CVR Energy, Inc. (CVI), American Railcar Industries, Inc. (ARII): Billionaire Carl Icahn’s Top Dividend Picks

Billionaire Carl Icahn is the CEO of Icahn Capital LP, a fund with an equity portfolio worth around $32.05 billion, as of the end of March. According to Forbes, Carl Icahn has a net worth of around $22.3 billion, which makes him the 31st self-made billionaire in the world. Mr. Icahn’s Icahn Capital LP has disclosed its latest 13F with the SEC, revealing a total of 20 long positions held at the end of the first quarter. The fund’s portfolio is diversified across sectors, with technology and industrials amassing over 60% of the total value. Mr. Icahn is an activist investor, therefore he prefers to invest in either underperforming or undervalued companies and then push for changes that would unlock shareholder value. Nevertheless, since Mr. Icahn invests also in many leading companies from their respective industries, he also has significant gains from the dividends on his holdings. In this article, we will take a look at three companies with highest dividend yield, in which Mr. Icahn disclosed a stake in his latest 13F.

Carl Icahn - Icahn Capital Lp

Icahn Capital LP is one of more than 700 investors that we track as part of our small-cap strategy. Through a series of backtests, we found out that imitating a portfolio of 15 most popular small-cap picks among them can generate gains on average around 1.0 percentage points in excess of the S&P 500 Total Return Index’s monthly return. Moreover, these small-cap picks had an alpha of around 80 basis points per month, compared with 50 most popular large-cap stocks among hedge funds that had a monthly alpha of about six basis points. This strategy managed to post gains over 137% in the last 2.5 years since we started following it in real time, outperforming the S&P 500 ETF (SPY) by over 80 percentage points (read more details here).

In the next sections, we will analyze the Carl Icahn’s top picks that have the highest dividend yields. On the first spot is CVR Energy, Inc. (NYSE:CVI), a diversified holding company specialized in manufacturing industries as petroleum refining and nitrogen fertilizer. Mr. Icahn’s stake in CVR Energy, Inc is the third-largest in terms of value and contains 77.20 million shares, worth around $3.15 billion, which represent around 80% of the company. The $3.4 billion company has paid a quarterly cash dividend of $0.50 for the last two quarters, compared to $0.75 paid for the third quarter of 2014, which gives the stock a dividend yield of 5.18%. CVR Energy’s stock dropped by 15.47%, during the last 52 weeks, affected by the fall of the oil price. Among other funds that we track, the largest shareholders of CVR Energy, Inc (NYSE:CVI) are Gotham Asset Management, managed by Joel Greenblatt, with 229,957 shares, worth $9.79 million and Ken Griffin‘s Citadel Investment Group that increased its position to 229,882 shares from 58,087 shares, valued at $9.78 million.

Carl Icahn disclosed a $1.03 billion position in the $10 billion producer of natural gas liquids and oil in the US Chesapeake Energy Corporation (NYSE:CHK). The company’s stock price declined by 23.76% year-to-date, also due to the decrease in the oil price. However, during the first quarter of 2015, Carl Icahn‘s fund has increased its position in Chesapeake Energy Corporation (NYSE:CHK) by 9.93%, holding 73.05 million shares worth $1.03 billion at the end of March. The company pays a quarterly dividend of $0.09 and sports a yield of 2.35%. Mason Hawkins’ Southeastern Asset Management and William B. Gray’s Orbis Investment Management are other large shareholders of Chesapeake Energy Corporation (NYSE:CHK), holding 64.20 million shares and 9.83 million shares.

In American Railcar Industries, Inc. (NASDAQ:ARII), a company engaged in the railcar industry, Icahn Capital owned 11.87 million shares valued at $590.36 million. American Railcar Industries, Inc. (NASDAQ:ARII)’s quarterly dividend amounts to $0.40 per share, which gives it a yield of 2.95%. For the first quarter of 2015, the company reported strong financial results with an increase in net income by 68.39% on the year to $34.98 million, or $1.64 diluted EPS. Other shareholders that have disclosed large positions in the American Railcar Industries, Inc. (NASDAQ:ARII) include Murray Stahl’s Horizon Asset Management and Chuck Royce’s Royce & Associates with 241,968 shares and 215,509 shares, respectively.

Disclosure: none