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Wall Street legend and activist investor Carl Icahn, chairman of publicly traded Icahn Enterprises, has a net worth of $6.11 billion, according to the Bloomberg Billionaires Index.
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As The Motley Fool reported, Icahn, like fellow billionaire investor Warren Buffett, believes in a value investing strategy.
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buy stocks when no one wants them
“In general, Mr. Icahn is interested in investing in stocks whose prices do not fully reflect the potential of the company. Mr. Icahn has said that he acquires companies when ‘no one wants them’. ” the Motley Fool noted.
But unlike Buffett, who is known for his ownership strategy, Icahn is “averse to selling stocks to lock in profits once the market knows a company’s true value,” the Motley Fool added. .
“I don’t know if we completely disagree,” Icahn told CNBC about Buffett in 2022. “I think I’m on a different level than Warren to some extent. I’m an activist,” Icahn said. “What I look for are companies that are, in my opinion, undervalued. [Southwest Gas], there’s nothing I can do about it. That’s what I enjoy doing. That’s why I come to work every day. ”
Although he holds for the long term, his strategy emphasizes short-term bets on stocks.
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become an activist investor
Mr. Icahn has a reputation as a prominent activist investor.
An activist investor is someone who seeks to gain control of a company by winning a seat on the company’s board of directors. As explained by the Corporate Finance Institute, they make significant changes to the target company, unlocking the perceived hidden value within the target company.
These changes include increasing cash back to shareholders, eliminating divisions that activists believe are driving down stock prices, demanding board seats, replacing CEOs, and changing specific business strategies. This includes advocacy.
“I’ve come to believe that activism is the best investment paradigm that exists from a risk-reward perspective,” Icahn told Bloomberg on February 21. I’m not running well. ”
As Bloomberg reported, just last week, Icahn Enterprises won four seats on the boards of JetBlue Airways and American Electric Power.
Don’t pay too much attention to hot trends
As The Motley Fool noted, some investors like Icahn’s refuse to focus too much on “hot trends in stocks or acquisitions of high-growth companies.”
“There are many hidden gems out there that are simply unloved or forgotten companies whose stocks are trading at a discount. Buying solid companies at fair prices makes for a patient investment. The Motley Fool added: “You could end up with a lot of money for your home.”
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This article originally appeared on GOBankingRates.com: 3 Investment Traps and Tips from Billionaire Carl Icahn
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