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A Look at Billionaire Carl Icahn’s Top Energy Holdings

Most of the people who follow billionaire activist investor Carl Icahn know that he holds some substantial stakes in energy companies. According to Icahn Capital’s latest 13F filing with the Securities and Exchange Commission, its $29.4 billion equity portfolio contained 16% invested in the energy sector. Our analysis of the fund’s 13F holdings in companies worth over $1 billion showed that the 20 long positions held by the fund during 2015 delivered a weighted average loss of 17.3% for the year. Since the main part of the fund’s declines was due to Icahn’s exposure to energy, let’s take a look at Mr. Icahn’s top five energy holdings at the end of the 2015, according to the investor’s 13F filing.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012.(see the details here).

Carl Icahn
Carl Icahn
Icahn Capital LP

#5 CVR Refining LP (NYSE:CVRR)

– Shares Owned by Icahn Capital LP (as of December 31): 6 million

– Value of Holding (as of December 31): $113.58 Million

CVR Refining LP (NYSE:CVRR) traded in the $18-$22 range through the most part of 2015. However, they started declining swiftly since the start of 2016 and are currently trading nearly 44% down year-to-date. The company released its fourth quarter results on February 18, and reported a loss of $0.83 per share on revenue of $948.30 million, whereas analysts had projected a loss of $0.24 per share on revenue of $995.87 million. Along with its earnings release, the master limited partnership also informed tits shareholders that it won’t be paying any distributions from the fiscal 2015 fourth quarter. Following the earnings release, on February 19, analysts at Barclays reiterated their ‘Overweight’ rating on the stock, but lowered their price target to $17 from $26. While Icahn Capital LP kept its stake unchanged in the company during the fourth quarter, billionaire Jim Simons‘ Renaissance Technologies increased it by 59% to 361,793 shares.

#4 Transocean LTD (NYSE:RIG)

– Shares Owned by Icahn Capital LP (as of December 31): 21.48 million

– Value of Holding (as of December 31): $265.9 Million

Though Transocean LTD (NYSE:RIG)’s stock ended fourth quarter on a flat note, it has fallen by 35% so far this year. Accounting for the decline this year, the company has lost over 90% of its market capitalization since 2011.  The stock is trading down in spite of the company beating analysts’ estimate by a wide margin for the fourth quarter. While the Street was expecting EPS of $0.73 on revenue of $1.44 billion, Transocean delivered EPS of $1.68 on revenue of $$1.85 billion for the quarter. However, the company added $367 million in customer early termination fees to its revenue for the quarter, without which its revenue for the quarter would have been down 34% year-over-year. Moreover, in the earnings call the company also revealed that it expects “very few drilling contracts to be awarded in 2016”. Till Bechtolsheimer‘s Arosa Capital Management initiated a stake in Transocean LTD during the fourth quarter by purchasing over 3.22 million shares.

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#3 Chesapeake Energy Corporation (NYSE:CHK)

– Shares Owned by Icahn Capital LP (as of December 31): 73.05 million

– Value of Holding (as of December 31): $328.72 Million

Despite Chesapeake Energy Corporation (NYSE:CHK)’s stock falling by 38% during the fourth quarter, Icahn Capital didn’t make any changes to its stake. That conviction of the fund doesn’t seem to be paying off this quarter as shares of  Chesapeake Energy Corporation (NYSE:CHK) have again fallen 42.67% so far this year amid rumors emerging earlier this year that the company might go bankrupt, but the rumors were dismissed later.  For the fourth quarter, Chesapeake posted a loss of $0.16 per share on revenue of $2.65 billion, versus EPS of $0.11 on revenue of $5.05 billion reported a year earlier. Along with its earnings release, the company also revealed that it reduced its debt burden by $2.1 billion during the quarter and announced plans to cut its CAPEX by more than half this year. Though most analysts are not bullish on the company currently, they feel that investors’ fears of bankruptcy are overblown as the company has enough liquidity to survive at least for a year.

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#2 Cheniere Energy, Inc. (NYSEMKT:LNG)

– Shares Owned by Icahn Capital LP (as of December 31): 4.67 million

– Value of Holding (as of December 31): $1.22 billion

Cheniere Energy, Inc. (NYSEMKT:LNG) is the only company in this list in which Icahn Capital LP increased its stake by 14% during the fourth quarter and also the stock which suffered the least amount of decline this year, trading down by 10% year-to-date. The stock has rallied recently after news emerged that it would ship the first batch of liquefied natural gas (LNG) from the Sabine Pass. On February 24, an executive from the company confirmed that the first cargo of U.S. LNG export has departed from the Sabine Pass. For its fourth quarter, the company posted a loss of $1.28 per share on revenue of $68.40 million, versus analysts’ projections of a loss of $0.54 per share on revenue of $66 million. Seth Klarman‘s Baupost Group also increased its stake in the company (by 16% to 26.09 million shares) during the fourth quarter.

#1 CVR Energy, Inc. (NYSE:CVI)

– Shares Owned by Icahn Capital LP (as of December 31): 71.2 million

– Value of Holding (as of December 31): $2.8 billion

CVR Energy, Inc. (NYSE:CVI) remained Icahn Capital LP’s top energy stock pick and represented the fund’s third-largest equity holding overall at the end of the fourth quarter. CVR Energy, Inc. (NYSE:CVI)’s stock has slid by 43% so far this year. However, despite this decline and unfavorable environment the company said that it would keep its quarterly dividend unchanged at $0.50 per share, which gives its stock a yield of 8%. The company reported a loss of $0.52 per share on $1.01 billion in revenue for the fourth quarter, compared to estimates of a loss of $0.33 per share on revenue of $969.51 million. Billionaire David E. Shaw‘s firm D.E. Shaw doubled its stake in CVR Energy to 32,516 shares during the October-December period.

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Disclosure: None

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