3 Stocks Carl Icahn Is Buying in 2015

 

NEW YORK (TheStreet) -- When Carl Icahn buys, Wall Street pays attention.
Icahn is known for affecting what is known as the "Icahn lift" -- a bump in a company's stock price that often occurs after he has taken a position in it. And while the swing is sometimes temporary, Icahn has the numbers to prove that his involvement has a long-term impact as well.

In an "activist manifesto" the billionaire investor penned for The Economist in 2014, Icahn laid out his case for activist investing and how and why his brand of it works. "The reason our record is so strong is that we are 'activists' in the truest sense of the word," he wrote. "Over the past two decades we have got actively involved with CEOs and boards, often in a friendly fashion."
And Icahn's active involvement has paid off. According to Icahn, a person investing in 23 companies whose boards his appointees joined from Jan. 1, 2009, to June 30, 2014, would have obtained an annualized return of 27%.
"Over the decades, our activism has enhanced shareholder value for all shareholders by multi-billions of dollars," he wrote.
Of course, not all of his activist bids are successful, nor are all of his investments made with an activist push. But his buys are always interesting to watch.
Here are three stocks Icahn has been buying lately, according to his most recent 13F corresponding to June 30, 2015

Icahn Enterprises

IEP data by YCharts
Icahn upped his stake in his own company -- and his top holding -- this year. As of June 30, he owns 112.3 million shares of Icahn Enterprises (IEP - Get Report)  valued at $9.7 billion, compared to 108.8 million shares on March 31.
Icahn Enterprises, a holding company, operates in various business segments, including automotive, gaming, real estate and energy. Icahn is the chairman of the board at the firm and as well as its majority shareholder, with a nearly 90% stake.ahn upped his stake in his own company -- and his top holding -- this year. As of June 30, he owns 112.3 million shares of Icahn Enterprises (IEP - Get Report)  valued at $9.7 billion, compared to 108.8 million shares on March 31.
Icahn Enterprises, a holding company, operates in various business segments, including automotive, gaming, real estate and energy. Icahn is the chairman of the board at the firm and as well as its majority shareholder, with a nearly 90% stake.
Icahn Enterprises reported earnings on Aug. 6, and this year appears to be a bit slower for the company than last. Net income for the second quarter of 2015 was $212 million, compared with $520 the same period in 2014. And for the first six months of 2015, income is $374 million compared with $612.
Icahn Enterprises pays an attractive dividend, however, and declared a $1.50 quarterly payout as well. Its yield is 8.7%.

TheStreet Ratings team rates Icahn Enterprises as a hold with a ratings score of C-. TheStreet Ratings team has this to say about its recommendation:
"We rate Icahn Enterprises (IEP) a hold. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings team include:

• Net operating cash flow has significantly increased by 1041.66% to $339.00 million when compared to the same quarter last year. In addition, Icahn Enterprises has also vastly surpassed the industry average cash flow growth rate of 3.48%.
• IEP, with its decline in revenue, underperformed when compared the industry average of 4.2%. Since the same quarter one year prior, revenues fell by 22.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
• Icahn Enterprises has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, Icahn Enterprises swung to a loss, reporting -$2.92 versus $8.98 in the prior year. This year, the market expects an improvement in earnings ($5.80 versus -$2.92).
• The debt-to-equity ratio is very high at 2.30 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
• Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Industrial Conglomerates industry and the overall market, Icahn Enterprises' return on equity significantly trails that of both the industry average and the S&P 500.Gannett
   
   GCI data by YCharts
  Icahn's most recent 13F reveals stakes in two companies spun off from Gannett (GCI) earlier this year. One of the companies, named Tegna, retains the firm's broadcasting and digital assets, and the other entity, which kept the Gannett name, includes publishing properties and affiliated digital assets. Through the transaction, Gannett shareholders retained their shares of the newly renamed Tegna and received one share of the new Gannett for every two shares of pre-existing stock.
  Icahn left his stake in the new Tegna untouched but wound up with a new position in the new Gannett. As of June 30, he owns 7.5 million shares of the spun off Gannett worth $104.7 million.
  Gannett became one of Icahn's activist targets in 2014 when he disclosed a 6.6% stake and backed the company's plan to spit. In early 2015, he appeared to be mounting a proxy battle and pushed for two seats on the firm's board, but just two months later, he withdrew his nominations.
  
  There is no TheStreet Ratings data for Gannett at this time.
  
  Cheniere Energy
  LNG data by YCharts
  Cheniere Energy (LNG - Get Report) is one of Icahn's most-talked-about recent buys. His 13F reveals he owned 1.1 million shares worth $74.5 million, and he has since increased his position even more -- twice.
  
  On Aug. 6, an SEC filing disclosed Icahn had 19.4 million shares of Cheniere, an 8.2% stake. And another filing, made public Monday, revealed he now owns 9.6% of the company. The stock ticked up, getting a bit of the famous Icahn lift,  in response.
  Icahn has moved quickly on the Houston-based liquefied natural gas company, which appointed two of his representatives to its board on Aug. 24.
  
  "As we have done with a number of companies in the past, we hope to contribute meaningfully as Board members towards enhancing shareholder value at Cheniere," Icahn said in a statement.
  
  TheStreet's Jim Cramer commented Monday on the billionaire activist investor's maneuvers on Cheniere. "I know that [LNG CEO] Charif [Souki] told me he welcomes the input. He's not fighting he's embracing. That's because he is all about learning from everyone. I think there could be $8 billion in cash flow in the outyears here but nothing near-term so be patient."
  TheStreet Ratings team rates Cheniere Energy as a sell with a ratings score of D+. TheStreet Ratings team has this to say about its recommendation:
  "We rate Cheniere Energy (LNG) a sell. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself. "
  Highlights from the analysis by TheStreet Ratings team include:
  
• Net operating cash flow has significantly decreased to -$280.78 million or 4182.21% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
• LNG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 30.92%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
• Cheniere Energy has improved earnings per share by 42.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Cheniere Energy reported poor results of -$2.44 versus -$2.32 in the prior year. This year, the market expects an improvement in earnings (-$1.93 versus -$2.44).
• The gross profit margin for Cheniere Energy is currently very high, coming in at 72.09%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -174.19% is in-line with the industry average.
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 41.3% when compared to the same quarter one year prior, rising from -$201.93 million to -$118.50 million. 

Written by Emily Stewart