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 $21.5 billion in value as of June 30. Its top three holdings, Icahn Enterprises L.P., CVR Energy, and Dell (DELL.DL) make up nearly 60% of the overall portfolio's value. Chesapeake Energy (CHKA.Q) was among the top three last quarter, but is now in fifth place. It's finally under new management, The shale gas leader has been shedding assets to help it pay down debt, while also aiming to boost production. It's poised to profit from rising natural gas prices, and may also profit from the practice of multi-well pad drilling.
Another high-profile Icahn holding is Herbalife (HLF -2.20%), which has been given a buy rating and an $80 price target by analysts at Argus Research, thanks in part to its solid earnings. (The stock was trading in the mid-$60s recently.) The company has been the subject of great controversy among hedge-fund giants, with Bill Ackman calling it a pyramid scheme. In recent Herbalife news, it seems that William Stiritz, CEO of cereal giant Post Holdings, has become the company's fourth-largest shareholder.
So what does Icahn Associates' latest quarterly 13F filing tell us? Here are a few interesting details:
Icahn Associates neither initiated nor closed out positions in any stocks. Among holdings in which Icahn Associates increased its stake were Dell, Nuance Communications (NUAN), and CVR Refining (CVRR). His Dell stake represents more than 9% of his assets, and some shareholders welcome his interest in stopping management's plans to take the company private, though some shareholder advocacy organizations are in favor of it. Even more recently, it seems that Icahn has taken a stake in Apple, with investors disagreeing about what he might accomplish there.
Nuance is a major developer of speech-recognition software, with its technology is housed in many iDevices (think "Siri"). It has been seen as a buyout candidate, and with Icahn having gobbled up many shares, the company recently swallowed a "poison pill," limiting takeover possibilities. While some see the stock as undervalued now, others are bailing on the company, not liking its recent performance or its CEO's compensation package. The company's future is quite uncertain.
CVR Refining, a Master Limited Partnership, offers a fat double-digit dividend yield (recently near 20%!), and one that's "variable," meaning that it will fluctuate along with the fortunes of the company. Refiners are facing regulations that require substantial financial investments, and those like CVR with less access to export markets than others are poised to experience some pain. It's also vulnerable to oil prices and spreads.
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, and 13F forms can be great places to find intriguing candidates for our portfolios.