There’s More to Carl Icahn’s Portfolio Than Just Apple and Dell

Indeed, a great example of the benefits of leasing and the earnings power of long-term, cash-generative leases can be seen in the company’s first-half results. American Railcar noted a 250% rise in lease income, although overall revenue only expanded by 2%. Nonetheless, thanks to the fact that rental revenue goes straight to the bottom line, year-on-year earnings from operations expanded 42%.

This is where value is rising,and the company should become extremely cash-generative over the next few years.

If you can’t choose one..
While Transocean and American Railcar present attractive opportunities, Icahn’s Icahn Enterprises LP (NASDAQ:IEP) itself could also be a good bet. Akin to a mini Berkshire Hathaway, Icahn Enterprises has a multitude of shareholdings. As a partnership — unlike Berkshire — Icahn Enterprises distributes a payout to unit holders, which currently stands at 6.4%.

Furthermore, whereas Berkshire is overweight insurance and financial operations, Icahn Enterprises offers more diversification, with the bulk of its earnings spread across three divisions: investments, automotive, and energy.

Additionally, Icahn Enterprises has its own railcar lease fleet, which, as I have mentioned, is a great way of generating strong, recurring cash flow. What’s more, Icahn Enterprises’ real-estate division provides an interesting play on the housing market for those investors who do not wish to take much risk.

In particular, Icahn Enterprises holds a share of WestPoint Home, one of the largest providers of home-textile goods within the U.S. Additionally, Icahn’s holding company owns a large portfolio of real estate ($787 million at the end of Q1 2013), with both rental real estate and development operations underway.

All in all, Carl Icahn is best known for his large activist positions in Apple and Dell, but the investor’s portfolio also contains other gems. American Railcar and Transocean offer attractive long-term outlooks and currently look undervalued.

The article There’s More to Icahn’s Portfolio Than Just Apple and Dell originally appeared on Fool.com and is written by Rupert Hargreaves .

Fool contributor Rupert Hargreaves owns shares of American Railcar Industries. The Motley Fool owns shares of Transocean.

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