Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.
Today, let's look at investing giant Carl Icahn, who has made billions, partly by taking large positions in companies and pushing for change in them. These companies have included Texaco, RJR Nabisco, and Imclone. He's also drawn to companies in or near bankruptcy, wanting to make them more valuable in order to sell them at a higher price.
Icahn Associates' reportable stock portfolio totaled $11.2 billion in value as of September 30, 2012. Its top three holdings, Icahn Enterprises L.P. (Nasdaq: IEP ) , CVR Energy (NYSE: CVI ) , and Forest Laboratories (NYSE: FRX ) , make up nearly 70% of the overall portfolio's value.
So what does Icahn Associates' latest quarterly 13F filing tell us? Here are a few interesting details:
The only new holding is Netflix (Nasdaq: NFLX ) , in which Icahn now owns nearly 10%. He would like to see a titan such as Microsoft (Nasdaq: MSFT ) , Amazon.com (Nasdaq: AMZN ) , or Verizon (NYSE: VZ ) buy the company, and that would likely deliver a nice premium-price bump to the stock. Some, though, would rather see the company remain independent because, if it succeeds, it could deliver much more value over the long run.
Among holdings in which Icahn Associates increased its stake was Navistar International (NYSE: NAV ) and Forest Labs. Navistar, known for its trucks, buses, engines, and items for commercial and military markets, has dropped some 42% over the past year. Its management offered many excuses, and now the company is under new management. Production and quality problems have played a part in its struggles. Icahn has suggested that he'd like to see Navistar combined with Oshkosh (NYSE: OSK ) , for which he's made an unsuccessful bid.
With Forest Labs, Icahn is seeing potential, while others fret about patent expiration for the company's drugs. Its blockbuster antidepressant Lexapro had sales plunge 93% recently, due to generic competition, and its Alzheimer's treatment, Namenda, which accounted for 53% of all revenue last quarter, will lose patent protection in 2015. Forest Labs is working on extending the life of Namenda via new approvals. Icahn has been critical of the company, and now sits on its board. On the plus side, sales of blood pressure drug Bystolic were up 29%, hitting $106.5 million, and the company received FDA approval for Tudorza, an inhaled treatment for chronic obstructive pulmonary disease, and Linzess, for irritable bowel syndrome and chronic constipation.
Icahn Associates reduced its stake in Icahn's company, Icahn Enterprises. Interestingly, while Icahn frequently criticizes the governance and performance of other companies, his own company has had some fingers pointed at it, as well. The governance watchdog folks at GMI Ratings see the company having higher accounting and governance risk than 84% of companies. Still, many like the company as a way to benefit from Icahn's investing smarts.
Finally, Icahn Associates sold out of Amylin Pharmaceuticals, which was bought by Bristol-Myers Squibb (NYSE: BMY ) , and AstraZeneca (NYSE: AZN ) . My colleague Brian Orelli has speculated that the biggest winner in the deal may be Alkermes (Nasdaq: ALKS ) , as it receives royalty payments on sales of Amylin's diabetes drug Bydureon, and should benefit with the drug now being supported by some much bigger players.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. Therefore, 13-F forms can be great places to find intriguing candidates for our portfolios.
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