Whale Week: Activist Investor
Fast Money’s Whale Week continues with our celebration of Wall Street's most unabashed capitalists – whales as they are called. On Wednesday we bring you the most rapacious of them all: the activists investor. First, a word of warning warning - if you are a CEO, the following story could trigger nightmares.
Species: Activist Investor
Specialty: The Break-Up
Most Famous Kill: RJR Nabisco
In the Corporate American seas, there is no whale more feared by CEOs than Carl Icahn. The quintessential activist investor, Icahn is mercurial by nature, often lashing out at his CEO prey through the press - hurling invective until his subject is subdued.
He lurks in the urban waters off New York, and despite his advanced age, time has not dulled this whale’s temper. Witness his famous battle in 2005 with Media Titan Dick Parson, as Icahn agitated for change at Time Warner. "By definition, you're going to have morons running companies," he famously said. Icahn later denied he was talking about Parsons, but terrorizing CEOs has long been his specialty.
His preferred method of kill: the break-up – a technique he honed in the 80s. It involves tearing out the prime cuts of lazy, underperforming companies – and later selling the leaner and more profitable parts for a hefty sum. His most famous kill – the break-up of RJR Nabisco in the mid-90s that netted some $1.3 Billion.
From 1996 to 2004, Institutional Investor said Icahn had stakes in 56 companies for an annual return of 54%. Such investing acumen has helped Icahn amass an estimated personal fortune of $10 billion. The mere sight of Icahn in corporate filings can send stocks sharply higher – as it did earlier this year with food giant Kraft.
Less infamous are Icahn's considerable philanthropic efforts – he sponsors numerous charities, including scholarship and research centers at various schools and universities. And he donated $10 million for the construction of Icahn Stadium on Randall’s Island in New York, proving a killer whale can still have a big heart.
Pete Najarian says Icahn has thrived in many different eras and Pete feels that’s impressive.
Guy Adami says it’s not as easy to mirror Icahn as investors might think. He explains that sometimes Icahn is wrong. But when he’s right – he’s right big time.
Jeff Macke recommends using Icahn as a starting point for research.
Eric Bolling says if you see two whales in a stock, it might not be a bad idea to jump in. He explains that Icahn and Peltz are both in Kraft (KFT).
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Trader disclosure: On Aug 8 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Najarian Owns (GS), (MEDX),(NMX, (BMY); Bolling Owns (ICE), (NMX); Bolling Is Short (FXI) But Is Bullish Long-Term; CNBC Is A Service Of NBC Universal And Dow Jones