The Fabulous Life Of Carl Icahn, The Man Who Smoked Wall Street In 2013

Gail golden carl icahn‘>APCarl Icahn and his wife, Gail.

Unless you’ve been living under a rock, you’ve noticed that Carl Icahn has taken every opportunity to shake up Wall Street in 2013.

It’s no shock. He started the year armed with $US10 billion in cash.

The name “Icahn” has meant something on Wall Street since the 1980s, when he gained his reputation as a ruthless activist investor. He did it by taking a controlling interest in companies like TimeWarner, TWA, and Blockbuster.

Now, Icahn’s a billionaire.

And even in his 70s, Icahn shows no sign of slowing down. This year he’s made major money out of Netflix, revved up his feud with fellow hedge fund manager Bill Ackman, and picked a fight with Apple.

Expect more next year.

Like most truly successful Americans, Icahn came from humble origins.

Icahn was born in 1936. His father was a synagogue cantor (though apparently an atheist); his mother a school teacher. He attended Far Rockaway High School in Queens.

Source: Icahn report

He worked his way into Princeton, where he majored in Philosophy.

Alexander Hall, Princeton University

He graduated in 1957.

Source: Icahn report

After brief stints at med school and the army, Icahn joined legendary mutual fund manager Dreyfus & Co.

Dreyfus merged with Mellon in 1994.

Source: Icahn report

By 1968, Icahn was able to buy a seat on the NYSE and start Icahn & Co. Inc., a brokerage firm.

He was 32.

Source: Icahn report

The big break came in 1978, when a bet on Tappan, a stove maker, grossed $US3 million for the firm.

That's nearly $US9,000,000 in 2005 dollars.

Source: New York Times

Icahn began gaining a reputation for being a 'corporate raider.'

He'd take a controlling stake in a firm and force extreme changes in the company's structure (like spinning off different units). He forced some firms to pay him 'greenmail' money to keep him away.

Source: Investopedia

The high point in the '80s, at least, was his takeover of TWA.

Having purchased the company in 1985, he took it private three years later in a $US650 million share-buyback plan.

Source: Investopedia

However, the move also saddled the airline with hundreds of millions in debt.

In 1992 it declared bankruptcy, and Icahn left the firm.

Source: Investopedia

In the late '90s, Icahn suffered a rare defeat after failing to takeover Marvel Entertainment.

''I have framed articles of every deal I've ever done,' Mr. Icahn told The New York Times in 1998. 'In all honesty, this is one frame I'm considering taking down.'

Source: New York Times

The fun part about Icahn is that at any given moment, he's plotting some crazy scheme.

Google 'Icahn' and any year, and you get something juicy.

Icahn rechartered his holdings to Icahn Enterprises in 2007.

The company consists of:

  • Federal Mogul (automotive)
  • Tropicana (entertainment/casinos)
  • ARI (rail car)
  • Viskase (food packaging)
  • PSC Metals (recycling)
  • Bayswater (real estate)
  • WPI (interior decorating)

Source: Icahn Enterprises

After six decades on Wall Street, the number of firms in which Icahn has owned a stake or served on the board is staggering:

Besides those already mentioned, these firms include Texaco, Phillips Petroleum (now Conoco Phillips), Western Union, Viacom, TimeWarner, and Blockbuster.

It should be no surprise that a man of his stature has made some enemies. In his case, it's hedge fund superstar Bill Ackman.

The feud between Ackman and Icahn dates back to 2004. One of the weirdest things about it? It all started over only $US4.5 million.

In 2003 Bill Ackman's first hedge fund, Gotham Partners, had just blown up and he was being investigated by then-Attorney General Eliot Spitzer. The investigation was eventually dropped, but this definitely wasn't the best time in Ackman's career.

He needed to do a deal. Specifically, he wanted to sell Hallwood Realty, a company whose stock was trading about $US60 a share but Ackman believed it was worth $US140. So he called Icahn.
Source: NYT

They did a deal in 2003 that ended in Ackman suing Icahn by 2004 and winning in 2011.

To make sure everything was on the up and up, Ackman included some legal provisions in his contract with Icahn. First the contract stipulated that if there was any legal trouble, the loser would pay the winner's legal fees. Second it said that if payment was delayed, Icahn would owe Ackman a lot of interest.

In 2004, Hallwood merged with another company, for $US137 a share. That meant Icahn made some good money on the deal, so Ackman called him for Gotham Partners' cut.
Icahn said he wouldn't pay, but a Court decided against him in 2011 and he ended up paying Ackman $US9 million.

Source: NYT

There was a lot of ugly name-calling involved and to this day the two do not like each other.

Most recently, Icahn said of Ackman:

'I'm telling you he's like a crybaby in the schoolyard. I went to a tough school in Queens, you know, and they used to beat up the little Jewish boys. He was like one of the little Jewish boys crying ...'

And on Ackman's pledge to give proceeds of his latest short, Herbalife to charity, Icahn said: 'He talks about charity. That's complete bullshit!'

During the lawsuit Ackman had this to say about Icahn:

'The guy is a shakedown artist,' Mr. Ackman sneers. 'His word is worthless.'

More recently, Icahn has targeted companies remotely, causing mayhem in their shares through Tweets.

With one Tweet in August announced a new stake in Apple, he caused a huge spike in the companies' shares.

Although the effect has worn off a bit.

An October Tweet in favour of a share buyback only spurred a 1.75% gain.

And indeed, his recent track of intervention is mostly solid.

A nearly 12-month-long stake in Netflix yielded Icahn Capital Management an $US800 million profit. Icahn thanked Kevin Spacey in a Tweet.

He also founded his own charter schools in the Bronx.

His foundation currently operates four charter schools.

That philanthropy -- and a legendary wit -- explain why ultimately, people usually end up falling for the kid from Queens. Check out his stand up below.

(video provider='youtube' id='UEc8Xzn1WqU' size='xlarge' align='center')

Oh by the way.

He's now worth $US14.8 billion.

Source: Forbes

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