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Carl Icahn

Carl Icahn was born in 1936 to a middle-class family in New York City. He grew up in Queens and received a scholarship to attend Princeton University. He graduated with a philosophy degree in 1957. He enrolled in the School of Medicine at New York University but didn’t complete this course, reportedly, because he didn’t like working with corpses.

In 1961 Icahn began working as a stockbroker for Dreyfus & Company in New York. He began his career in finance in 1968 by purchasing a seat with the New York Stock Exchange so that he could trade options. Shortly after, Icahn became well-known for his activism and competitive investment strategies. He began to use ownership of public companies to force an increased value of his shares. His corporate raiding strategies began in the late 1970s and culminated in 1985 with the hostile TWA takeover. These moves established Icahn’s reputation as a tough negotiator and brilliant strategist. He was subsequently involved in large-scale corporate battles with numerous companies including Texaco, Western Union, Viacom, Revlon, Motorola and Time Warner.

Icahn’s investment strategy is based on targeting companies that are poorly run and have under-valued stock. He does a lot of investing at times when the market is falling and other people are selling. Icahn often disagrees with majority opinion and has been quoted as saying, "When most investors, including the pros, all agree on something, they're usually wrong." He purchases enough to get into a strong ownership position so he is able to join the board of directors. He will often lobby for the previous CEO to be fired and for the division of the company into distinct sections that can be sold off separately. Regarding CEOs, Icahn once said "CEOs are paid for doing a terrible job. If the system wasn't so messed up, guys like me wouldn't make this kind of money."

Professionals on Wall Street attribute Icahn’s success in these endeavors to his intimidating and relentless style. He has such a successful record that investment managers will typically purchase stocks in the company that Icahn invests in. This also has the effect of increasing the stock value. One example of Icahn’s investment strategy in action was his attempt in 2006 to oust the CEO of Time Warner (Richard Parsons) and break up the company. This attempt was unsuccessful and Icahn explained this in Time Magazine by saying that "… Dick Parsons agreed to do what we wanted most - a $20 billion buyback of the stock. He did what he promised, and the stock is up 30%. That helps shareholders. Our [hedge] fund made $250 million. It's a nice way to lose."

The rise in value of the stock price after Icahn has invested in a company has come to be known on Wall Street as the “Icahn Lift”. The battles that Icahn has had with large corporations through the years have generally resulted in substantial capital gains for the shareholders of the companies as well as huge personal profits for Icahn. In 2008, Forbes ranked Icahn as the 46th richest man in the world. There are two ways of looking at Icahn’s investment strategy: either as a ruthless corporate raider, or a positive example of shareholder activism and a way of correcting incompetent or greedy management.

In 2007 Fortune Magazine reported the success of Icahn’s investment style with the following figures: "in its less-than-three-year existence, the Icahn Partners hedge fund has posted annualized gains of 40%; after fees, investors pocketed 28%. That 40% gain trounces the S&P 500's return of around 13%, as well as the 12% for all hedge funds calculated by the research firm."

Icahn uses his substantial fortune for philanthropic causes, in particular by making large donations to Princeton University. He has received several civic awards in recognition of the charitable contributions he has made to health, research and education in New York.

Icahn is still working in the finance industry. When he turned 71, he was interviewed by Time Magazine and he was quoted as saying: "Well, a number of CEOs have offered to host my retirement party. But I'm just a competitive guy that grew up in Queens. I can't see myself spending the rest of my life in Florida playing golf." This sentiment was echoed by the renowned investor Wilbur Ross who told Fortune Magazine in May 2007 that Icahn is "the most competitive person I know … he's especially good at terrorizing people and wearing down their defenses."

Icahn has reportedly assembled a team of over 20 associates to assist him with future corporate crusades and investor activism. He shows no sign of leaving the industry and has recently said "I make money. Nothing wrong with that. That's what I want to do. That's what I'm here to do. That's what I enjoy."

Publications about Carl Icahn include:

King Icahn: The Biography of a Renegade Capitalist

About the author

Mark McCracken

Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".

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