Billionaire Trump Supporter Carl Icahn Made These Changes To His Portfolio Amid Trump’s Win

Billionaire activist investor Carl Icahn has been constantly in the news since Donald Trump launched his Presidential campaign. During the campaign, the man who would become POTUS announced that Mr. Icahn –  who has been an active supporter of his candidacy from day one –  would be among his foremost choices for Treasury Secretary. While Mr. Icahn politely declined that offer, he recently was roped in by the Trump administration as a special adviser on regulatory reform. This decision hasn’t gone well with some of the Senate Democrats including Elizabeth Warren, who are opposing his appointment citing a ‘conflict of interest’.  While it won’t be wrong to say that Mr. Icahn, for his part, has benefited immensely from Mr. Trump’s win – both materially and socially – it would perhaps be wrong and too early to assume that he would use his new role to benefit financially, considering that he is an octogenarian, multi-billionaire who has been advocating for corporate reforms for years now.

Coming to the material benefits part, on the day that Mr. Trump was announced as the new President, some media sources reported that Mr. Icahn left the victory party early to bet $1 billion on U.S stocks. The recent 13F filing of Mr. Icahn’s hedge fund Icahn Capital LP, one of the 140 Biggest and Most Famous Activist Hedge Funds, suggests that this was likely true. According to the filing, Icahn Capital LP’s 13F portfolio was worth $22.37 billion at the end of 2016, almost 13% more than the $19.80 billion it was worth at the end of September. The filing also revealed that during the fourth quarter the fund made additional purchases in three stocks, reduced its holding in three stocks and sold its entire stake in one stock. Moreover, at the end of the fourth quarter, Icahn Capital LP’s top-10 equity holdings accounted for over 90% of its portfolio’s value. In this article, we will take a look at some of the major holdings of Icahn Capital LP as of the end of 2016 and will discuss the moves made by the fund during the fourth quarter.

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Hertz Global Holdings, Inc (NYSE:HTZ)

– Shares Held By Icahn Capital (as of December 31): 29.26 Million

– Value of Holding (as of December 31): $630.93 Million

During the fourth quarter, Icahn Capital made its most bullish move in Hertz Global Holdings, Inc (NYSE:HTZ), having upped its stake in the company by 126%. Shares of the car rental company have been on a major downtrend since last September and have lost more than 54% of their value in the past six months. The company has been trying to reverse its fortune by making changes to its top management. In December, the company named Kathryn V. Marinello as its incoming CEO, to replace former CEO John Tague in January. Earlier this month, Hertz Global Holdings, Inc (NYSE:HTZ)’s Chief Revenue Officer, Jeffrey Foland, stepped down and the firm hasn’t announced his replacement as of yet. Most analysts who track the stock currently have a ‘Neutral’/’Hold’ rating on it.

We’ll check out four other prominent positions held by Icahn Capital on the next two pages of this article.

Herbalife Ltd. (NYSE:HLF)

– Shares Held By Icahn Capital (as of December 31): 99.03 Million

– Value of Holding (as of December 31): $1.08 Billion

With Icahn Capital boosting its stake in Herbalife Ltd. (NYSE:HLF) for the second quarter in a row, by 14%, the fight between Mr. Icahn and fellow activist investor and billionaire Bill Ackman over whose thesis on the stock is right seems to be intensifying. Mr. Ackman has long argued that Herbalife Ltd. (NYSE:HLF) is a scam and has famously kept his massive short position in the stock, which he created years ago. Considering that Herbalife’s stock has appreciated by over 27% since the beginning of 2016, Mr. Icahn seems to be winning this fight for now. The crusade that Mr. Ackman has been leading against Herbalife for years now has arguably been the most covered fight that an activist investor has led against a company. Its importance can be gauged from the fact that a documentary film is being made on it called ‘Betting on Zero’, which will release on March 17. Whether that documentary will affect Herbalife’s stock or not is debatable, but analysts from Pivotal Research continue to remain bullish on it. On January 20, they reiterated their ‘Buy ‘ rating and $90 price target on the stock, which suggest potential upside of nearly 48%.

Freeport-McMoRan Inc (NYSE:FCX)

– Shares Held By Icahn Capital (as of December 31): 91.24 Million

– Value of Holding (as of December 31): $1.20 Billion

Apart from selling its entire stake in Voltari Corp (OTCMKTS:VLTC), Freeport-McMoRan Inc (NYSE:FCX) was the only stock in which Icahn Capital lowered its stake by more than 10% during the fourth quarter. Though the fund sold off 12% of its stake in the company during the fourth quarter, Freeport-McMoRan Inc (NYSE:FCX) continued to remain its seventh-largest equity holding, owing to the 21% increase in its stock during that time. Freeport-McMoRan’s stock has appreciated by a further 14% so far in 2017 but is still trading down by nearly 75% from the highs it made in late-2010. The natural resources company has taken several constructive steps, like halting its quarterly dividend payouts and conducting asset sales to bring its debt down to $12 billion from $20 billion in calendar year 2016.  According to analysts who track the stock, the improvement in the company’s balance sheet and free cash flow along with favorable trends in the copper market could push the stock to significantly higher levels in the coming months.

Paypal Holdings Inc (NASDAQ:PYPL)

– Shares Held By Icahn Capital (as of December 31): 33.4 Million

– Value of Holding (as of December 31): $1.3 Billion

Icahn Capital lowered its stake in Paypal Holdings Inc (NASDAQ:PYPL), during the fourth quarter, albeit marginally, by 1%. For most of the time that Paypal Holdings Inc (NASDAQ:PYPL) has traded as a separate entity after its separation from eBay Inc (NASDAQ:EBAY), its stock has been range-bound. Nevertheless, it is currently trading up by 6.13% year-to-date. Earlier this month, Craig-Hallum analyst Brad Berning released a note in which he asked clients to buy the dips in Paypal Holdings, citing the talks that the company’s management has had with Amazon to include PayPal services for purchases on Amazon’s platform. Mr. Berning believes that if the deal goes through, it could bring an additional $25 billion in payments volume to PayPal. On February 14, Paypal announced that it has agreed to acquire bill payment provider TIO Networks for $233 million in an all-cash deal.

American International Group Inc (NYSE:AIG)

– Shares Held By Icahn Capital (as of December 31): 45.64 Million

– Value of Holding (as of December 31): $2.98 Billion

With Icahn Capital making no changes to its stake in American International Group Inc (NYSE:AIG), the insurance giant continued to remain the fund’s second-largest equity holding at the end of 2016, trailing only its majority ownership stake in Icahn Enterprises LP (NASDAQ:IEP). American International Group Inc (NYSE:AIG)’s stock is currently trading down by 5.24% in 2017, with most of those losses coming in recently after the company reported disappointing Q4 numbers. While analysts were anticipating AIG to report EPS of $1.18, the company declared an ugly loss of $2.72 per share for the quarter. Despite the recent sell-off of the stock, it still sports an impressive return of 132% over the last five years. Most analysts who track AIG believe that the recent sell-off is a knee-jerk reaction by market participants and that the capital return program that the company started last year after being pressured by Mr. Icahn and John Paulson will prove to be hugely beneficial for shareholders long-term. On Wednesday, analysts at FBR & Co reiterated their ‘Outperform’ rating on the stock.

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