Is Carl Icahn Bullish or Bearish About The Stock Market?

Carl Icahn sent a letter to his investors announcing that he is returning all outside capital because he doesn’t want to be responsible to limited partners through another possible market crisis. He implicitly says that renewed market dislocation is possible. Should investors be worried about another crash in the stock market? Insider Monkey, your source for free insider trading data, doesn’t think so. Carl Icahn isn’t planning to sell any of his holdings. He will be using cash on hand and borrowing under existing lines. This exercise will effectively increase Carl Icahn‘s personal exposure to the stock market by more than 30%. If he was really worried about another crash, then why would he increase his exposure to the stock market through leverage? We believe Icahn is now extremely bullish about the stock market and he’s betting the farm on it.

ICAHN CAPITAL Carl IcahnCarl Icahn

Here is Carl Icahn‘s letter to his investors:

Dear Limited Partner:
I am pleased that our funds have earned gross returns of 33.3% and 15.2% in 2009 and 2010, respectively, as well as returns of approximately 8.7% through February 2011. Despite our losses in 2008, since inception of our funds in late 2004 we have had gross returns of 106.9%.

While it may sound “corny” to some, the losses that were incurred by investors in our funds in 2008 bothered me a great deal more, in many respects, than my own losses. Perhaps this is because over the years I have become inured to dealing with large “paper” losses for myself. During 2008 and part of 2009, unlike many other funds, we did not impose “gates” on our investors that would have prevented them from withdrawing capital from our funds if they chose to do so. Therefore investors seeking liquidity did withdraw a fair amount of cash from our funds. Additionally, rather than liquidating positions that we believed in, we infused our own new capital into our funds which provided cash for withdrawing investors. As a result, fee paying assets now constitute only 25% ($1.76 billion) of total assets in the funds of approximately $7 billion.

While we are not forecasting renewed market dislocation, this possibility cannot be dismissed. Given the rapid market run-up over the past 2 years and our ongoing concerns about the economic outlook, and recent political tensions in the Middle East, I do not wish to be responsible to limited partners through another possible market crisis. After careful consideration of all relevant factors, we have determined to return all fee paying capital to investors.

Payments will be made in cash in April based upon values at March 31 and will be funded through cash on hand and borrowings under existing lines and not through the sale of securities in the funds. We expect that 95% of your March 31 capital balances will be returned by April 30, and that the balance will be returned within 30 days of completing the March 31 audit, which will not be later than June 30. However, if you would like to delay withdrawal please call us and we will try to accommodate you. Please complete and return the attached form on or before March 31. This form will be required in order to properly process your redemption.

I have appreciated all of your support over the past six years. Obviously based on the past 2 years and 2 months we are ending on what I consider to be a high note. I wish you much success with your future investments and hope that our paths will cross again. Please do not hesitate to call me now or in the future with any questions or just to talk.
We will be contacting you shortly to discuss the
redemption. In the meantime, please feel free to contact Dana Witkin (212-702-437l/dwitkin(S)icahncap.com”) or Alex Chastain-Chapman (212-702-4383 ace a icahncap.com”) at any time.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!