Carl Icahn is a legend of the investment world, making his 13F filing a must-read for investors who want to glean insight into what the activist investor is thinking about companies in his portfolio, and the markets as a whole.

His latest 13F filing suggests that he's been busy selling shares of PayPal Holdings (NASDAQ:PYPL) and AIG (NYSE:AIG), while adding to his stake in his publicly traded holding company, Icahn Enterprises (NASDAQ:IEP).

Slashing one of his biggest winners

PayPal shares have rallied more than 51% this year, but Carl Icahn is cashing out. He sold roughly 68% of his holdings in the most recent quarter, reducing his position by more than 21.5 million shares. He held just 10 million shares as of June 30.

Those who don't follow PayPal closely might be surprised to learn just how fast it's growing despite being one of the oldest methods for sending cash via the internet. Active customer accounts grew 12% year over year in the most recent quarter. Transactions per account also grew at nearly 10% year over year. These two metrics effectively compound on one another. PayPal delivered with its second-quarter earnings with a "beat and raise," topping analyst expectations and raising its guidance for the remainder of the year.

Beyond its core online payments processing business, PayPal.com, the company has a wildcard -- Venmo -- a peer-to-peer payments app that is virtually unmonetized as it exists today. In the second quarter, users sent $8 billion to one another using Venmo's service, a 103% increase from the same period a year ago. One wonders when PayPal might flip the profits switch and start taking a small portion of every payment on the service.

Of course, it's not all upside. Many would argue that PayPal has existential risk, given it relies on eBay (NASDAQ:EBAY) for a substantial share of transaction volume and new customers. (Some estimates suggest that as many as 30% of PayPal's new users come from eBay.) In 2020, the online marketplace will have the ability to move payments in house, if it wants to. Whether eBay and PayPal decide to play nicely when their spin-off operating agreement ends is really anyone's best guess. Based on Icahn's exit, though, it seems he won't be around for the ride.

Man pulling dollar out of suit pocket

Image source: Getty Images.

Icahn invests in Icahn

There are few people Icahn likes wagering on more than himself. This quarter, Carl Icahn increased his personal stake in Icahn Enterprises, a publicly traded holding company for his investments.

Icahn has been increasing his holdings in the company this year. He bought more of the company's shares earlier as part of a rights offering designed to decrease the company's financial leverage. The company had been hard hit by its bias toward short positions in its investment funds. The funds remain mostly short, having a net short position of 44% as of June 30. That's far lower than the net short position of 128% at the end of 2016.

After an impressive run in the years following the financial crisis, the investment funds generated poor returns in 2014, 2015, and 2016. Finally, they're back in the black for the first half of 2017.

Chart of IEP investment fund returns

Image source: author. Chart data was gathered from an Icahn Enterprises presentation.

Trimming an insurer

Icahn trimmed his holdings of AIG this quarter, selling roughly 5% of his stake in the insurance giant. One wonders if this is a sign that Icahn might let go of the remaining $2.7 billion of stock in the months to come.

Whether or not AIG remains in Icahn's portfolio, the activist investor certainly left his mark at AIG. In his activist campaign, Icahn called the insurance company "too big to succeed," suggesting that it should break up its varied insurance units. Here's a snippet from his letter to then-AIG CEO Peter Hancock.

Despite years of dismantling and selling non-core assets, AIG is still too large. The combination of life insurance and P&C insurance into a single entity offers no net benefit to shareholders (proven by industry low ROE), a fact that has driven other major multiline insurers to aggressively focus on a single line of business. We believe you must acknowledge that the current multiline strategy is not generating competitive returns. Separate monoline companies will be more focused, more efficient, generate better returns and, as a result, command significantly higher market valuations.

If it wasn't clear from Icahn's simultaneous use of bold, italics, and underlining, Icahn's views on AIG's future were strongly held.

Icahn likely played a big role in Peter Hancock's exit as AIG's CEO in March 2017. Brian Duperreault, an insurance industry veteran with the resume to back it up, stepped in as AIG's new CEO.

Duperreault appears poised to put AIG on the exact opposite course Icahn had previously campaigned for. Duperreault suggested that he may redirect excess cash away from stock buybacks and start spending more on acquisitions in the pursuit of growth and profitable business lines. It's a high stakes bet for AIG, given shares trade at a nearly persistent discount to book value. Arguably, AIG stock is the best acquisition that AIG could make, given its below-average valuation.

We'll see if Icahn plays friendly with AIG's new leadership. Unlike Hancock, Duperreault has insurance industry experience, which gives him the credibility to ignore one of Wall Street's most legendary activist investors should he choose to.

Jordan Wathen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends eBay and PayPal Holdings. The Motley Fool has a disclosure policy.