Carl Icahn: Net Worth, The Corporate Raider

American business magnate, investor, philanthropist, and self-made billionaire, Carl Icahn was born on February 16, 1936 to the Jewish family of Bella and Michael Icahn in Far Rockaway, Queens, New York City. He worked his way through to earn a degree in philosophy from Princeton University in 1957, and later enrolled at the New York University School of Medicine where he dropped out in his second year to join the army.

Icahn is the founder of Icahn Capital Management, a conglomerate, and holds the highest company’s stakes. He is the chairman of Federal-Mogul, a manufacturer and trader of vehicle safety products. He also served as the Special Advisor to the President on Regulatory Reform under the Trump administration from January 2017 to August 2017. The position was immediately abolished after its creation in January 2017 due to rising controversies in relation to the position.

He has donated a sum of $200 million to the Icahn School of Medicine at Mount Sinai.

Net worth

$14.3B as of May 27, 2020.

Career/ Source of Wealth

After resigning from the army reserve, Icahn secured a job at Dreyfus & Co., a mutual fund manager. By 1994, the company merged with Mellon. In 1968, Icahn purchased a seat on the New York Stock Exchange (NYSE) with the $400,000 he borrowed from his uncle and $150,000 personal savings, after which, he started the brokerage firm Icahn & Co. Inc. Getting officially involved with the stock market opened Icahn to more opportunities and concepts especially risk arbitrage which has to do with the purchase of shares in hope that the price of the stock would eventually increase through a takeover bid. Since takeover bids could be initiated and manipulated, Icahn engaged in the business of instigating takeover bids. Icahn made large investments in the stove maker company Tappan and made a bet on it that fetched him a sum of $3 million (approximately $22.3 million in 2019) in 1978.

One of Icahn’s investing strategy was to gain a controlling stake in companies and effecting changes on the company’s management and operation that would benefit him by increasing shareholder value. Companies that refused to be a part of his investment schemes were then expected to pay him off with “greenmail” money. The greenmail strategy involves using forceful methods to threaten “a corporate takeover unless management buys back the greenmailer’s shares at a premium price.” Icahn has countlessly been accused of this attitude, and victim companies include Phillips Petroleum, Texaco, US Air Group, USX (United States Steel), Dan River, and Marshall Field. However, Marshall Field’s case, rather than let Icahn have his way, the company accepted an offer from BATUS Inc. In 1982.

Icahn once again gained a reputation for himself in the corporate world as a “corporate raider”. In the 1980s, corporate raiding was common as the raiders aggressively sought out and bought companies by “acquiring large stakes in their corporations, achieved out-sized control, and used their shareholder rights to drastically manipulate the company’s executive and leadership decisions.”

He finally gained full control of Transworld Airlines (TWA) with the union support after purchasing the company in 1985. As most of his investor counterparts, Icahn also has an eye for companies with high value potentials suffering from bankruptcy or other financial challenges.  By 1988, the company was privatized at a share-buy-back of $650 million. What Icahn missed was that taking TWA private would later hit back at him with a financial relapse. By 1992, the company went bankrupt after Icahn had sold out its valuable London routes to American Airlines at $455 million which in turn led to a personal wealth increase for him and flight benefits from the American Airlines allowing him purchase tickets for 55 cents. Shortly after TWA went bankrupt Icahn took a bow out of the firm. His investment pattern has since become acquiring or selling off parts of a company to his benefit.

Icahn began his Wall Street career in the 1960s but didn’t gain a reputation there until 20 years later. Now, he has been listed as one of Wall Street’s most successful investors. His public traded Icahn Enterprises has been shown to be his primary investing vehicle; alongside the investment fund he controls which combines his personal money and money from Icahn Enterprises. Icahn Enterprises was formerly American Real Estate Partners (AREP) which Icahn had purchased shares in the early 1990s until he gained full control of the company. The company has since then become his investment company under the name Icahn Enterprises. He has since taken a controlling interest in Blockbuster, Time Warner, and TWA.

In the 21^st century, Icahn’s investment interest began to broaden. By the early 2000s, he gained control of XO Holding by becoming a majority shareholder of the company. He also bought stocks in Take-Two Interactive, a video game publisher after which he increased his shares to 11.3% three years later. He stands as the firm’s second-largest shareholder.

Icahn’s corporate raiding was once again revealed in his scheme to gain four seats on the Motorola board and eventually force the sale of the company by suing the company in 2008. Still in 2008, He purchased majority shares in Yahoo to later pushed for the removal of Yahoo’s board of directors who refused a Microsoft takeover bid by starting a proxy fight.

Other investments

●     Telik, a cancer research biotech firm (9.2% stake) – January 2007

●     WCI Communities (6.1 million shares) – 2007

●     Motorola (33.5 million shares) – 2007

●     American Railcar Industries (majority position) – 2007

●     BEA Systems, a software company (8.5% stakes) – September 2007 (stakes later increased to 13% by October)

●     Fontainebleau property in Las Vegas (acquired for about $150 million) - 2010 (was later sold for $600 million in 2017)

●     Hain Celestial Group, Inc. (12% ownership) – 2010

●     Netflix (10% stake) – October 2012

●     Apple Inc. ($500 million worth of shares) – January 2014

●     Lyft, a ride-sharing service ($100 million investment) – May 2015

●     Xerox (7.13%) – November 2015