Icahn’s Investment Fund Posts Small Loss

The legendary activist investor’s private hedge fund continued to lag the broad market in the first quarter.


Illustration by II

Carl Icahn stopped the bleeding at his holding company’s internal hedge fund.

The octogenarian’s investment portfolio posted a 0.8 percent loss in the first quarter, according to the first quarter report of Icahn Enterprises. Sure, it greatly lagged the S&P 500, which posted a total return of 10.6 percent for the period.

However, the slight loss was more of a moral victory for Icahn given that in 2023 Icahn’s investment portfolio lost 16.9 percent compared with a 26.3 percent gain for the S&P 500, including dividends reinvested. That was the investment portfolio’s worst loss since 2016, when it dropped 20.3 percent, according to an earlier filing.

Icahn Enterprises is a publicly traded holding company for seven businesses: investment, energy, automotive, food packaging, real estate, home fashion, and pharmaceuticals. As of March 31, Icahn Enterprises accounted for $3.2 billion of the investment funds’ capital while Carl Icahn and his affiliates held about $2.1 billion in the portfolio.

In the first quarter, Icahn’s longs kicked in 11.4 percent to performance while “other” contributed 1.2 percent to gains. They were more than offset by a 13.4 percent loss suffered by the short book, according to the report.

More specifically, losses from the short book were driven primarily by losses from energy hedges totaling $341 million, losses from a broad market hedge of $177 million, and losses from short positions across various sectors totaling $181 million, according to the report.

Long gains mostly came from the health care, utilities, and energy sectors.

The investments funds continue to have a negative view of the markets, although not as extreme as in previous quarters. As of March 31, the portfolio had a net short notional exposure of 27 percent. This was down from 36 percent at year-end and 41 percent at the end of September 2023, according to Icahn Enterprises filings.

It portfolio was just 18 percent net short at the end of the second quarter of 2023. “During the second quarter of 2023, our bearish view on the market shifted, which has impacted and may continue to impact our net short position accordingly, which can be offset by exiting certain long positions and market performance,” Icahn Enterprises stated in its recently filed annual report.

At the end of March, the long exposure was 99 percent — virtually all of it long equity — while its short exposure was 126 percent — 109 percent short equity, 11 percent short credit, and 6 percent short commodity.

The notional exposure represents the ratio of the notional exposure of the Investment Funds’ invested capital to the net asset value of the Investment Funds.

Drilling down, about two-thirds of the long exposure was comprised of the fair value of its long positions and 38 percent comprised mostly single name equity forward and swap contracts, according to the report.

Of the 126 percent short exposure, 69 percent was comprised of the fair value of its short positions and 57 percent was comprised mostly of short broad market index swap derivative contracts, short credit default swap contracts and short commodity contracts, according to the quarterly report.