Dell did coercion and manipulation) with scare tactics about IPO and such. VMW is at ~$145 and that is the value. Basically, Dell & Silverlake is trying to walk away with ~$11B for doing nothing. It is basically stealing. IPO THREAT IS EMPTY – Icahn says he will fight it and others will join. Dell says threat of litigation is act of desperation. CONSIDERING COMPETING PARTIAL BID. They might bump it a bit and at that point they might consider a competing bid and probably look around for partners. Not giving assurance he is going to do that. MARKET PULLBACK – don’t know but guessing – have to be cautious. Trump did well getting regulations, tax deal, etc. Tariffs are a dangerous game he is playing – brought the crash of 1929. Donald is a deal maker and so he might get something done with China – some settlement. Other problems in the market – interest rate will put a damper. Holds stock but have hedges. President said Sears was a shame – Icahn says he cannot talk about it – problems there – in bankruptcy – taking a look at some of the bonds. President says Fed was crazy – Icahn says that is the way Donald Trump is. Cramer & Icahn are both very bullish on VMW prospects. 10/31 – Icahn  9.3% stake.Note for Q4 2017 onwards: BV from their website & the indicative net-asset-value from their earnings conference calls (might be useful as the comment stream usually debates over these). 11/21/2018 Update: Per their investor website (http://www.ielp.com/financial-information/key-ratios), BV is 30.07. The historical value for IEP P/BV (https://ycharts.com/companies/IEP/price_to_book_value) is much lower although in recent years it has stayed high. Net Asset Value per share - per the Q3 earnings press release, that figure would be $46.20 (8.64B/187M).”Regulatory Filings thru 11/20/2018: 13D – 11/19 – EGN – 9.67M shares – 9.9% of business, Form 4 – 11/19, 11/13, Form 3 11/13,  13D/A 11/13 – CNDT – forward contract related, 19.81M shares, 22.3M shares – 10.56% of business. ~3.56M shares acquired at prices between $2.98 and $3.38. 13D, 13D/A – 11/1, 10/30, 10/15,   – DVMT – 18.53M shares – 9.3% of business, Overall cost-basis was ~$92.3. 13D/A – 10/22 – ARII – ITE merger at $70 related filing. 13D – 10/1 – TEN – 5.65M shares – 9.9% of business - As partial consideration for the acquisition of Federal-Mogul, on the Closing Date, Tenneco issued to the Reporting Persons an aggregate of 5,651,177 shares of Class A Common Stock and 23,793,669 shares of Class B Non-Voting Common Stock, Form 4 – 10/1 – TPCA – 19.98M shares @ 75.14 disposal – merger consideration Form 4 & 13D/A – 9/20 – IEP – 170.8M shares – 91.5% of business."