Carl Icahn posted another loss in his private hedge fund last year.
The octogenarian’s Investment Funds segment of his publicly traded company, Icahn Enterprises, was down 3.5 percent in 2024 after dropping more than 1 percent in the fourth quarter, according to the company’s annual report.
This was the Investment Funds’ sixth straight annual loss. They were down 16.9 percent in 2023, according to the company’s filings. The S&P 500 rose 24.23 percent in 2023 and 23.31 percent in 2024, so Icahn’s funds lagged it by nearly 70 percentage points over the most recent two-year period.
The Investment Funds are one of several units of Icahn Enterprises, which include Energy, Automotive, Food Packaging, Real Estate, and Home Fashion. The Investment segment does not have outside investors. But its largest internal investor was bailing out on the fund all last year.
As of December 31, 2024, the value of investments in the Investment Funds made by Icahn and his affiliates was about $1.5 billion. This compares with $4.9 billion just two years earlier, according to the annual report. Last year, the funds made a distribution of $650 million, including $256 million to Icahn and his affiliates. As of year-end, Icahn Enterprises’ investment in the funds was valued at about $2.7 billion.
The Investment unit holds significant positions in a number of companies, including Southwest Gas Holdings, American Electric Power, Caesars Entertainment, International Flavors & Fragrances, and Bausch Health.
In 2024, long positions contributed 2.3 percent and shorts 5.8 percent to the loss. These were offset by a hefty 4.6 percent gain in what Icahn Enterprises calls “other,” which primarily comprises interest income earned on cash balances, collateral posted to counterparties, and short rebates. “Other” has been the only booster of performance for the past few years.
The short portfolio’s drop was driven primarily by a decline in the broad market hedge of $261 million; net losses in the utilities, materials, and industrials sectors; and the negative performance of certain credit default swap positions, according to the filing. Losses from long positions came primarily from negative performance in the energy and consumer cyclical sectors, offset in part by gains in the utilities sector, per the filing.
Icahn has been hurt over the years by his bearishness and negative positioning.
Heading into 2024, the funds had a net short notional exposure of 36 percent. The exposure had been 41 percent net short at the end of September 2023, 18 percent at the end of June 2023, and 38 percent at the end of March 2023. However, in fourth-quarter 2024, the Investment Funds swung to a net long notional exposure of 22 percent. They had a long exposure of 102 percent — 97 percent long equity and 5 percent long credit. The short exposure was 80 percent — 72 percent short equity, 7 percent short credit, and 1 percent short commodity.
“During the next several years, we see a favorable opportunity to follow an activist strategy that centers on the purchase of target stock and the subsequent removal of any barriers that might interfere with a friendly purchase offer from a strong buyer,” Icahn Enterprises wrote in its annual report.
“Alternatively, in appropriate circumstances, we or our subsidiaries may become the buyer of target companies, adding them to our portfolio of operating subsidiaries, thereby expanding our operations through such opportunistic acquisitions. Through our Investment segment, we are in a position to pursue our activist strategy by purchasing stock or debt positions and trying to promulgate change through a variety of activist approaches, ranging from speaking and negotiating with boards of directors and chief executive officers to proxy fights, tender offers, and acquiring control.”
