We recently published a list of Carl Icahn Stock Portfolio: Top 10 Stock Picks. In this article, we are going to take a look at where Bausch Health Companies Inc. (NYSE:BHC) stands against other top stock picks from Carl Icahn’s portfolio.
Billionaire hedge fund manager Carl Icahn was known as a corporate raider in the 1980s, although he is now more commonly referred to as an activist investor. Icahn is a relentless and self-consciously contrarian investor with a keen eye for undervalued opportunities. Valuing hard assets, he has often stated that he prefers to purchase unglamorous, out-of-favor companies. The same is true for his investment wheel, Icahn Capital LP, which is well-known for its aggressive and high-stakes activism efforts, establishing itself as one of the world’s most powerful and prominent hedge funds. Boasting an impressive track record, the billionaire investor achieved an average annualized return of 14% between 2000 and 2022, outperforming the S&P 500 by 6%.
One of the most well-known examples of Icahn’s corporate raiding is his aggressive purchase of TWA in 1985. He obtained a majority share in the airline and then fought bitterly with management over the company’s future. Despite criticism from TWA management, Icahn eventually emerged triumphant, turning the firm around and increasing its worth. Another significant example of Icahn’s activism was his participation in the Dell acquisition in 2013. Icahn invested heavily in the firm and then mounted a public campaign opposing Michael Dell and Silver Lake Partners’ proposed takeover. Icahn claimed that the planned takeover undervalued the firm and sought that the buyout price be raised.
Although the 89-year-old investor earned a name for himself (alongside billions of dollars) by criticizing business executives’ policies and plans and advocating for reform within firms, it appears that the tide has shifted, as Icahn is now under heavy scrutiny from Wall Street investors, who are swiftly dumping his company’s shares. Shares of Icahn Enterprises, his publicly traded investment business, have fallen more than 48% in the last year. Shares began to fall in May 2023, when Nate Anderson’s short-selling firm, Hindenburg Research, issued a study doubting the company’s financials. Among other things, Hindenburg accused the company of paying an unsustainable dividend. In a September 2024 interview, Anderson predicted that its shares would continue to plummet, claiming Icahn’s frequent use of personal debts remains a threat to the company’s viability. As an illustration of the troubles the activist investor faces, Icahn Capital LP saw losses exceeding $3 billion from Q4 2023 to Q4 2024.
Our Methodology
For our list of Carl Icahn’s top stock picks, we scanned the legendary investor’s 13F portfolio at the end of Q4 2024. We ranked the top 10 stocks in ascending order based on the value of Icahn Capital’s stake in them as of the end of the quarter.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A series of pharmaceutical and medical products in a warehouse, displaying the range of products available.
Bausch Health Companies Inc. (NYSE:BHC)
Carl Icahn’s Q4 2024 Stake: $279.85 million
Bausch Health Companies Inc. (NYSE:BHC) is a multinational pharmaceutical corporation that develops and distributes prescription medications, over-the-counter treatments, and medical devices for eye health, gastroenterology, dermatology, and neurology.
In the last quarter of 2024, Bausch Health Companies Inc. (NYSE:BHC) reported revenues of $2.56 billion, an increase of 9% organically, while full-year revenue came in at $9.63 billion, a 10% increase. The company also reported GAAP net income of $93 million during the quarter, although it ended the year with a net loss of $46 million.
On February 21, Jason Gerberry, an analyst at Bank of America Securities, confirmed his Sell rating on Bausch Health Companies Inc. (NYSE:BHC), with a price target of $7. The analyst’s rating is based on a number of variables, the primary of which is Bausch Health Companies’ future prognosis. While the firm beat expectations with its 4Q/FY25 prediction, the increase was primarily driven by its Xifaxan brand, which is expected to lose exclusivity in January 2028, or maybe earlier. This raises concerns about Bausch’s ability to continue growth once Xifaxan’s exclusivity expires, since there are no apparent growth drivers to replace the massive revenue contribution from the medicine.
Overall, BHC ranks 6th on our list of top stock picks from Carl Icahn’s portfolio. While we acknowledge the potential of BHC as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BHC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.