January 22, 2019

Carl Icahn – One of the World’s Biggest Traders

Carl Icahn – One of the World’s Biggest Traders

You need to be a very tenacious individual in order to muscle your way into the most exclusive group in the world – the Billionaires’ Club.

Seventy-eight-year-old investment guru Carl Icahn is someone who has exhibited this trait from an early age, and it is one of the key reasons for his success.

In interviews, Icahn has often described his larger than life aspirations and how he made many of his opportunities for himself.

Just Who Is Carl Icahn?

Carl Icahn is a famous investor based out of New York. With more than $20 billion in assets, he is renowned as one of the world’s 50 richest men. An outspoken shareholder activist, he is most commonly known for his brash corporate raiding style.

A colourful personality with an aggressive investing streak, Icahn has been credited as the inspiration for the character of Gordon Gecko in the 1987 movie Wall Street, directed by Oliver Stone.

Over the years, Icahn has used his massive ownership stakes to become a vocal critic of the boards and senior management figures in publicly traded companies, while he earns large profits.

In one of his most memorable deals, he attempted a takeover of Nabisco, but lost out to Philip Morris Co. Still, he managed to make $600 million profit from the sale.

Early Life and Education

Mr Icahn was born and brought up in Far Rockaway, a neighbourhood in Queens, New York by his mother, who was a teacher and his father, a worker at a synagogue.

He often talks of the time when he started to apply to colleges and how his teachers tried to discourage him from applying to Ivy League schools since they did not believe they would pick a kid from a neighbourhood like his. However, after taking the boards, he gained admission to all of them, he chose to go to Princeton.

Although his father was able to pay his $750 tuition, Icahn had no money to cater for his room and food. He took up a job in the Rockaways as a beach boy, where he regularly played poker with cabana owners.

After being cleaned out initially, he decided to read poker books, eventually becoming better than all of the other players, winning about $2,000 every summer.

Icahn’s Start on Wall Street

After he had used his winnings from poker to pay his way through Princeton, Icahn had a brief stint in the Army and eventually ended up on Wall Street. He bought himself a seat on the New York Stock Exchange and started working in arbitrage.

This is a low-risk investment strategy that takes advantage of price differences. He says that it is at this point that he started pulling in the big bucks, earning up to $2 million per year.

His success led him to start his own firm, Icahn Enterprises, as well as to take positions in companies that he felt were undervalued. If he discovered a company that had potential but was not being well run, he would buy into them and then threaten to take them over unless the management implemented certain steps. In most cases, the management agreed to his demands.

What Is Icahn Doing Now?

Not only does Icahn continue to make investments in undervalued companies and help to turn them around, in 2004, he set up a hedge fund that would allow other investors to benefit from the “Icahn Lift.”

This is a phenomenon where an undervalued company’s stock starts to rise once he buys into the firm and starts to implement changes.

Even in his seventies, Carl Icahn has continued to be active within the investment world, with recent investments and high-profile exchanges with the top brass at Apple, Netflix, eBay, Family Dollar and Dell.