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An American Icahn

Thursday, 27 Sep 2007 | 12:33 AM ET

Carl Icahn - His name is synonymous with capitalism.

From his famous break-up of RJR Nabisco in the 1990’s, to his infamous 2005 battle with Time Warner head honcho Dick Parsons, few names strike fear in the hearts of CEOs like Icahn.

Although corporate bigwigs might shudder, investors rejoice. According to Fortune magazine this summer, investments by Icahn boosted the market values of his target companies by more than $50 billion the last two years.

In addition, his relatively new hedge fund, Icahn Partners, boasts annualized gains of 40% the last 3 years. Results such as these netted him a staggering personal fortune and $12 billion in capital.

And this Wall Street whale shows no signs of slowing. This year he’s made moves into software maker BEA Systems and wireless giant Motorola.

Billionaire investor Carl Icahn joins the panel for this conversation. Following are excerpts from what was said.

An American Icahn
The Fast Money crew has an exclusive interview with legendary activist investor Carl Icahn.

What do you think about Bear Stearns and speculation that Warren Buffett might be considering astake?

“I think you have to be quite cautious about the financial investments because a lot of the derivatives and mortgages that they profited from will be going away,” says Icahn. “So I am not really taking an investment in any of them.”

What’s your intention with BEA Systems?

“We would like to see it sold. Being alone in that area is possibly dangerous and the company is worth a great deal more to a synergistic buyer,” says Icahn. “I think it would be good for the shareholders as well as the company and employees –and if you want to take it to its final degree to society because they do have great technology. It could be used a lot more profitably – and put to better use.”

Who would be a buyer of BEA?

"I think there are 3 or 4 logical buyers. Hewlett Packard (HPQ), Oracle (ORCL) possibly IBM (IBM) or SAP (SAP),” says Icahn.

He adds “If you notice BEA has not increased its licensing for the last year or two, but Oracle has been making inroads and IBM certainly has."

What is your thinking in your position in Motorola (MOT)?

“I think MOT has great potential. If you analyze it – you’re buying the handheld business for $10 or $11 billion,” says Icahn. ”And that’s a company that’s doing $25 billion in revenue."

He adds, "Now, take Nokia’s margins at 16% - (if Motorola could perform at the same margins) that would make MOT astronomically more profitable. But even at a small margin MOT is extremely cheap."

He also says, "Now can they ever achieve that? I believe they can. I think they can cut costs and they sell very well in this hemisphere. I think if (CEO Edward) Zander stays..."

(Interrupts) Does he have to go?

“I would say if things turn around and costs are cut and we take hold he doesn’t necessarily have to go,” replies Icahn. “But I don’t think you can have a long tenure, you have to bite the bullet sooner or later. But I like the risk reward (in MOT). It’s a great deal.”

Can you tell us about your Biogen (BIIB) position?

"We haven’t filed a 13D, but we do have a large position. I don’t think it’s a secret that we think it should be put up for sale,” says Icahn. “We’re activists and we feel a lot of companies are better off under different mangements or in different hands. It doesn’t mean that all managements are bad, it just means that… a lot of companies are not as well managed as they might be.”

He adds, “In the biotech area I think it’s very interesting, because a lot of biotech companies would be better with Big Pharma, where they would get solid backing. And Big Pharma I think is looking for that because their patents are running out. MedImmune was a perfect example of that – I’d like to think we lit a fire under it – they did a good job in selling it.. and I think Biogen would get a better price than anyone (might expect.)”

Are their other names in Biotech that are qualified candidates?

“We don’t talk about our positions unless it’s already out and known… we very rarely talk about positions until they’re public knowledge,” says Icahn.

If there’s one lesson you could impart, what is it?

“Investing is difficult. There are professionals and amateurs, like in anything else. However, in tennis you’d be crazy to go out on the courts and play with Sampras. But in investing everyone seems to want to get in."

He adds “ For a while...you can do well. But, unless you hold for the long, long term, it’s a dangerous area to be in right now. I think now is an extremely dangerous (time)."

Why?

"I think this market is on a precipice and could go either way. You sort of have a credit crunch and remember in 1990 nobody recognized the manifestation that credit crunch would have. It took about a year (to work though),“ says Icahn.

He adds, “I’m not saying that we won’t get out of it – I’m saying you have to be extremely careful. It takes all the king’s horses and all the king’s men and they still can’t turn it around again.”

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Trader disclosure: On Sept. 25, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (DIS), (EMC), (ATVI); Najarian Owns (CBAK), (UA), Najarian Owns (DGX); Najarian Owns (GS) Options; Finerman Owns (GS); Finerman's Firm And Finerman Own (TEL); Finerman's Firm Owns (NMX), (NYX), (KFT), (BEAS); Finerman's Firm Is Long (GCO) Calls; Finerman's Firm Owns (MSFT) Options; Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; NBC Universal Is The Parent Company Of CNBC

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