Icahn scores another big win with PayPal spinoff
Carl Icahn has had a busy year. The famed activist investor has tangled with the boards of eBay (EBAY), Apple (AAPL) and Hertz Global (HTZ), among others, while also crossing swords with fellow billionaire Bill Ackman over Herbalife (HLF).
Icahn's pressing for change at these and other companies has produced mixed results. Shares of EBay, which is succumbing to Icahn's demands that it spin off its PayPal unit, have risen about four percent this year. Apple, which resisted Icahn's call to repurchase $50 billion in shares, has gained about 26 percent.
Icahn disclosed an 8.48 percent stake in Hertz in August in questioning the rental company's management. But the company's shares have slumped more than 11 percent amid accounting irregularities. As for Herbalife, shares of the multi-level marketer plunged more than 40 percent this year following Ackman's claims that the company amounts to a pyramid scheme and a subsequent Federal Trade Commission investigation. Icahn disagrees with Ackman and has taken a long position in the stock.
Over the longer term, Icahn's track record as an investor is remarkable. According to Kiplinger's, he was able to grow his initial $100,000 investment in his Wall Street firms at an annual rate of 31 percent between 1968 and 2011. That topped the performance of Warren Buffett's Berkshire Hathaway (BRK.A), which grew at a 20 percent rated.
Icahn prides himself on finding value where others don't see it, and he has invested in industries ranging from casino gambling to pharmaceuticals. He is a major player in the faltering Atlantic City casino industry and is the largest creditor of the empire that Donald Trump used to own.
The investor also has had his share of duds. Those include Blockbuster, the video rental chain that shut all of its bricks-and-mortar stores last year. Icahn, who waged a successful proxy fight that lead to the ouster of CEO John Antioco, called the Blockbuster investment the biggest blunder of his career.
He appeared to have lost his duel with eBay earlier this year after he withdrew his call for the e-commerce giant to spin off PayPal. But it's now clear the investor prevailed at the expense of eBay CEO John Donahoe, who had opposed the PayPal spinoff.
Ironically, one stock that hasn't benefited from Icahn's magic touch is his publicly traded Icahn Enterprises (IEP), the holding company for his diversified investment empire. Its shares are down more than 6 percent on the year, while the S&P 500 Index has gained 7 percent.