But behind all his proxy fights, television outbursts and tweets, is Icahn’s ability to trade financial markets. Now in his late 70s, Icahn is on an amazing run. In 2013, Icahn’s investment fund returned 31%, according to a recent financial presentation put out by Icahn Enterprises. That’s just about in line with what the U.S. stock market performed last year, which is pretty impressive given that Icahn has said that his portfolio was hugely hedged last year. The vast majority of hedge fund managers were trounced by Icahn and the U.S. stock market last year and their defenders have loudly argued that recent hedge fund underperformance has been a product of prudent and, at times, contractually required hedging of portfolios during a raging bull market.
How did Icahn do it? He went into 2013 with Netflix as his third biggest holding. The stock soared by 283% from the start of the year until Icahn sold a big chunk of his holdings in late October. The stock of Icahn’s biggest holding going into 2013, Forest Laboratories, merely increased by 70% over the year. Icahn held onto most of his stake in Forest Labs throughout the year and it remains his second biggest position. Icahn played an important role in the ouster of Aubrey McClendon from Chesapeake Energy last year and the stock, which was Icahn’s second biggest holding in 2013, rose by 63%.
Can Icahn keep producing good returns in 2014? It’s very early, but Icahn seems to be off to a bit of a rough start. Herbalife, a stock that also helped Icahn’s investment fund tremendously last year, has tumbled by more than 10% in January. It was Icahn’s fourth biggest position going into 2014 with a value of $1.3 billion, a not insignificant chunk of Icahn’s investment fund. Apple, which is Icahn’s biggest single position by far, has dipped by more than 3% to start the year. His other big bets are Forest Labs, Chesapeake and Transocean.
But you would be crazy to bet against him. Home runs like Netflix might seem like luck, but as someone who once worked with Icahn told me recently, it can’t be luck when a guy like Icahn keeps on scoring for decades. After a tough 2008 that saw Icahn post big losses, Icahn has rebounded in a big way. He kicked all outside investors out of his hedge fund after the financial crisis and rebooted. The last five years for Icahn have been tremendous, a stretch that has seen his investment fund return 27% annually. Outside of billionaire hedge fund manager David Tepper, who has done even better, it’s tough to find that kind of investment performance amid big shot money managers over the last five years.
