Why Carl Icahn's newest investment is already turning heads

Carl Icahn is one of Wall Street's great power players. He's famous for his "corporate raider" approach - only taking stakes in companies that he believes he can make lasting change in. His first attempt at a hostile takeover saw American whitegoods maker Tappan sell off its Electrolux arm for nearly $3 million. 

$3 million is a lot of money today, but it was a serious pay day in 1978. 

From there, he has been heavily involved in just about every industry you can think of. From the buy out (and asset strip) of Trans World Airlines to the unsuccessful takeover of U.S. Steel, to a perfectly timed sellout of his stake in energy giant Texaco (now called Chevron). At one time, he owned and operated Marvel Comics. 

At others, he has owned big stakes in everything from Netflix to eBay and Xerox (a stake he still holds). And for a time, Icahn was in a fierce battle with the board of Yahoo! because he was upset that the company had rejected a takeover offer from Microsoft. 

These days, Icahn Enterprises is his main vehicle and he no longer manages money for outside clients. But his influence and name still make headlines.

This wire, the latest of our 13F series, explores Icahn's latest transactions. We'll focus on the few moves he made last quarter, and in particular, why.

Carl's 13F changes at a glance

Carl's latest move: Bausch + Lomb (NYSE: BLCO)

Icahn Enterprises made only one move this past quarter but the move has already led to some internal earthquakes. Apart from investing more into his own holding company (Icahn Enterprises), Icahn invested $53 million into Canadian eye health company Bausch + Lomb. 

If that name isn't familiar to you, that's because it shouldn't be. It only debuted on the public boards in May this year. But it was also long enough for Icahn to muscle in and make changes. Just weeks after the IPO, Bausch + Lomb's CEO and chairman stepped down from the board. And guess who gets to fill the seats? You guessed it - Icahn's appointees. Some media reports added and suggested that Icahn himself said the CEO should go.

The reaction

If you needed any proof that Icahn's influence reaches far and wide, all you had to do was take a look at how the brokers moved their ratings and price targets in the wake of his purchase.

• Goldman Sachs cut the price target for the company by $3 last week (though kept its neutral rating)
• Cowen initiated an outperform rating with a $35 price target
• Evercore ISI also initiated an outperform rating but with a $21 price target
• Citigroup also initiated an outperform rating and pegged a $22 price target 

What do all of these moves have in common? They were all made after Icahn bought a stake in the company. 

Southwest Gas Holdings (NYSE: SWX)

If you read our last report on Icahn's 13F holdings, you'll know about his battle with Southwest Gas. The billionaire has been buying up shares in the company for some time, raising some serious eyebrows about whether Icahn was about to buy out the firm. 

Then, this Reuters report dropped on 21 April:

In an open letter to Southwest's shareholders, Icahn said his "only interest is to replace the incumbent board of directors".

So, no takeover. But Icahn did get his way - and you can read more about that story in our last 13F story on him:

Investment Theme

What Carl Icahn added to his long portfolio in 2022

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Then, Bloomberg reported that Southwest Gas was to carry on as a stand-alone company after all with no word yet on what it will do with those two flagship projects that Icahn has raised concerns over. Finally - and most pertinently to this story - another director is set to resign and he will, in all likelihood, be replaced by one of Icahn's associates. 

No wonder shares fell 14% on the day.

The big sales: Delek US (NYSE: DK) and Cheniere Energy (NYSE: LNG)

So far, we've told you about stories where Icahn has bought shares and then muscled his influence in. Delek US, on the other hand, is a near-opposite story. After years on the company's share register, Delek bought back 50% of Icahn's stake in March this year (though it only shows up on the 13F filing of Q2 2022). 

The $64 million transaction also comes with a key caveat - the Icahn Group has to withdraw its nomination of directors and not acquire any additional shares until Delek's 2023 AGM. 

And if shareholders thought that was good news, the news got even better when the company announced it would likely restart dividend payouts imminently.

The buyback story also applies to Cheniere Energy, with the board repurchasing $350 million worth of Icahn's stake in June. The last Icahn appointee to the board also stepped down as a result of the deal, but not without (say it with me) a CEO replacement.

Our next profile: Cathie Wood

So that's Carl Icahn - the activist investor who has consistently redefined the term "power player". 

Tomorrow, our series continues with ARK's Cathie Wood. If you remember from our last series, Wood does have a heavy investment in Tesla but it's by no means the only big bet she makes. Find out what other purchases and sales she's been making in tomorrow's edition of the 13F series.

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