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Carl Icahn Irks and Inspires as His Investments, Stakes Build Fortune

By Dan Weil   |   Friday, 15 Feb 2013 07:03 PM

Image: Carl Icahn Irks and Inspires as His Investments, Stakes Build Fortune
Finacier Carl Icahn (Mat Szwajkos/Getty Images)
Carl Icahn, No. 21 on the Forbes 400 list with $14.8 billion, is either a vile corporate raider or a forceful shareholder advocate, depending on who you ask.

Icahn recently made news with the release of a regulatory filing that shows he has amassed a 13 percent stake in Herbalife, a seller of nutrition products.

The rough-and-tumble New Yorker, 76, is famous for buying stakes in big, troubled companies, demanding improvements by management, and then selling out for hefty profits.

Icahn has been involved with a string of famous corporations over the past 30 years or so – from TWA to Netflix to Herbalife.

Carl Icahn’s Top Deals

TWA. Icahn took over the storied airline in 1985 for an investment of $469 million. He bought several regional airlines and sought to improve efficiency. In 1988, he took the company private with a $650 million stock-buyback that enabled him to get back nearly all of his investment. It didn’t work out quite so well for the company. It was weighed down with a $540 million debt load. Soon afterward it had to start selling some of its best routes to raise cash. The company went into bankruptcy in 1992, and Icahn was ousted the next year. Many TWA employees were upset with Icahn. “It became more and more apparent that Carl was not interested in growing the airline but in using TWA as a financial vehicle to acquire wealth for himself,” Jeff Darnall, who flew for the airline from 1989 to 2003, told St. Louis magazine.

Herbalife. This one has turned into a battle between hedge fund manager Bill Ackman, who is shorting the stock, and Icahn, who has purchased 14 million Herbalife shares. That gives him a 13 percent stake in Herbalife worth about $578 million. Pershing Square Capital Management's Ackman calls Herbalife a pyramid scheme, but Icahn obviously disagrees. The two had a vicious, schoolboy-like spat several weeks ago on CNBC that turned heads on Wall Street. Icahn wants talks with Herbalife’s management, and he says one option is taking it private.

USX. After his episode at TWA, Icahn focused on making his money through share price increases, generally created through cost-cutting or asset sales. He began accumulating USX shares in 1986 and ultimately purchased about $800 million. In 1991, he pushed USX to spin off its steel operations and sold out for a profit of $200 million.

Time Warner. In 2006, Icahn led a group of investors that bought a 3 percent stake in the
company. The two sides ultimately reached an agreement in which the dissident shareholder gave up his effort to gain control of the company, and it in return conceded to some of Icahn’s demands, such as share repurchases.

Netflix. Icahn disclosed last November that he has amassed a 10 percent stake in the company. That’s now worth about $1.6 billion. When the stock surged to a 14-month high last month, Icahn predicted further gains. “A major sea change is going on in viewership which very strongly favors Netflix,” he told Bloomberg. “We still own every share we bought and we believe it’s still got tremendous potential.”

Summing up his investment style, Icahn told The Wall Street Journal in 2007, "My investment philosophy, generally, with exceptions, is to buy something when no one wants it."

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