• Icahn feared as an activist investor
• Hunters of various large corporations
• Icahn also on the road as a philanthropist
Carl Celian Icahn was born on February 16, 1936 in Queens, New York City to a Jewish family. In 1957 he left the renowned Princeton University with a degree in philosophy and began studying medicine, which he dropped out of after two years to join the US Army. Another two years later he started a career as a stockbroker on Wall Street and thus laid the foundation for an extraordinary career in the financial world.
From stockbroker to corporate raider
After learning the basics of stock trading, Icahn founded his securities trading firm “Icahn & Co.” in 1968, which enjoyed success in the areas of arbitrage and options trading in the years that followed, and with which he acquired his first shares in companies. Under Icahn’s direction, the company bought into companies such as Phillips Petroleum and Texaco.
The takeover of the US airline Trans World Airlines (TWA) in 1985 became well known. This purchase in particular strengthened Icahn’s reputation as a so-called “corporate raider”. He engaged in what was known as “asset stripping,” selling the company’s assets to improve its returns. He used the capital to repay the loan he had taken out to purchase the company. Icahn later took the company public and made a profit of around half a billion US dollars, leaving the company with a debt of 539 million dollars. After TWA sold its route rights to American Airlines, Chapter 11 bankruptcy followed in 1991 , two years later Carl Icahn retired from TWA.
A hostile takeover attempt for the steel company US Steel, which was plagued by labor disputes, failed in 1986. Nevertheless, the investor got into the steel company and put pressure on the management. His goal: spin off the steel business and focus on activities in the oil business. He pushed through a split of the US Steel parent company USX, which now focused 71 percent on the profitable energy business. However, he did not manage to completely spin off the steel division. Nevertheless, his entry can be considered a success, as unprofitable steel plants were sold and the company’s finances improved. In 1991, Icahn sold his 13 percent stake and made a book profit of about 25 percent.
In 1987, Carl Icahn founded the conglomerate Icahn Enterprises amidst his US Steel acquisition efforts. The company bought stakes in other companies across a wide range of industries, including Mylan Laboratories, a pharmaceutical company that had recently announced a merger with King Pharmaceuticals. As a major investor, Icahn opposed the merger plans, and the purchase was ultimately canceled.
Shares in the media conglomerate Time Warner followed, which Icahn called for to be broken up, and in BEA Systems, which was later taken over by Oracle – probably at Icahn’s instigation. In addition, his hedge fund took a stake in Biogen and also acquired a large stake in former Internet giant Yahoo, where he pushed for Microsoft’s acceptance of the multi-billion dollar takeover bid. The plans failed, however, and Icahn’s aggressive action against the Yahoo board of directors was unsuccessful.
The pressure from the actionist investor was also felt at the online auction house eBay: Icahn vehemently demanded the spin-off of the PayPal payment service there in 2014 – with success. The tech giant Apple was the next major corporation on Icahn’s list of companies: In an open letter, he put pressure on CEO Tim Cook and demanded a larger share buyback from the company. At Motorola, too, he became vehement and pushed for the spin-off of the loss-making cell phone division.
Business policy makes Carl Icahn a multi-billionaire
Even if Carl Icahn was not always able to celebrate success in the same way with his business policy, the system basically worked: the investor repeatedly bought into large companies and then made demands on the management. The goal was often to spin off parts of the company that he considered unprofitable, but the value of one’s own investment should always be increased through corporate decisions. How successful this tactic has been in the past can be seen from the fortune of the star investor: According to Icahn Forbes, it is around 17.9 billion dollars at the beginning of April 2023.
His company, Icahn Enterprises, is publicly traded and claims to have holdings in investment, energy, automotive, food packaging, real estate, home fashion and pharmaceuticals businesses.
Icahn also appears as a philanthropist
Icahn has also donated some of his wealth to charitable causes in the past. Among other things, he financed a genome laboratory, the “Carl C. Icahn Laboratory”, at the renowned University of Princeton. He also financed part of the “Mount Sinai Hospital”, which then renamed the “‘Mount Sinai School of Medicine” to “Icahn School of Medicine at Mount Sinai”.
In addition, his foundation, the Children’s Rescue Fund, has funded a homeless shelter in the Bronx. Icahn is also the sponsor of an athletics stadium in Manhattan called “Icahn Stadium.”
Icahn is a member of The Giving Pledge, one of Warren Buffett and Bill Gates launched a campaign in which wealthy people pledge to donate a large portion of their wealth. As a donor, Icahn often appears in connection with educational projects. Among other things, he created the Scholars Program at Choate Rosemary Hall. Each year, the program awards scholarships to financially disadvantaged students from across the country. In addition, he is particularly interested in “improving the education of the city’s children,” said Icahn himself as part of the “The Giving Pledge” campaign. He therefore sponsored and built public charter schools in the Bronx.
“The principles that have guided my investing career are those that I apply in my approach to philanthropy. As a shareholder activist, I have focused on gaining control of undervalued companies (often poorly run). I believe “that I have unlocked significant shareholder and bondholder value and improved the competitiveness of American companies. Similarly, I want to maintain America’s position as a world economic leader by improving the competitiveness of its education system,” Icahn himself comments on his philanthropic efforts.
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