The Carl Icahn Effect

By Bryan Rich 

May 23, 2016, 5:00pm EST

Last week we talked about Warren Buffett’s new stake in Apple.  Today we want to talk about the investor that recently sold Apple: Carl Icahn.

In a world where information is abundant, markets are priced quite efficiently.  The way a stock re-prices is through CHANGE.

And that’s precisely what the influential investors that we follow in our Billionaire’s Portfolio specialize in.  And that’s why they have such a tremendous record in posting consistent superior returns – and, in turn, building tremendous wealth for themselves and their investors.

No one has done a better job at creating change for shareholders than Carl Icahn – certainly not over the span of the past three decades. That’s why we have 20% of our Billionaires Portfolio in stocks owned and controlled by Icahn.

We consider Icahn the god-father of activism.  Very early on, Icahn found that, among all of the complications people like to add to investing, there is a very simple opportunity to take advantage and capitalize on the simplicities that we all know about human nature.

In his words, “some people get rich studying artificial intelligence. Me, I make money studying natural stupidity.”

I’ll interpret that remark with these three simple points:  1) People will take advantage of opportunities to satisfy their own self-interests. 2) People will find ways to justify their self-serving actions.  3) People will be greedy.

Add this human nature to a concoction called the public equity markets, and you find, among many things, a witch’s brew of bad management teams at publicly traded companies.

To most investors, identifying a company that’s run poorly is a red flag – something to stay away from.

For Icahn, it’s opportunity. It’s blood in the water.  Why?  Because it presents the opportunity for CHANGE. And when you get change, you have a chance to make a lot of money as the stock re-prices to reflect that change.

Icahn has done this over and over throughout his long career. That’s why he has been able to compound money at nearly 30% a year for almost 50-years.  That’s the greatest long-term investment track record in history (as far as we know).  One thousand dollars with Icahn when he started has gone to $275 million.

Even at the age of 80, Icahn has been as vocal and as influential as ever. He influenced Apple to a near double by encouraging Apple to use their treasure chest of cash to buy back stock.  Cash sitting on a balance sheet idle does nothing for shareholders. Share buybacks create shareholder value.
That’s the name of the game. Despite what some CEOs may think, that is precisely why they have been employed, to create shareholder value.  And that is often the change that has to take place (the CEO or the mindset of leadership).

Icahn’s continued investing success can be attributed to one important talent:  He’s a change-maker.  When we follow him, we can be assured that he has a plan for change and that he will fight to make it happen. Plus, when we follow Icahn, we get an added bonus that few, if any, other big time investors summon: Because of his great success, his campaigns tend to attract other influential investors to join in – stacking the odds even more favorably for shareholders.

We’ll talk more about the “Icahn effect” tomorrow.

Don’t Miss Out On This Stock

In our Billionaire’s Portfolio we followed the number one performing hedge fund on the planet into a stock that has the potential to triple by the end of the month.

This fund returned an incredible 52% last year, while the S&P 500 was flat.  And since 1999, they’ve done 40% a year.  And they’ve done it without one losing year.  For perspective, that takes every $100,000 to $30 million.

We want you on board.  To find out the name of this hedge fund, the stock we followed them into, and the catalyst that could cause the stock to triple by the end of the month, click here and join us in our Billionaire’s Portfolio.

We make investing easy. We follow the guys with the power and the influence to control their own destiny – and a record of unmatchable success.  And you come along for the ride.

We look forward to welcoming you aboard!