The Only 3 Energy Stocks That Matter to Billionaire Carl Icahn

Billionaire investing legend Carl Icahn of Icahn Capital has gained a reputation as a savvy investor and fearsome corporate raider, one who has tangled with the likes of Blockbuster Video and Time Warner in an effort to improve the value of his investments. If his wealth is anything to go by, he’s been rather successful in that regard. The 82-year-old is currently ranked 79th on Forbes’ real-time list of the world’s billionaires, with a personal fortune estimated at $17 billion.

Icahn came to greater attention among the American public following the Presidential elections in 2016, when he was named a special advisor on regulatory reform by fellow billionaire Donald Trump. Icahn was quickly caught up in a row that suggested he was using his position to try and benefit his hedge fund’s own investments, including pushing for regulatory reforms that would aid refiner CVR Energy, Inc. (NYSE:CVI). He promptly resigned from the position following the scandal.

CVR Energy has been one of Icahn’s biggest winners of late, with the stock doubling in value over the past six months. In this article, we’ll take a look at that investment, plus the two other prominent energy stocks in Icahn Capital’s 13F portfolio as of the end of 2017, based on the hedge fund’s latest filing with the SEC.

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Carl Icahn - Icahn Capital Lp

Cheniere Energy, Inc. (NYSEMKT:LNG)

How Many Cheniere Shares Icahn Owns: 32.68 million

How Much Money Icahn Has Invested in the Stock: $1.76 billion

Why Icahn Likes Cheniere Energy, Inc. (NYSEMKT:LNG): Icahn took a big stake in Cheniere in 2015 and promptly landed two board seats. Icahn told CNBC in 2015 that the company was misunderstood by the market and that its contracts were solid and accounted for 80% of the company’s production. Icahn also took issue with Jim Chanos‘ assertion that Cheniere was a “looming disaster” due to contracts that he believed were suspect, stating that they did their due diligence on them and they are “golden”.

Cheniere Energy, Inc. (NYSEMKT:LNG) Strikes Chinese Trade Pact: Cheniere became the first American exporter of liquefied natural gas to strike a deal with a Chinese state-owned energy company earlier this year, agreeing to send 1.2 million tons to China National Petroleum Corporation annually. China is one of the biggest LNG growth markets in the world, with the country’s imports of LNG rising by 50% in 2017 to 38 million tons. The bulk of China’s imports come from Australia, Malaysia, and Qatar. However, China is also attempting to lessen its need for LNG by building natural gas pipelines to multiple nearby countries.

Cheniere Energy, Inc. (NYSEMKT:LNG) Growth to Slow in 2018?: With no new liquefaction trains scheduled to be completed this year, growth is likely to slow considerably for the LNG producer, which completed its first four trains in 2016 and 2017, all ahead of schedule and within budget. Cheniere has predicted that each facility could generate as much as $500 million in EBITDA annually. However, Cheniere could firm up future expansion plans this year to help offset the lack of immediate growth.

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On the next page we’ll look at two other energy stocks that Icahn owns, including a new position opened in the fourth-quarter.

CVR Energy, Inc. (NYSE:CVI)

How Many CVR Shares Icahn Owns: 71.2 million

How Much Money Icahn Has Invested in the Stock: $2.65 billion

Icahn Is More Than Just Your Average CVR Energy, Inc. (NYSE:CVI) Investor: The size of Icahn’s CVR Energy position hasn’t changed in over five years, with the stock ranking as the billionaire’s top stock pick throughout much of that time (excluding the fund’s position in Icahn Enterprises L.P. (NASDAQ:IEP). CVR Energy and CVR Refining LP (NYSE:CVRR) are in fact subsidiaries of Icahn Enterprises which continue to trade as separate public companies, which explains his immutable position in the stock.

CVR Energy, Inc. (NYSE:CVI) Loses Massive Biofuels Short: CVR began shorting RINs (Renewable Identification Numbers) in 2016, ahead of Trump’s stunning White House upset. Icahn hoped that a Republican win might lead to changes being made to the Renewable Fuel Standard that would cripple the price of RINs and pass the obligation of purchasing them on to other companies (namely, companies not named CVR). However, Icahn’s hopes were dashed in the middle of last year, pushing the price of RINs up and forcing CVR to start covering its obligations (due this quarter) at much higher prices than it envisioned.

Feds Looking Into Icahn’s White House Role: It was revealed last November that the U.S. Attorney’s office for the Southern District of New York had begun to look into Icahn’s dealings involving RINs and his attempts to change regulations through his White House position that would’ve directly affected their price and benefited a company that he majority-owns. Icahn’s lawyer has claimed that Icahn’s role as special adviser to the President was not an official role and that he’s therefore exempt from a federal statute that could otherwise bring criminal charges his way.

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SandRidge Energy Inc. (NYSE:SD)

How Many SandRidge Shares Icahn Owns: 4.82 million

How Much Money Icahn Has Invested in the Stock: $101.53 million

Icahn Scuttles Bonanza Creek Deal: Icahn wasted little time making his mark on SandRidge Energy, of which he bought 4.82 million shares during the fourth-quarter. Icahn was instrumental in the company bailing on its planned purchase of Bonanza Creek Energy Inc (NYSE:BCEI) late last year, calling the proposed deal “value-destroying” and claiming that it offered no obvious synergies or economies of scale. Fir Tree, founded by Jeffrey Tannenbaum, which owns the second-largest position in the stock among the funds in our database as of the end of 2017, also disliked the deal, stating that it would decimate SandRidge’s cash reserves.

Why Icahn Took On SandRidge Energy Inc. (NYSE:SD): By his own reckoning, SandRidge is a relatively small company for Icahn to tangle with, as he told CNBC in November. However, the investor was compelled to act after witnessing what he called “a new low in corporate governance”, after SandRidge adopted a “poison pill” to try and quell shareholders and prevent activists from opposing its plans. Icahn has since pushed for changes to the company’s board and bylaws, proposals which have been rebuffed by the company.

Hedge Fund Ownership of SandRidge Energy Inc. (NYSE:SD): Let’s take a look at how other hedge funds have been trading this stock recently. At the end of the third-quarter (before Icahn opened his position), 22 hedge funds in our system owned $202 million worth of SandRidge shares, amounting to 28% of the stock’s float. In the fourth-quarter, several funds opened new positions in the stock, including the funds run by billionaires Icahn, Ken Griffin, and Jim Simons. On the other hand, three of the four largest hedge fund positions in SandRidge Energy as of the end of September were sold off during the fourth-quarter, including positions held by Tony Chedraoui’s Tyrus Capital (2.47 million shares), Christopher Pucillo’s Solus Alternative Asset Management (1.12 million shares), and James Dinan‘s York Capital (1.02 million shares).

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Disclosure: None