Today, we will look at 5 stocks that billionaire investor Carl Icahn is buying through his hedge fund Icahn Capital Management. Icahn is one of Wall Street’s most followed and successful investors. Icahn ranks 369 out of the 482 hedge funds rated on TipRanks. Despite a solid history of value stock picks, bets can sometimes go sideways. Icahn’s stock picks are rather unconventional. Unlike several hedge funds, he does not invest heavily in tech stocks and holds none of the MATANA stocks or artificial intelligence (AI) stocks.
Icahn’s performance, as measured by the Sharpe Ratio, stands at -0.36 compared to the average hedge fund manager’s ratio of 1.49. He invests mainly in the Energy sector, with 73.8% of his portfolio committed to it.
Without much ado, let’s dive right into the five stocks from Icahn’s portfolio.
#1 Icahn Enterprises LP (NASDAQ:IEP)
Icahn Enterprises is an American conglomerate with diverse businesses. The company acts as a holding company, having several stakes in other businesses, including investment, energy, automotive, food packaging, metals, real estate, home fashion, and pharmaceutical businesses.
Icahn’s largest investment is in IEP, representing 55.23% of his portfolio, worth $6.32 billion as of December 31, 2023. Conversely, Icahn has a majority ownership in IEP with an 89.55% stake and is the Chairman of IEP’s board.
In its Q4 FY23 results, IEP’s total revenues fell 13.5% year-over-year, and net loss per LP unit more than halved to $0.33 per share from $0.74 per share a year earlier. Notably, IEP also declared a quarterly dividend of $1.00 per depositary unit, representing a massive yield of 34.97%.
Is Icahn Enterprises a Good Buy?
Icahn Enterprises acts on the belief of true activism. The company invests in seemingly undervalued companies (hidden gems) and stirs the management for turnaround and to improve shareholder value. Currently, IEP has 25 board seats in disclosed public company investments. As these bets take a long horizon to redeem true value, IEP’s shares are taking the toll of such investments. IEP stock has lost over 57% in the past year.
#2 JetBlue Airways (NASDAQ:JBLU)
Icahn recently took a huge stake (10.09%) in American low-cost carrier JetBlue Airways. We cannot miss this one because it is his latest stock pick. The activist investor even managed to secure two board seats after talks of a merger between JetBlue and Spirit Airlines (NYSE:SAVE) ended. JetBlue is now looking to improve its overall flight operations and take more profitable routes.
Icahn bought 33.62 million shares of JBLU, representing 1.64% of the total portfolio and currently occupying the eighth spot. Carl Icahn’s intervention is expected to boost JBLU’s stock price, as the activist is known for strategic turnarounds at the companies he invests in. This will also bolster Icahn’s holding value in the long term, which has already turned profitable since Icahn bought the shares at an average price of $3.56 per piece. The stock is trading near $7 currently.
What is the Future of JBLU?
With two Buys, four Holds, and three Sell ratings, JBLU stock has a Hold consensus rating on TipRanks. The average JetBlue Airways price target of $5.94 implies 18.4% downside potential from current levels. JBLU stock is up 8.2% in the past year.
#3 CVR Energy (NYSE:CVI)
Carl Icahn’s second-largest holding (20.91%) is Texas-based CVR Energy, a diversified holding company with interests in renewable fuels, petroleum refining, and nitrogen fertilizer manufacturing businesses. As of December 31, 2023, Icahn held 66.69 million shares of CVI worth $2.39 billion. Notably, Icahn has steadily built his stake in the company to 66.34%.
CVI paid its most recent quarterly dividend of $0.50 per share on March 11, reflecting an attractive yield of 5.52%. In its Q4 FY23 results, the company posted adjusted earnings per share (EPS) of $0.65 on revenue of $2.2 billion. CVR Energy also paid two special dividends of $1 and $1.50 per share in Fiscal 2023, bringing the total full-year dividend to $4.50 per share.
Is CVR Energy a Good Stock to Buy?
With two Sell ratings received in the past three months, CVI stock has a Moderate Sell consensus rating. The average CVR Energy price target of $28.50 implies 22.3% upside potential from current levels.
#4 Southwest Gas Holdings (NYSE:SWX)
Southwest Gas Holdings is the third largest holding (representing 6.1% of the portfolio, valued at $698.28 million) in Icahn’s portfolio. He holds 15.41% of the company. Southwest Gas acts as an intermediary in the energy sector, purchasing, distributing, and transporting natural gas in North America. Plus, it has a Utility Infrastructure segment that provides services to energy networks in North America.
SWX also boasts a lucrative dividend yield of 3.49%, paying $0.62 per share in quarterly dividends. For Fiscal 2024, the company expects net income to be between $228 and $238 million. Also, the company projects its adjusted net income to grow at a compound annual growth rate (CAGR) of 10%-12% through 2026.
Is SWX a Good Stock?
With only one Hold rating received in the past three months, SWX stock has a Hold consensus rating. The average Southwest Gas Holdings price target of $73 implies 1.6% upside potential from current levels. SWX stock has gained 18.5% in the past year.
#5 Bausch Health Companies (NYSE:BHC)
Bausch Health is an American-Canadian globally diversified pharmaceutical company focused on gastroenterology, neurology, dermatology, and ophthalmology products. BHC is the fifth-largest holding in Icahn’s portfolio. It represents 2.36% of the portfolio, worth $269.78 million as of December 31, 2023. Icahn owns 9.62% of Bausch Health.
In Q4 FY23, BHC’s revenues rose 10% year-over-year while adjusted net income attributable to shareholders jumped to $406 million from $372 million reported a year earlier. For Fiscal 2024, BHC updated its revenue outlook to reach between $9.30 and $9.55 billion, up 6% to 9% annually.
Is BHC a Good Stock?
Despite Icahn’s long-term view on the stock, BHC has a Hold consensus rating on TipRanks. This is based on one Buy, four Holds, and one Sell rating. The average Bausch Health Companies price target of $9.67 implies 1.8% upside potential from current levels.
Ending Thoughts
Unlike conventional investors, Carl Icahn is an activist who seeks to make money by buying undervalued stocks. His primary goal is to improve share price performance and long-term shareholder returns. Not every investor has the kind of risk-return profile that Icahn does. Nonetheless, if you wish to have some exposure to the stocks he owns, you can consider the five stocks mentioned above.
