Born in New York City in 1936, Carl Icahn is one of the most reputable investors in history, although he has also been described as a financial shark.
His movements have not only allowed him to achieve great returns, but his way of operating has earned him numerous enmities in the financial and business world.
After living his first years in New York, Icahn chose to study Philosophy at the prestigious Princeton University, where he graduated in 1967. Interestingly, poker helped him obtain the necessary income to finance his studies.
However, already at an early age, the restlessness of an investor and an entrepreneur welled up in Icahn. Thus, in 1961 he debuted on Wall Street with his meager financial resources, and 1962 turned out to be a disastrous year for Icahn and the stock market.
Icahn would not fall apart from what happened in 1962 and in 1968, with the help of a relative, he founded his investment company Icahn & Co. At this stage he was mainly dedicated to carrying out operations in areas such as arbitration and financial options. The results were more than satisfactory, making him earn around two million dollars a year.
a financial shark
After his successful trading in arbitrage and options, Icahn’s reputation began to change. It would not be long before he became known as a “financial shark” for his aggressive moves.
This reputation is due to Icahn’s practice of acquiring a significant part of the shareholding of a company in order to have great decision-making power in the company. Icahn is characterized by selecting companies with problems in which he introduces profound changes.
However, Icahn is not only looking for companies with poor management, since they must have strong growth potential. On the other hand, carrying out major changes in the management of the company helps to attract new investors. With the company’s management, profitability, and attractiveness all improved, Icahn makes a substantial profit by selling it on the market.
There are those who claim that this way of acting is typical of a financial shark. On the contrary, Icahn defends himself by arguing that he is an activist investor and that he refloats companies, eliminating mismanagement and creating value for shareholders. In a way, there are similarities between Icahn’s investment strategy and Warren Buffett’s value investing.
This way of proceeding caused Icahn to break up companies in various sectors: food, record companies, oil companies, telecommunications, finance, tourism and household appliances, among many others.
Carl Icahn’s investments
One of his most notable investments was the purchase of the airline TWA in 1985. His time at the airline was especially controversial, since he sold company assets to return the money they had lent him. Likewise, in 1988 he opted to delist TWA and in 1993 he left the company, leaving it bankrupt.
No less controversial was Carl Icahn’s stage as an Herbalife investor, where he had a very tough confrontation with fellow investor Bill Ackman. Ackman entered the stock in 2012 betting the company’s value would decline, but in 2013 Icahn invested in Herbalife believing the company would increase in value.
Ultimately, Icahn’s arrival sent Herbalife’s stock soaring in value after Ackman sent the company’s value down. Ackman would end up leaving Herbalife in 2018 after suffering significant losses, while Icahn made notable gains.
Other notable investments of Carl Icahn are Xerox, Hertz and Apple. It is true that Icahn’s plans were cut short at Hertz, since the company went bankrupt in 2020 as a result of the pandemic.
On the contrary, his investment in Apple brought him benefits. His entry into the shareholding of the technology company in 2013 increased the value of the shares, but in 2016 he sold his stake in the company due to fears generated by the company’s situation in China. Despite Icahn’s departure, Apple shares have continued to rise in value.