{"id":6340,"date":"2012-04-20T00:41:31","date_gmt":"2012-04-20T00:41:31","guid":{"rendered":"http:\/\/unitedexplanations.org\/english\/?p=6340"},"modified":"2012-04-19T22:40:50","modified_gmt":"2012-04-19T22:40:50","slug":"carl-c-icahn-activist-investor","status":"publish","type":"post","link":"https:\/\/unitedexplanations.org\/english\/2012\/04\/20\/carl-c-icahn-activist-investor\/","title":{"rendered":"Carl C. Icahn, activist investor"},"content":{"rendered":"

\"\"<\/a><\/p>\n

For nearly four decades, Carl C. Icahn has been participating in both large and small companies, in the process also becoming one of the richest men in the United States, with a net worth <\/strong>estimated by Forbes<\/strong><\/span><\/a> at <\/strong>$<\/strong><\/span><\/span><\/span>14 billion as of March 2012<\/strong>.<\/p>\n

From cabana boy to corporate raider<\/strong><\/em><\/h3>\n

Born in 1936, Carl C. Icahn<\/strong> grew up in the middle of the Great Depression in Far Rockaway, a neighbourhood in Queens, New York. He started his first \u2018business\u2019 at the age of 13, taking photographs of neighbours\u2019 homes. developing the pictures in his basement, he then proceeded to glue them to the covers of matchboxes bought for 50 cents a box, and to sell the boxes to homeowners for $1.50 a pop.<\/p>\n

After turning 15, he worked as a cabana boy at a beach club, piling up stocks of extra ice on particularly hot mornings only to sell it to customers who would run out later in the day. The entrepreneurship spirit and ensuing winnings at the poker table later helped him cover half of his tuition at Princeton. Graduating with a degree in philosophy and briefly serving as a medic in the Army, he then found himself among the sharks on Wall Street.<\/strong><\/p>\n

Mr. Icahn started pursuing his career on Wall Street in 1961, and just 7 years later, in 1968, he formed his own brokerage firm Icahn & Co<\/strong>, which focused on risk arbitrage<\/strong> and options trading<\/strong><\/a> <\/strong>(an option<\/em>, in the investment vernacular, is a type of contract which gives the buyer the right, but not the obligation, to buy or sell an\u00a0underlying<\/a>\u00a0asset at a specific price on or before a certain date). <\/strong>By the late 1970s, Mr. Icahn was already engaged in his first proxy fights<\/strong>.<\/p>\n

\n

A proxy fight, or proxy battle,<\/strong> is a situation occuring mainly in the context of company takeovers. The acquiring party will persuade existing shareholders to vote out company management in order to join forces and gather enough shareholder proxies to win a corporate vote, so that the company will be easier to takeover. Source<\/em>: Investopedia<\/a><\/p>\n<\/blockquote>\n

He began taking significant and at times controlling positions in important US companies like TWA, Phillips Petroleum, Western Union and Revlon. It was the beginning of his activity as a corporate raider.<\/p>\n

\n

Corporate raid<\/strong> stands for purchasing a large interest in a corporation and subsequently exercising voting rights to enact measures targeted at increasing the company’s share values. Such measures may include downsizing operations, replacing top executives, or even liquidating the company for short term gains.<\/p>\n<\/blockquote>\n

Some business feats<\/strong><\/em><\/h3>\n

Mr. Icahn\u2019s relentless activity contributed to coining the term \u2018Icahn Lift\u2019,<\/strong> which refers to the rise in a company\u2019s stock price that occurs when Carl Icahn starts purchasing shares in a company. The Icahn Lift takes places because of the investor\u2019s reputation for creating value for the shareholders of the companies in which he takes interest. Generally, Mr. Icahn purchases companies that he considers as being poorly run and traded below value, coming up with a plan to solve the problems, which, as previously pointed out, may include corporate raid measures such as changing company\u2019s management, cutting costs and others.<\/p>\n

\"\"<\/a>This is precisely the reason Mr. Icahn has mostly been successful when a market is in a recession. It allows him to secure a large ownership position in a company, ofter demanding to get rid of the CEO (Mr. Icahn is notorious for particularly disliking top executives, claiming they embody the \u201canti<\/a>–<\/a>Darwinian metaphor<\/a>. The survival of the unfittest.\u201d)or even splitting the company into many different parts. This is what he did in 1980s<\/strong>: he bought<\/strong> controlling interests<\/strong> in undervalued companies, obtaining funding from Wall Street investment banks, and sold off the individual parts<\/strong> of those businesses separately to other enterprises.<\/p>\n

Some of the recent battles Mr. Icahn has waged include:<\/p>\n