Feared activist Carl Icahn of Icahn Capital LP reduced his fund’s exposure to U.S. equities during the first quarter of 2016, jettisoning six positions, including the stake in Apple Inc. (NASDAQ:AAPL). Although the billionaire investor did not channel capital into new positions during the March quarter, he did report a new position in Manitowoc Foodservice Inc. (NYSE:MFS), which resulted from the separation of Manitowoc Company Inc. (NYSE:MTW)’s Crane and Foodservice businesses. Mr. Icahn has voiced his pessimistic views on financial markets since last year, blaming the near-zero interest rate monetary policy pursued by the Fed for the abnormal behavior on the part of investors and companies. The equity portfolio managed by Carl Icahn was valued at $21.49 billion at the end of March, a massive decreased from the $29.44 billion-portfolio recorded at the end of the fourth quarter. Having this in mind, let’s proceed to the discussion of Mr. Icahn’s major moves implemented during the first three months of 2016 in addition to dumping the stake in Apple, which wasn’t taken as a surprise, since Icahn himself revealed the move before filing the 13F.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).
Icahn Increases Exposure to American International Group Inc. (NYSE:AIG)
– Number of shares owned by Carl Icahn as of March 31: 44.42 Million
– Value of Carl Icahn’s holding as of March 31: $2.40 Billion
Billionaire Carl Icahn boosted his firm’s exposure to American International Group Inc. (NYSE:AIG) by 2.18 million shares or approximately 5% during the March quarter to 44.42 million shares. The upped stake was valued at $2.40 billion at the end of the March quarter and accounted for 11.2% of the fund’s equity portfolio, second only to Mr. Icahn’s $7.42 billion-position in his holding company Icahn Enterprises LP (NYSE:IEP). The activist investor previously urged the insurer to split into three separate companies that would focus on life, property-casualty and mortgage coverage insurance. Earlier this year, AIG agreed to provide two board seats to Carl Icahn and John Paulson of Paulson & Co., so Mr. Paulson and Samuel Merksamer, managing director of Icahn Capital LP, joined the 16-member Board. Both Mrs. Icahn and Paulson previously suggested that the so-called de-conglomeration plan would allow the insurer to avoid the government’s Systemically Important Financial Institution (SIFI) designation. AIG shares are down 10% year-to-date. Paulson & Co. owns 11.23 million shares of American International Group Inc. (NYSE:AIG) as of March 31.