Icahn Enterprises LP (IEP): Other Hedge Fund Managers Don’t Like Carl Icahn

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. One of the most popular stock among hedge funds is Warren Buffett’s Berkshire Hathaway. In this article we look at what those investors think of Icahn Enterprises LP (NASDAQ:IEP).

Icahn Enterprises LP (NASDAQ:IEP) has experienced a decrease in enthusiasm from smart money recently. IEP was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. There were 4 hedge funds in our database with IEP positions at the end of the previous quarter. Our calculations also showed that IEP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Most Popular Stocks Among Hedge Funds

Carl Icahn of Icahn Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. Also, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“.  We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to view the key hedge fund action regarding Icahn Enterprises LP (NASDAQ:IEP).

How are hedge funds trading Icahn Enterprises LP (NASDAQ:IEP)?

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IEP over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Icahn Capital LP, managed by Carl Icahn, holds the most valuable position in Icahn Enterprises LP (NASDAQ:IEP). Icahn Capital LP has a $9.5411 billion position in the stock, comprising 53% of its 13F portfolio. The second largest stake is held by Murray Stahl of Horizon Asset Management, with a $59.7 million position; 2.6% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions comprise Ken Griffin’s Citadel Investment Group, and . In terms of the portfolio weights assigned to each position Icahn Capital LP allocated the biggest weight to Icahn Enterprises LP (NASDAQ:IEP), around 53% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, designating 2.64 percent of its 13F equity portfolio to IEP.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified IEP as a viable investment and initiated a position in the stock.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Icahn Enterprises LP (NASDAQ:IEP) but similarly valued. These stocks are Ingersoll Rand Inc. (NYSE:IR), CenturyLink, Inc. (NYSE:CTL), Brown & Brown, Inc. (NYSE:BRO), and EPAM Systems Inc (NYSE:EPAM). All of these stocks’ market caps match IEP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IR 33 490015 -14
CTL 34 774832 0
BRO 26 585823 3
EPAM 27 338859 -1
Average 30 547382 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $547 million. That figure was $9602 million in IEP’s case. CenturyLink, Inc. (NYSE:CTL) is the most popular stock in this table. On the other hand Brown & Brown, Inc. (NYSE:BRO) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Icahn Enterprises LP (NASDAQ:IEP) is even less popular than BRO. Hedge funds dodged a bullet by taking a bearish stance towards IEP. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately IEP wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); IEP investors were disappointed as the stock returned 5.8% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

Disclosure: None. This article was originally published at Insider Monkey.