BLCO - Tracking Carl Icahn's 13F Report - Q3 2023 Update

2023-12-10 22:56:31 ET

Summary

• Carl Icahn's 13F filing decreased from 15 to 14 holdings this quarter.
• The top five holdings in the filing are Icahn Enterprises, CVR Energy, Occidental Petroleum warrants, Southwest Gas Holdings, and FirstEnergy.
• Icahn disposed of his stake in Xerox Corporation and decreased his holdings in CVR Energy and Newell Brands.

This article is part of a series that provides an ongoing analysis of the changes made to Carl Icahn's 13F portfolio on a quarterly basis. It is based on Icahn's regulatory 13F Form filed on 11/14/2023. Please visit our Tracking Carl Icahn's Portfolio series to get an idea of his investment philosophy and our previous update for the fund's moves during Q2 2023.

The number of holdings in the 13F filing decreased this quarter from 15 to 14. The top five holdings in the filing are Icahn Enterprises, CVR Energy, Occidental Petroleum warrants, Southwest Gas Holdings, and FirstEnergy.

Carl Icahn is best known for building sizable stakes in businesses and then pushing for changes to increase shareholder value. To learn more about his investing style and philosophy check out here .

Note: Icahn's 13F cannot be considered a listing of his holdings. Carl Icahn is the majority owner of Icahn Enterprises ( IEP ) which holds several of the businesses and the entities in turn hold IEP. His 13F is a consolidated report. IEP Investor Presentation (Slide 5) has details of the business structure.

Stake Disposals:

Xerox Corporation ( XRX ): XRX was a 3.29% of the portfolio position established in Q4 2015 at prices between $24 and $32. The four quarters through Q2 2021 had seen a roughly one-third stake increase. Their overall cost basis was ~$25 and they had a ~22% ownership stake in the business. The stake was sold back to the company at $15.84 per share as per a 2021 agreement. The stock is now at $15.04.

Note 1: In December 2017, Icahn launched a proxy battle nominating four new board members in an effort to stop the Xerox-Fujifilm deal announced earlier. In May 2020, Xerox scrapped the deal with Fujifilm in a settlement with Icahn and Darwin Deason (another activist alongside Icahn).

Note 2: Icahn's activism earned him three board seats in 2016. Xerox spun off Conduent and that transaction closed in January 2017. That was followed by a 1:4 stock split in June. The prices quoted above are adjusted for these two transactions.

Stake Decreases:

CVR Energy ( CVI ): CVI is a top three ~19% of the 13F portfolio position first purchased in Q4 2011. The bulk of the current position (71.2M shares: ~71% of the whole business) was purchased through a $30 per share tender offer in H1 2012. This quarter saw a ~6% trimming at an average price of ~$35.20 per share. The stock currently trades at $30.09.

Note 1: Two MLPs were carved out since the 2012 tender: CVR Refining the refining portion and CVR Partners ( UAN ) the nitrogen fertilizer unit. CVR Energy had majority ownership stake in both. In August 2015, CVR Partners agreed to merge with Rentech Nitrogen. Q2 2018 saw a tender offer whereby new CVR Energy shares were exchanged for CVRR at a valuation of $24.26 per common unit (0.6335 shares of CVI for one CVRR). ~22M new shares were issued.

Note 2: Their ~$30 implied cost-basis is vastly overstated due to carve-outs and special dividends paid out over the years.

Newell Brands ( NWL ): NWL is now a very small 0.44% of the portfolio position. It was established in Q1 2018 at a cost-basis of $27.40 per share. The stock is now at $8.42. Q2 2018 saw a ~10% stake increase at prices between $23 and $28 and that was followed by a ~15% increase next quarter at prices between $20.50 and $28. There was a ~25% reduction in Q1 2022 at $25.86 per share in a repurchase agreement with the company. That was followed by ~9% selling during Q1 2023. That was followed by a ~80% selling this quarter at prices between $8.61 and $11.09.

Note: In April 2019, rival activist Starboard Value came to an agreement with Carl Icahn for control of Newell's board.

Stake Increases:

Icahn Enterprises ( IEP ): IEP position has seen consistent increases over the years. The position size increased from ~98M shares to ~102M shares in 2013, to ~109M shares in 2014, to ~117M shares in 2015, to ~130M shares in 2016, to ~158M shares in 2017, 175.4M in 2018, 197M in 2019, 222M shares in 2020, 257M shares in 2021, 300M shares in 2022, and 351M shares as of Q3 2023. The stock currently trades at $16.33.

Note 1: In May, IEP stock price dropped sharply following a short report from Hindenburg Research.

Note 2: The stake increase over the years is primarily due to them taking the dividend consideration in additional shares rather than cash. The dividend was cut by 50% to $1 per unit in early August.

Southwest Gas Holdings ( SWX ): SWX is a 5.51% of the portfolio position established over the two quarters through Q3 2021 at prices between ~$63 and ~$72. There was a ~75% stake increase during Q3 2022 through a tender offer at $82.50 per share. That was followed by a ~60% further increase during Q1 2023 at prices between ~$59 and ~$67. The stock currently trades at $61.03. There was a minor ~3% stake increase last quarter and a ~2% increase this quarter.

Note 1: They have a 15.4% ownership stake in the business.

Note 2: The position was made public in an October 2022 regulatory filing when they said they were opposed to Southwest's acquisition of Questar Pipeline, Dominion Energy's ( D ) transportation and storage business.

Kept Steady:

Occidental Petroleum ( OXY ) wts: The ~6% of the portfolio position was established in Q3 2020 when 19.3M warrants (strike 22, 8/3/2027 expiry) were purchased for ~$2.75 per warrant. The stake saw a ~20% selling in Q3 2021. There were minor increases in the five quarters through Q1 2023. The warrants currently trade at $34.94.

Note: They also had a large position in the common stock of OXY but that was sold in Q1 2022.

FirstEnergy ( FE ): FE is a ~4% of the portfolio position purchased in Q1 2021 at prices between ~$29.50 and ~$35.60 and the stock currently trades at $37.08. There was a ~25% selling last quarter at prices between ~$37 and ~$42.

Bausch Health ( BHC ): The 2.36% of the portfolio BHC position was purchased in Q4 2020 at prices between ~$15.30 and ~$21 and increased by ~575% next quarter at prices between ~$21.25 and ~$34.40. The stock currently trades well below their purchase price ranges at $7.30.

Note: They own 34.7M shares (~10% of the business). Two Icahn nominees are on the board.

Dana ( DAN ): The 1.73% DAN stake was established in Q4 2020 at prices between ~$13.25 and ~$20 and increased by ~200% next quarter at prices between ~$19 and ~$27. Q3 2021 also saw a ~20% stake increase at prices between $20.90 and $24.60. The stock currently trades at $13.67.

Note: Icahn controls ~10% of Dana Inc.

Conduent (CNDT) : The small 1.10% portfolio stake came about as a result of Conduent's spinoff from Xerox which closed in January 2017. Terms called for Xerox shareholders to receive Conduent shares in the ratio of 1:5. Icahn owned 99M shares of Xerox for which he received 19.8M shares of Conduent. CNDT started trading at ~$15 and currently goes for $3.23. Q2 2019 saw a ~60% stake increase at around $9 per share. That was followed by a ~20% increase in Q4 2019 at ~$6.50 per share.

Note: Their ownership interest in Conduent is at ~18% of the business.

Crown Holdings ( CCK ): CCK is a 0.76% of the portfolio stake established during Q3 2022 at prices between ~$80 and ~$102 and the stock currently trades at $88.53.

Note 1: Regulatory filings since the quarter ended show them beneficially owning ~6M shares (~5% of the business). This includes forward contracts at an aggregate price of $75 per share.

Note 2: A director appointment and nomination agreement was reached in January for the company's 2023 election.

SandRidge Energy ( SD ): SD is a 0.62% of the portfolio activist stake established in Q4 2017 at prices between $16 and $21 and the stock is now at $13.98.

Note: Icahn has a ~13.5% ownership stake in the business. He lobbied the board and succeeded in ending the Bonanza Creek acquisition on December 28, 2017. In June 2018, Icahn gained control of SandRidge's board by winning a proxy battle.

Bausch + Lomb ( BLCO ): BLCO is a spinoff from Bausch Health that started trading in May last year at ~$18 per share. The stock currently trades at $15.66. In June 2022, two nominees of Icahn joined the board.

Illumina ( ILMN ) : ILMN is a small 0.49% of the portfolio stake established during Q1 2023 at prices between ~$194 and ~$233 and the stock currently trades at ~$113.

Note: Icahn launched a proxy battle and succeeded in ousting board Chairman John Thompson in May. The CEO Francis deSouza also resigned in June. In October, Icahn filed a lawsuit for damages and to remove board members for violating fiduciary duties.

International Flavors & Fragrances ( IFF ): IFF is a very small 0.27% of the portfolio stake established in Q1 2022 at prices between ~$116 and ~$150 and the stock currently trades well below that range at $76.82.

Note: Icahn also owns ~90% of Viskase Companies ( OTCPK:VKSC ). He is also known to have a position in Fannie/Freddie ( OTCQB:FNMA ) ( OTCQB:FMCC ).

The spreadsheet below highlights changes to Icahn's 13F stock holdings in Q3 2023:

For further details see: