An Icon Broken?

Uncle Carl may leave us out of the will

In reference to the quote above, many wealthy people on Wall Street are vindictive and don’t have anyone to answer to. It makes great movies and great villains. Yet, Carl Icahn does have someone to answer to his shareholders which, if you have not been following the news or may be distracted by it, the other GOAT of investing Carl Icahn is the subject of an attack by a short seller. As such, his investment vehicle IEP, Icahn Enterprises, is now yielding 25% .

If it turns out that the sellers of the stock are wrong, then you will be making the magical +20% return that every investors flocks to.

As I write this, I have two pending articles on “Don’t chase dividend yields”, and “Pointless to be a hero”. The two subjects that I hope to finish soon are about how investors must look at the entire picture of the investment, not just yield. And when a stock drops horribly fast it’s not in your interest to go big.

Yet, when you have a bastion of Wall Street for about 50 years, you forget about rules above and say it will work out. I do think you should follow the narrative as investment vehicles by well-established investors are quite common and tend to trade at premiums and discounts to value depending if they are in fashion or not.

I’m sharing my thoughts here as we can learn a lot about shrewd businessmen like Icahn and how enemies of that success can feed upon weaknesses of someone who is past his prime (or is he? more to discuss)

If you are going to swim with sharks and pay investors and yourself, you have to be right and honest.

Here are some brief thoughts on some thoughts about him:

Past his prime? - Yes, he’s almost 90. But his team that has helped him are not. Look at the current management. They have a strong track record.

Taxes and borrowing shares - Rich people don’t want to pay taxes and neither do corporations as they will eventually pay a sufficient amount. Many of the wealthy do this, here is an article about it:

https://www.forbes.com/sites/johnhyatt/2021/11/11/how-americas-richest-people-larry-ellison-elon-musk-can-access-billions-without-selling-their-stock/

Ponzi scheme - Funny, I happened to have read this before the short seller’s report and thought it made a lot of send:

https://seekingalpha.com/article/4588760-icahn-enterprises-im-in-pursuit-of-income-with-its-15-7-percent-yield

Some smart ways to play on this fiasco?

The stocks he has a stake in may need to be sold. And the proxy battles he is waging may halt until there is clarity. Currently, the stocks are not doing what you would expect of a scam. But we will see.

UAN - is a cash flow positive chemical company that does special dividends that are mouth watering

CCK - very established aluminum manufacturer

ILMN - he is doing a proxy battle and because of the current issues the stock is very weak. They have amazing assets and it’s a matter of time until they are unlocked.

SWX - its a utility that probably will profit with rising Natural Gas prices

Or, just buy his shares, of IEP.

I feel his reputation is important to him and he hasn’t gotten to where he is by screwing his partners. Maybe his competitors, but not his nephews.