Billionaire investor Carl Icahn’s Icahn Capital manages a concentrated portfolio, and he’s known for his activist approach. He’s often required to file 13D’s because of the large ownership positions his firm takes in publicly-traded companies. Icahn’s firm doesn’t trade in and out of stocks like a lot of today’s hedge funds, typically making only a few changes every quarter. For the first quarter of 2015, Icahn Capital added to four of its positions, while also disclosing that its position in Talisman Energy, which was acquired by Repsol SA during the fourth quarter and became nothing more than a merger arbitrage play, has been removed from Icahn’s portfolio.
Why do we follow Carl Icahn? One of the most common objections to incorporating 13F filings into an investment process is that the information in these filings is a bit out of date; the most recent round of filings discloses hedge fund’s or other major investor’s long equity positions as of the end of March. However, we’ve actually found that the most popular small-cap stocks among hedge funds earn an average excess return of 18 percentage points per year. In addition, even though 13Fs lag real time we can compare them to those from the past quarters to see which stocks investors have liked over a longer time frame and therefore are still likely to own. This is especially true with Icahn Capital because as we previously mentioned, the firm doesn’t typically make many changes.
Let’s look at the four changes Icahn Capital did make during the first quarter now, starting with his position in Manitowoc Company Inc (NYSE:MTW), which he initiated during the fourth quarter. We wrote about the firm’s successful push for Manitowoc Company Inc (NYSE:MTW) to spin off its food division and see now that Icahn has increased his stake by 136% during the first quarter, a quarter in which Manitowoc announced that it would do just that. At the end of March, Icahn Capital held some 10.58 million shares with a value of $228.16 million. Just to give you an idea of how big Icahn Capital is, the large stake in Manitowoc Company Inc (NYSE:MTW) is actually one of the smallest in its portfolio, representing just 0.71% of its value. Icahn Capital is the largest shareholder among the funds we track, while Larry Robbin’s Glenview Capital follows with a $185 million stake.
Icahn increased his firm’s equity holding in Chesapeake Energy Corporation (NYSE:CHK) to 73.05 million shares valued at $1.03 billion, an increase of 6.60 million shares during the first quarter. Shares of Chesapeake Energy Corporation (NYSE:CHK) have been tough to hold so far in 2015. Even though the price of crude oil has rebounded some 25%, Chesapeake Energy Corporation (NYSE:CHK)’s shares are still down over 22% year-to-date. Icahn initiated his activist position in the company at the beginning of 2012 and become successful by not only taking control over the board but also eliminating founder and CEO Aubrey McClendon. Chesapeake Energy currently has a legal battle with the ex-CEO, who is blamed for transferring some of the company’s confidential data as well as maps of oil and gas prospects to American Electric Power Company Inc (NYSE:AEP), which he now runs. Mason Hawkins’ Southeastern Asset Management holds shares of Chesapeake, as does William B. Gray’s Orbis Investment Management.