How Icahn’s Investment Segment Has Dampened Company Performance in 2Q16



Investment segment

In 2Q16, Icahn Enterprises’ (IEP) Investment segment was the largest drag on overall revenues. The Investment segment contributed 7% to IEP’s total revenues, with an operating loss of $306 million.

In 2Q16, Icahn’s Investment segment was unfavorably impacted by its short term positions. The loss attributable to Icahn Enterprises was of $351 million for 2Q16.

The segment gave a portfolio return of (6.0%) in 2Q16 while the returns stood at (12.8%) in 1Q16. The investment funds were negatively impacted by the performance of its core holdings in the energy sector.

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Investment strategy

Icahn has a long history of investing in both public equity and debt securities. The company’s strategy is to invest in companies that it sees as undervalued.

Icahn keeps tabs on different companies for financials, balance sheet restructuring, operational turnarounds, strategic initiatives, and corporate governance changes. It then decides where to invest. Its portfolio of companies includes CIT Group, Motorola, Navistar, Hertz, Motorola, eBay, Manitowoc, eBay, and Gannet.

Icahn Enterprises’ investments

Through its Investment arm, IEP has significant positions in various investments. Some of its investments include American International Group (AIG), Forest Laboratories (FRX), eBay (EBAY), Chesapeake Energy (CHK), Herbalife (HLF), and Netflix (NFLX).

Exposures of other investment companies

By comparison, Loews’ (L) majority-stake holdings include Diamond Offshore Drilling (DO), Loews Hotels, Boardwalk Pipeline Partners (BWP), and CNA Financial (CNA).

Berkshire Hathway (BRK-B) owns GEICO, Lubrizol, Dairy Queen, Helzberg Diamonds, Fruit of the Loom, Flight Safety International, and NetJets.

On a yearly basis from August 5, 2015, to August 5, 2016, IEP’s has stock declined by 33%, as compared to the 8.8% gain seen by the S&P 500 Index (SPY). On a yearly basis, Loews and BRK-B gained 7.9% and 3.0%, respectively.

Now let’s discuss what happened with Icahn Enterprises’ Automotive segment in 2Q16.


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