In our article titled “Carl Icahn 101: Who is the Famous American Financier?” on Zatrun.com, we will delve into everything you need to know about the well-known American financier, Carl Icahn.
Who is Carl Icahn?
Carl Icahn, also known as Carl Celian Icahn, is an American financier and the chairman of Icahn Enterprises, a holding company with various portfolios. He was dubbed a corporate raider in the 1980s but has since been predominantly labeled as an activist investor.
Icahn was an only child, born to parents who were both educators, with his father also being a lawyer and a Jewish rabbi. He graduated from Princeton University with a degree in philosophy (B.A., 1957) and went on to study medicine at New York University but dropped out to join the US Army. After his discharge, he became a stockbroker for Dreyfus Corporation. He left Dreyfus in 1963 and began trading stock options at Tessel, Patrick and Company a year later. He continued trading options after moving to Gruntal & Co.
In 1968, Icahn borrowed $400,000 from an uncle to buy a seat for his new brokerage firm, Icahn and Company. While trading on the stock market, Icahn became interested in risk arbitrage, a stock-buying strategy that drives up the stock price in anticipation of a takeover bid. He began making takeover attempts himself after investing heavily in Tappan Company, a kitchen stove manufacturer, in 1978. Icahn managed to secure a seat on the board with his shares and then orchestrated a sale of the company to Swedish firm AB Electrolux, earning nearly $3 million in the process.
Career Life:
In the 1980s, Carl Icahn became a feared corporate raider. He acquired significant equity stakes in companies such as Hammermill Paper, Simplicity Patterns, Marshall Field’s, Dan River, ACF Industries, Phillips Petroleum, Uniroyal, USX (United States Steel), B.F. Goodrich, US Air Group, and Texaco. Icahn was frequently accused of using a tactic known as “greenmail,” in which he would threaten to take over company management if they did not buy back his shares at a premium price. In the Marshall Field’s case, the company accepted a rival bid from BATUS, Inc. (British American Tobacco’s American subsidiary) in response to Icahn’s offer in 1982.
Icahn’s connection with Trans World Airlines (TWA) is notable for a relatively long period of time. TWA was already a troubled company when it gained control with union support in late 1985. After becoming president in early 1986, he privatized TWA and sold valuable routes to other airlines, thereby increasing his own personal wealth and burdening the company with heavy debt, which critics say led to its bankruptcy in 1992. Icahn resigned from the presidency the following year.
In 1990, Carl Icahn purchased shares in American Real Estate Partners (AREP) company. He gradually took control and used the company as an investment vehicle. In 2004, he founded a hedge fund called Icahn Partners. Three years later, AREP changed its name to Icahn Enterprises. Icahn also became the chairman of the board of several other companies, particularly petroleum refiner CVR Energy, casino operator Tropicana Entertainment, and American Railcar Industries.
Ventures:
In the 21st century, Carl Icahn showed increasing interest in entertainment-related ventures and invested in companies such as Blockbuster and Hollywood Entertainment video chains, Time Warner, and Netflix. He established a long-term connection with Donald Trump and, due to Trump’s financial interests in his troubled casinos in Atlantic City, New Jersey, Trump Entertainment Resorts became a subsidiary of Icahn Enterprises in 2016. Icahn provided early support to Trump in the 2016 presidential race, and upon Trump’s election victory, he was appointed as a consultant on regulatory reform issues.
Accepting this unofficial position, he made a critical statement about the “overregulation” of American businesses. However, conflict of interest concerns began to arise, and shortly before allegations surfaced that he was pushing for a regulatory change that could benefit one of his investments, Icahn resigned in August 2017. Icahn denied the allegations and stated that his resignation was to “prevent partisan bickering.” The 2022 documentary, Icahn: The Restless Billionaire, focused on him.
