Legendary Investor Carl Icahn Dishes On McDonald’s, Wall Street And His New HBO Doc

After 45 years as one of America’s most feared investors, billionaire Carl Icahn gets emotional about pigs and in a new documentary reflects on his legacy.

It’s a week after his 86th birthday and billionaire investor Carl Icahn is back doing what he does best: launching a proxy fight. Only his latest target is fast-food giant McDonald’s, which confirmed Sunday that Icahn has nominated two members to its board of directors. The infamous corporate raider’s er, beef? The mistreatment of sows housed in its suppliers small gestational crates. 

Icahn, who is known to have inspired Gordon Gekko’s “If you want a friend, get a dog” quote from the 1980’s movie Wall Street, says he feels “very emotional about the treatment of animals” ever since it was brought to his attention by his daughter, Michelle, a vegetarian who has been involved with the Humane Society. “I’m not trying to be sanctimonious, I just feel [bad] about it,” he says from his home in Indian Creek, Miami, an area otherwise known as the “Billionaire Bunker.” Icahn’s 200 shares of McDonald’s stock, worth less than $50,000, scarcely merits a footnote among the $9 billion in investments his Icahn Enterprises holds.

But the mistreatment of farm animals isn’t really on top of Icahn’s agenda. After a long career rattling corporate boardrooms and amassing a net worth of $16.6 billion, the octogenarian hedge fund legend has a bigger mission, to set his legacy straight by promoting a new HBO documentary, Icahn: The Restless Billionaire. 

“The activist [investor] serves a very important purpose,” he says, referring to his strategy of buying undervalued stocks and pressuring management into making changes that benefit shareholders. “And yet, all these PR machines make [them] out to be a bad guy.”

Icahn shows no signs of letting up on his crusade. Besides the worst inflation in nearly 40 years, he says the U.S. is also suffering from a crisis in corporate governance, something he says is largely overlooked. “It’s hard to get people worked up about it until there’s a bad market maybe, but all I can say is democracy works if it’s really democracy,” he says. “But there is no democracy in corporate America.” 

Some of the unintended consequences of this, Icahn argues, have contributed to the current economic predicament. “Part of the reason for inflation is that we don’t produce enough goods and really, productivity is worse than a lot of other countries in the world,” he says. “And that’s because [some] of these CEOs are inept. They don’t care a hell of a lot.”

If you want to hear more of Carl Icahn on his soapbox reflecting on his infamous deals, as well as some priceless behind-the-scenes Icahn at home footage, then the hour and forty-one minute HBO documentary is a must watch.

For those unfamiliar with this legendary investor, Icahn was born in 1936, raised in Far Rockaway, Queens. His father was a synagogue cantor and his mother a schoolteacher. After graduating from Princeton with a degree in philosophy, he went onto New York University School of Medicine before dropping out for military reserve service. He got his start as a stockbroker at Dreyfus in 1961 before buying a seat on the New York Stock Exchange, and opening his own shop focused on risk arbitrage and options trading in 1968. “I got into arbitrage because I was good at math and then it [became] sort of a natural thing,” Icahn explains. “It eventually evolved into buying these undervalued companies and that was sort of arbitrage, in a way.”  

A decade later, he attempted his first hostile takeover campaign with appliance maker Tappan in 1978, ultimately earning double his initial investment after the company was sold. The thrill of the hunt got him hooked. From there, he famously went on to face-off with a laundry list of corporate behemoths like Trans World Airlines (TWA) and RJR Nabisco to Marvel, Lionsgate, Time Warner, Yahoo, eBay and others. The profits he generated from those deals, as well as having avoided insider trading scandals that ensnared contemporaries like Ivan Boesky, earned him the nickname “Lone Wolf of Wall Street.”

“What people may not fully recognize is that more than any other activist, Carl has shown an ability to be successful in multiple sectors over multiple decades,” says industry watcher Ken Squire, founder and president of 13D Monitor, a research service that specializes in the analysis of activist investor’s SEC filings. “He has activism in his blood. Had he chosen to be a school teacher, he would have been an activist school teacher.” 

“He has activism in his blood. Had he chosen to be a school teacher, he would have been an activist school teacher.” 

The last decade has been no exception in terms of mega deals and publicity. A stake in Netflix in 2012, delivered a 457% return in 14 months, amounting to a $2 billion profit. (Had Icahn held onto the position, however, he would have banked $19 billion.) There was also his $1 billion stake in Apple, which gained $17 billion in market capitalization after Icahn tweeted about it in August of 2013. And who could forget Icahn’s battle over nutritional supplement maker Herbalife, which erupted in an on-air feud with hedge fund rival Bill Ackman live on CNBC. In the end, Icahn reportedly banked $1.3 billion in profits after closing out his position in May of 2021. 

All of this is part of the intrigue of the man that has railed against corporate America since the 1970s and created a phenomenon known as “The Icahn Lift.” It is these antics that HBO director Bruce David Klein says drew him to Icahn in the first place. “I’m drawn to subjects with unique DNA, especially those whose talents are a bit mysterious,” he says. “Everyone knows Icahn is a feared disruptor, a tough negotiator, an extraordinarily successful billionaire–but why?… That’s the catalyst,” says Klein.

Although Icahn’s fund has been closed to outside investors since 2011, his Nasdaq-listed Icahn Enterprises (IEP), has been trading for more than 20 years. The diversified holding company, of which Icahn has a 89% stake, invests in his hedge fund and companies like oil refinery CVR Energy and auto-parts retailer Pep Boys. It has total assets of $28 billion and a net asset value of $5.4 billion as of the third quarter of last year, up from $3.1 billion the year prior but down from $9.1 billion at the end of 2013. Currently trading at $55 a share, his Icahn Enterprises is down 6% in the last 12 months, compared to the S&P 500 return of 12.6%. 

Icahn’s $4.6 billion hedge fund has also stumbled in recent years. As of the third quarter of last year, the fund was up 8.8% for the year, in comparison to the 14.7% for the S&P. In 2020, the fund underperformed, down 14% while the market returned 18%, and in 2019 clocked down 15%. Due to recent losses, the fund’s average annual return since inception in 2004 has fallen to 3.8%, versus 10% for the S&P. 

Icahn isn’t bothered though, preferring to focus on publicly-traded Icahn Enterprises instead of just his investment fund. Rather, he computes his own cost/benefit analysis since the company’s inception on January 1, 2000 through February 17. “I did some statistics,” he says. “If you bought [IEP] when we started activism [over] twenty years ago, bought and reinvested the dividends as you got them, you made a 2,041% return on investment.” Using this calculation over the same period, Icahn computes that the S&P 500, Dow Jones Industrial, and Berkshire Hathaway Class A shares would have returned 354%, 403% and 739%, respectively. 

Still, Icahn isn’t planning on retiring anytime soon, despite his son and successor Brett Icahn returning to the firm as a portfolio manager and member of the board in October 2020. In fact, quite the opposite. He’s already talking about taking advantage of the correction. Says Icahn, “As the famous saying goes, the trend is your friend till the end.”