Icahn Enterprises

Icahn Enterprises Jonathan Poland

Icahn Enterprises L.P. (IEP) is a diversified holding company headquartered in New York City, founded and chaired by billionaire investor Carl Icahn. Carl Icahn has a long history of successful investments and has been involved in many high-profile corporate battles.

Through its subsidiaries, has a presence in various industries such as investment, energy, automotive, food packaging, real estate, home fashion, and pharma on a global scale. The Investment segment utilizes private investment funds to invest its proprietary capital. The Energy segment engages in refining and marketing transportation fuels, as well as producing and marketing nitrogen fertilizers in the form of urea ammonium nitrate and ammonia. The Automotive segment is responsible for the retail and wholesale distribution of automotive parts and provides automotive repair and maintenance services. The Food Packaging segment specializes in the production and sale of cellulosic, fibrous, and plastic casings for processed meat products. The Real Estate segment is responsible for renting retail, office, and industrial properties, constructing and selling single-family homes and residential units, and managing golf and club operations. Additionally, this segment manages hotel and timeshare resort operations. The Home Fashion segment is responsible for manufacturing, sourcing, marketing, distributing, and selling home fashion consumer products. Finally, the Pharma segment provides pharmaceutical products and services.

as of May 14, 2023

At the first of May, a report by Hindenburg Research stated that “Icahn has been using money taken in from new investors to pay out dividends to old investors…” basically comparing it to a ponzi-scheme. The stock has produced outperformance because of that dividend payment, distributing over $70 per unit in the last decade. Until a couple of weeks ago, the stock was over $50 a share. Before trading starts tomorrow, it’s under $35… AND is now paying $8 a year. I think Icahn is a real business. It doesn’t matter that only one analyst covers it. What matters is whether investors are getting their checks and the company is doing what it can to produce more value for them.

as of May 3, 2023

Oh Boy! Hindenburg Research dropped a short sell paper that sent the stock plummeting. Of course, it’s easier to do that in Icahn Enterprises (IEP) because the float isn’t that large. 357 million shares outstanding, only 41 million in the float. Float being what is generally traded by investors not insiders. Anyway, stock is down massively, now the 14% yield is 10% higher and to be honest, if it turns out that IEP isn’t solvent or rather has overleveraged itself at the expense of investors, this could get a lot worse. HOWEVER, in the event that Icahn comes out and speaks about it openly and says the company is keeping the dividend payment, this value will look amazing. Two big ifs.

as of March 7, 2023

14% annual dividend is super enticing, going from $1 to $2 per quarter in the last decade. I would trust Carl Icahn (at 87) and his team to keep this venture producing high levels of growth for years to come, even if the founder passes away. But here’s the thing… you know this one is not going to produce capital gains. It will produce income and a lot of it. There are plenty of good dividend producers, yet Icahn is likely one of the best long-term. On $10,000, an investor will receive nearly $1,500 of taxable annual earnings. The stock price is basically flat over the last 5 and 10 years and while it will likely fluctuate going forward, it’s mostly just an income trade.

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