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's reportable stock portfolio totaled $32 billion in value as of March 31, 2015. Its top two holdings, Icahn Enterprises L.P. (NASDAQ:IEP) and Apple (NASDAQ:AAPL) make up 51% of the overall portfolio's value. Icahn's stake in Apple is worth more than $6 billion, but that doesn't even constitute 1% of Apple's value. Nevertheless, he has been agitating for an increase in share buybacks -- and along with its last earnings report, the company did boost its capital return plans from $130 billion to $200 billion, reflecting both dividends and stock buybacks.
So, what does Icahn Associates' latest quarterly 13F filing tell us? Here are a few interesting details.
He sold all of his Talisman Energy (NYSE: TLM) position, for one thing. The Canadian energy company was whacked by the fall in the price of oil and has been acquired by Spain's Repsol S.A. There were no other sales in Icahn's portfolio over the last quarter.
It's interesting that while Apple is the market's most highly valued company by far, with a market cap topping $700 billion, Voltari (formerly called Motricity) is a small-cap mobile advertising company, with a market cap recently close to $70 million -- and as of the end of March, Icahn owned about 52% of the company. His big buys helped propel the shares, which have more than tripled over the past year. Icahn has made money on Voltari recently (after losing money on it years ago), but interestingly, the company itself has been losing money, posting a string of net losses and negative free cash flow. The mobile advertising business is expected to grow wildly, but it's not clear that Voltari will be a big winner in it, and so far, its results are unimpressive. Some have speculated that it won't be surprising to see Icahn having shrunk his position by next quarter. Others believe the company is waiting for someone to buy it for its hefty tax-loss carry-forwards.
When it comes to Manitowoc, Icahn has more clearly been successful, agitating for the company to split off its crane business from its restaurant and kitchen equipment business. The company announced in January that it would indeed pursue that strategy. It's a very different situation than that of Voltari, as Manitowoc has been posting profits for years and is free-cash-flow positive. Its net margins have been rising, too, and it offers a modest dividend, recently yielding 0.4%. Its last quarter was a little disappointing, though, with the crane division meeting internal expectations, but the food service division underperforming. The stock seems priced attractively relative to recent years, but its near-term expectations are lackluster, making it less of a bargain at the moment -- though the splitting of its businesses is expected to unlock some value.
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. 13-F forms can be great places to find intriguing candidates for our portfolios.