Throughout this ten-part series, I’m looking at the life and times of Carl Icahn, how he started on Wall Street, his most famous and infamous trades, his transition from stockbroker to corporate raider to activist investor and his activities today.
Of all the world’s great investors, Carl Icahn is perhaps the most feared and respected at the same time. Icahn started his life on Wall Street as a stockbroker and worked his is way up to become the Street’s most respected activist investor and most feared corporate raider.
From 1968 through 2011, Icahn compounded the initial $100,000 he invested in his Wall Street firm at a 31% annual rate. Over the same period, the book value of Warren Buffett’s Berkshire Hathaway grew at only 20% annualized.
According to Bloomberg, Icahn is currently the world’s 35th richest person with a fortune of $19.1 billion.
Carl Icahn Part One: The Beginning
Carl Icahn Part Two: Working Through The Ranks
Carl Icahn’s story is completely different to that of other investing legends such as Warren Buffett, Charlie Munger, Ray Dalio or George Soros. While he has made almost all of his money in the equity markets, Icahn’s performance isn’t a result of his unrivaled stock picking acumen. Instead, over the years Icahn has built his wealth through activist activities and corporate raiding, which if executed successfully, leaves nothing to chance. At the end of the day, Icahn almost always walked away from a deal with a profit.
This is why the billionaire is such an interesting character to study. With most notable investors, any biographies always focus on their successful stock picking, investment philosophy and attitude towards the market. However, with Icahn, his story is a tale of hard work, getting things done and making money, no matter what it takes.
Tony Robbins profiled Icahn in his 2005 book “Money: Master The Game
Icahn told Robbins:
“At first I didn’t even know how to play, and they cleaned me out. So I read three books on poker in two weeks, and after that I was 10 times better than any of them. To me, it was a big game, big stakes. Every summer I won about $2,000, which was like $50,000 back in the ’50s.”
That sums up Icahn: he never takes no for an answer.
After a brief stint working for someone else on Wall Street, Icahn borrowed money ($400,000 from his uncle M. Elliot Schnall) to buy a seat on the New York Stock Exchange. This is where his career began. Rather than trading stocks, Icahn minted money using a low-risk arbitrage strategy when the odds were always skewed in his favor. This is where he began to “make big money, $1.5 to $2 million a year.”
With money behind him, Icahn set up the first form of his firm, which is now called Icahn Enterprises.
Icahn Enterprises
With Icahn Enterprises, Icahn began to take on companies and managements in a way only he could. Icahn pounced on his prey, finding companies that weren’t well run, acquiring a stake and giving management an ultimatum, “”I’m taking you over unless you change, or unless the board does X, Y, Z.”
This strategy is bound to rustle up a few feathers and over the years Icahn has had his fair share of hostile takeovers, court cases, and bitter publicity battles. Icahn has been sued and investigated numerous times for issues ranging from corporate debt payment to possible federal securities violations.
Some of these fights have become so publicized and aggressive that they would be enough to make the average hedge fund manager want to retire from the business for good. But not Icahn. Icahn has been fighting these battles now for more than four decades. Why does he keep going?
“Very few people had the tenacity I had,” Icahn told Tony Robbins for his book. “I’m a very competitive guy. Passionate or obsessive, whatever you want to call it. And it’s in my nature that whatever I do, I try to be the best.”
It’s said that Gordon Gekko
This article was originally published in ValueWalk.
Photo: Insider Monkey