Carl Icahn still believes the market is going to crash.
Icahn Enterprises, the holding company helmed by billionaire investor Carl Icahn, reported a second quarter loss on Thursday morning, and a lot of that can be attributed to the company’s investment segment.
You see, it bet big on a deep conviction about the market that Icahn shared with the public last year, and it hasn’t played out the way Icahn thought (at least not yet).
The long positions in Icahn’s $1.7 billion fund were mostly flat in Q2, but his short positions dragged the fund down to a loss of 6% for the quarter.
On the investor call, Icahn execs explained that this was due, in large part, to Icahn’s continued conviction that the high yield bond market is going to crumble. In May, Barron’s reported that IEP had a net short position of 149%.
“I think the composition hasn’t dramatically changed we still have our bearish views on high yield spreads and frankly they’re even stronger now with spreads compressing so much the market seems to be pushing spreads tighter and tighter,” said Keith Cozza, Icahn Enterprises CEO.
“Expressing it in the form of CDX is still part of our hedging strategy and the rest of it there is a combinations of some single names but the majority of our hedging is done through broad market hedges, sch as S&P 500, things of that nature.”
Icahn also released a video back in September outlining his fears on the stock market. It was called “Danger Ahead.” He believes that keeping interest rates at or near 0% has created a massive bubble in the market.
In fact, he believes it’s just a symptom of what’s wrong with our entire economy. The answer, he told Business Insider in an interview at the time, really boils down to making corporations pay their fair share.
“We legislate inequality… protect the status with these corporations,” he told Business Insider. “CEOs should not be able to make 800 times what the worker makes.”
In the video, Icahn endorsed Donald Trump because he thinks that Trump is the only candidate tough enough to take on special interests head on. Now that those groups, and Super PACs, control electoral purse strings, candidates on both sides of the aisle have become more polarised to keep up.
“I disagree with him [Trump] on certain issues and would probably need to talk to him more,” Icahn said in his video, later adding: “Teddy Roosevelt was great, he stood up to JP Morgan, where do we get a guy like that?”
Really good question, Carl.