Icahn Lift

What Is the Icahn Lift?

The Icahn lift is the name given to the rise in the price of a stock that happens when professional investor Carl Icahn starts to purchase shares in the underlying company. The Icahn lift happens due to Mr. Icahn's reputation for making value for the shareholders of the companies where he takes a majority or a sizeable stake.

Understanding the Icahn Lift

One of Wall Street's most compelling figures, Carl Icahn has been in the investment business since the 1960s through different substances, including his hedge fund, called Icahn Enterprises L.P. Marks of him range from corporate raider to vulture capitalist to greenmailer, especially during the 1980s and 1990s. Around the turn of the 21st century, however, he began getting referred to for his work as a shareholder activist — one who buys large stakes in a company with an end goal to influence its board of directors and their management straightforwardly.

As a contrarian investor, Icahn purchases a huge number of shares in companies that he accepts are undervalued by the stock market and different investors. He then publicly frames a plan to fix what he targets as the company's problems — the purposes behind the poor performance of its shares.

His thoughts ordinarily include spinning off beneficial sections, evolving management, cutting costs, and buying back stock. Frequently, he calls for the election of a completely new board of directors or the divestiture of assets. Icahn much of the time centers publicly around CEO compensation, saying he accepts that many top executives are terribly overpaid and that their salaries need more correlation with corporate performance or shareholder value — which gives them minimal incentive to move along.

Frequently, Icahn's changes have enhanced the company's performance. In any case, these days, he doesn't even need to execute them to obtain considerable outcomes. His reputation is to such an extent that once he targets a company, institutional investors follow his lead and buy into the business he's set his concentration upon. The increased interest makes the share prices rise — the Icahn lift.

Instances of the Icahn Lift

Throughout the long term, Icahn's caused major developments in stock prices among companies including RJR Nabisco, Texaco, Phillips Petroleum, Western Union, Gulf and Western, Viacom, Uniroyal, Dan River, Marshall Field, E-II (Culligan and Samsonite), American Can, USX, Marvel, Revlon, ImClone, Fairmont, Kerr-McGee, Time Warner, Yahoo!, Lions Gate, CIT, Motorola, Genzyme, Biogen, BEA Systems, Chesapeake Energy, El Paso, Amylin Pharmaceuticals, Regeneron, Mylan Labs, KT&G, Lawson Software, MedImmune, Dell, Herbalife Nutrition, Navistar International, Transocean, Take-Two, Hain Celestial, Mentor Graphics, Netflix, Forest Laboratories, Apple, and eBay.

Take these examples of his influence on stock prices:

• In 1991, he constrained USX to veer off its steel-fabricating division and on second thought center around the petroleum business through Marathon Oil. Following the creation of an inferior of USX shares to address the steel division, the two classes of stocks rose 28%.
• In the harvest time of 2012, Icahn accumulated more than 10% of Netflix when it was close to its 52-week low. The "Icahn lift" sent the stock taking off 14% after he revealed in a regulatory filing his stake in the web-based feature/diversion production company.
• In late 2012, Icahn started accumulating shares in Herbalife Nutrition; he eventually acquired more than 35 million of them, about a 25% ownership stake in the company, and acquired several seats on the Board. HIs directors worked closely with Herbalife management to settle the troubled nourishment firm. In August 2020, while declaring the partial sale of his stake, he noticed that stock offered investors a total return of 200% in those eight years.

Icahn's company is organized as a master limited partnership. It is a diversified holding company with operating fragments in seven industries: investment, energy, automotive, food bundling, real estate, home fashion and pharma. As of March 31, 2022, Icahn Enterprises has critical equity stakes (going from 13.5% to 3.8%) in the companies Cheniere, FirstEnergy, Bausch Health, Newell Brands, and Herc Rentals.

Special Considerations

Icahn sees his job as a manufacturer of shareholder value and the Icahn lift is a testament to that. "I view at companies as businesses, while Wall Street analysts search for quarterly earnings performance. I buy assets and expected productivity. Wall Street buys earnings, so they miss a great deal of things that I find in certain circumstances," he once said.

"That's what my perspective is, thoughtfully, I'm making the best choice in attempting to stir up a portion of these managements," he noted in another frequently cited statement. "Today's a problem in America that we are not close to as useful as we ought to be. That is the reason we have balance-of-payments problems. It resembles the fall of Rome, when half the population was getting handouts."

Features

• Icahn accumulates a sizable position in a company that he accepts is undervalued, and afterward publicly frames the justifications for why (and his proposals).
• Assuming different investors concur, they buy into the company too, making its stock price appreciate — the Icahn lift.
• The "Icahn lift" alludes to the vertical effect on the share price of a company that investor/activist shareholder Carl Icahn buys into.