CARL C. ICAHN
- IEP depositary units had a 1,623% cumulative increase since January 2000, translating to an annualized return of 13%.
- IEP's activism strategy compares extremely favorably to the performance of broad-based indexes over the same period.
- IEP's current portfolio is expected to yield additional winners and generate significant upside ahead.
- IEP returns would have been more impressive had they not strayed from their activist methodology and shorted (hedged) far more than necessary over the past several years.
- The company's overly bearish view of the market and related oversized short (hedge) positions have overwhelmed their returns.
Dear Fellow Unitholders,
As we stated in our last letter, we have reset our focus on our core activism strategy. We have long believed that activism is the best investment paradigm. We believe activism has served IEP unitholders handsomely over the years, as shown by our long-term track record. Let us look at the results if you purchased our IEP depositary units in January 2000 for
Returns from 01/01/00 to 07/31/23 | |
Annualized Return | |
with Dividend | |
Reinvestment | |
IEP | 12.8 % |
S&P 500 | 6.9 % |
Dow Jones | 7.4 % |
Russell 2000 | 7.4 % |
Nasdaq 100 | 7.1 % |
Nasdaq Composite | 6.5 % |
Berkshire Hathaway A | 10.0 % |
Additionally, I believe it is compelling that if you purchased 1,000 IEP depositary units in January 2000, for
As compelling as the above numbers are, they would have been far more impressive had we not strayed over the past several years from our activist methodology and shorted (hedged) far more than was necessary. While we made money on the long side through our activism efforts, our returns have been overwhelmed by our overly bearish view of the market and related oversized short (hedge) positions. Over the past six months, we have significantly reduced our hedges. Going forward, we intend to stick to our knitting and focus on our activist strategy while remaining appropriately hedged.
The numbers above speak for themselves. Activism is the best investment paradigm. The reason is simple – there is no accountability in Corporate America. With many exceptions, most CEOs are incapable of creating great businesses (or even improving them) and the desire to empire build is rampant. Most CEOs are not the best person for the job or even the most talented individual at the organization. Rather, too often CEOs have risen through the ranks because they were ho-hum, with the main skill of having not been seen as threatening to their superiors. Those CEOs are generally too busy playing at the proverbial country club to realize what improvements can be made or what hidden jewels can be unlocked.
Once a CEO ascends to their seat, it is extremely difficult to remove them. CEOs, generally with the help of a few friendly directors, are able to pack their respective board of directors with cronies who are unwilling to challenge a CEO or hold them accountable for their performance for fear of losing the prestige and stipends that come with being a public company director. Shareholders find it hard to hold management teams and boards of directors accountable because there is no real corporate democracy. For example, if a board is challenged by the company's own shareholders, the board is able to use corporate funds (which should otherwise benefit the company's shareholders) to defend, entrench and enrich the board! Boards can hire overpaid legal, financial and communications experts, with little regard to cost or concern for the wishes of shareholders. These tactics are similar to what occurred in feudalistic societies when peasants attempted to overthrow their rulers, only to be met with highly-paid mercenaries. Put simply, the deck is stacked against the shareholder and the activist, and this explains why there is so little activism today relative to the number of companies that could benefit from it.
Even when a shareholder wages and wins an activist campaign, boards can be so entrenched that it can take years to implement the needed changes and unlock the value and/or hidden jewel. HOWEVER, WHEN AN ACTIVIST IS SUCCESSFUL IN CHANGING THE BOARD OR THE CEO, GREAT VALUE CAN BE UNLOCKED FOR ALL SHAREHOLDERS AND THIS IS WHY OUR RECORD OVER THE LAST 23 YEARS HAS BEEN SO IMPRESSIVE.
There are very few activist investors that have the capital base, the will, the knowledge and the patience to improve companies and increase shareholder value for all holders. We have done precisely this many times, including at Forest Labs, Netflix, Caesars, eBay, Herbalife, CVR Energy, Tropicana, Cheniere and Apple, to name just a few. And we hope and believe that we will be able to continue to do this.
We believe strongly that our current portfolio will yield additional winners and generate significant upside ahead. Through our activism we have become members of the boards of directors of many of the companies that we are currently invested in. Most recently, we gained board representation at Illumina, resulting in the replacement of its Chairman and CEO. We believe that these types of activist strategies will continue to meaningfully enhance value for all shareholders.
We thank our many loyal unitholders that have communicated to us over the last several months. We look forward to continuing to focus on our activism strategy.
Sincerely,
Carl C. Icahn
Caution Concerning Forward-Looking Statements
This release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, many of which are beyond our ability to control or predict. Forward-looking statements may be identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will" or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of Icahn Enterprises and its subsidiaries. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors, including risks related to economic downturns, substantial competition and rising operating costs; the impacts from the
Investor Contact:
Ted Papapostolou, Chief Financial Officer
IR@ielp.com
(800) 255-2737
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SOURCE Icahn Enterprises L.P.
FAQ
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