17. Carl Icahn

American activist investor

Benjamin Wachenje
"In the takeover business, if you want a friend, you buy a dog."

Founder, Icahn Enterprises
Born: Feb. 16, 1936, New York City
Education: Bachelor's in philosophy, Princeton University

Carl Icahn unlocks shareholder value, and neither a company's size nor reputation nor industry deters him from seeking it—actively. He will do it as an outside agitator, a minority investor or an owner-operator. He can deftly pick the lock as a creditor owning a company's distressed debt or, his critics say, kick the door down as an equity holder with a proxy fight, tender offer or controlling share. Whatever his methods, they have built him a fortune Bloomberg estimates at $21.7 billion.

Boards of directors and executive managers fear news that he has become a shareholder: It portends some kind of shake-up, and likely a proxy fight. "Generally, but not always, the net result has been very positive for the company and the shareholders," Icahn has written. "For too long and for a variety of reasons, shareholders have been complicit in allowing management excesses and incompetence by not taking a stand."

In addition to lambasting poorly performing or coddled managements, Icahn operates companies in industries as diverse as auto parts, energy, metals, railcars, gaming, food packaging, real estate and home decor through his publicly traded holding company, Icahn Enterprises, in which he is the majority shareholder. Founded in 1987 as American Real Estate Partners, the company also runs internal investment funds with $3.7 billion of assets as of the end of 2013 (outside investor money was returned in 2011, when Icahn exited the hedge fund business).

Relentless and self-consciously contrarian, Icahn has a gimlet eye for asset-rich, undervalued targets. He likes hard assets and has said he prefers to buy unglamorous, out-of-favor companies; he likes it even better if a whole industry is that way. The scale and diversity of Icahn Enterprises lets it make opportunist investments regardless of the economic cycle and positions it to pursue activist investing.

Icahn has had a reputation as a hard-boiled corporate raider for the better part of three decades. He took TWA private after acquiring the airline in a hostile takeover in 1985, subsequently selling off its assets to repay the debt incurred to buy it. Over the past quarter-century he has been involved with RJR Nabisco, Blockbuster, ImClone, Revlon, Phillips Services, Federal-Mogul and Marvel Comics. Current investments include Apple, Forest Laboratories, eBay, Chesapeake Energy, Herbalife, Netflix, Transocean, Talisman Energy, Hologic and Navistar.

Since 2000, Icahn has fully embraced the activist shareholder strategy. He developed that model for hedge funds, which as a class have been more successful than most investors in proxy fights.

His 2005-06 attempt to oust a majority of the Time Warner board is a textbook example. Icahn sought to gain control of the media giant and restructure it to maximize the share price. His plan was to significantly reduce corporate overhead, split up Time Warner's component businesses into four companies and launch a $20 billion stock buyback program. Icahn and his group of supporters backed off after management agreed to the stock repurchase and to cut costs by $1 billion, and Wall Street showed scant appetite for spinning off AOL and Time Warner Cable. Though the Icahn contingent didn't win the battle for control, Time Warner's stock had risen from $4 to $21.50 by the time they withdrew from the field.

More recently, Icahn sued Dell and its board in an attempt to derail a $24.4 billion buyout bid by founder Michael Dell, and pressed eBay to spin off the payments service PayPal and Apple to buy back $150 billion worth of its stock.

Carl Icahn: Lifelong highlights

  • Studied to be a doctor but dropped out after two years to join the Army
  • Started Wall Street career as a stockbroker for Dreyfus in 1961
  • Bought NYSE seat in 1968 with a loan of $400,000
  • Made $470 million taking TWA private in 1988
  • Launched the Icahn Report in 2008 to promote his views on shareholder activism
  • Sold half of his 10 percent stake in Netflix at a profit of over $800 million in less than a year—said to be one of the largest stock gains ever
  • Genomics institutes named for him at Princeton University and Mount Sinai Hospital in New York
  • Il Tinello in Manhattan, a favorite restaurant of Icahn's, named a pasta dish (farfalle with tomatoes, onions and pancetta) after him


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