Love him or hate him, controversial billionaire Carl Icahn has been wildly successful in his long career. This veteran activist investor, commander of the master limited partnership Icahn Enterprises (IEP -1.94%), has managed to make piles of money while helping to influence policy at companies such as Apple (AAPL 0.51%) and Hertz Global Holdings (HTZG.Q).
Such changes have historically boosted the results of companies in Icahn Partners' portfolio, to the point where Icahn Enterprises was not only well in the black, but strongly profitable for years at a stretch.
Until recently.
Oil stain
Last month, Icahn Enterprises released its Q4 and fiscal 2014 results. The bottom lines of were both a color Icahn Enterprises rarely sees: red. For the quarter, attributable net loss was $478 million compared to a profit of $222 million in Q4 2013.
The annual shortfall wasn't as bad, but it was well in negative territory at $373 million, and it was a far cry from the 2013 profit of more than $1 billion. Last year marked the partnership's first net loss since 2008.
The direct culprit wasn't a particular stock or group of stocks in the partnership's portfolio. Rather, it was a commodity -- oil. Late last year, the price of oil suddenly cratered, dropping more than 50% from the yearly high.
That was a heavy blow to Icahn Partners, as its investment segment -- essentially its stock portfolio -- is packed with companies whose fortunes are tied to oil prices. These include Talisman Energy, Chesapeake Energy, and Transocean. Taking the 2014 performance of those three alone, we can see how a portfolio stuffed with them could suffer:
Those stocks weren't the partnership's only laggards in 2014. Among the non-oil titles losing value over the course of the year were Herbalife, which fell nearly 53%, and Hertz, declining 13%.
The Apple of his eye
But Icahn and his Enterprises didn't get where they are today by investing only in stocks going south.
That Apple stake is the largest position in the investment segment, and Icahn flagged it as a big reason the 2014 losses weren't deeper. The tech giant didn't make too many missteps last year, and the market rewarded this with a nearly 40% price gain. And that's not taking into account the dividends the company has been paying out.
Meanwhile, the offending energy sector should recover, according to the partnership's guiding light. Although Icahn admitted that oil prices would likely continue their slide "in the near term," he was bullish on the industry's prospects. "I believe a great amount of profit in the next few years will be made by those who hold positions in energy companies," he said.
His fellow travelers in the partnership will certainly be hoping he's right.
