Activist Investor Alert: The Top 3 Stocks Carl Icahn Is Targeting in 2024
Since the late 1970s, when the former options trader and arbitrageur moved into activist investing (then called “corporate raiding”), Carl Icahn has built a multi-billion dollar fortune investing in (and pushing for profitable changes at) undervalued companies. With this track record, it’s no surprise that Wall Street and Main Street investors alike are always curious to hear what are the latest Carl Icahn stocks.
Yes, over the past year, Icahn has experienced a bit of a role reversal, going from predator to prey. As you may recall, back in May, short-seller Hindenburg Research issued a “short report” on Icahn’s publicly-traded investing vehicle, Icahn Enterprises (NASDAQ:IEP).
This report led to a sharp decline in price for IEP shares, and ultimately resulted in the master limited partnership cutting its dividend by 50%.
But while down billions following IEP’s big plunge, even at 88 years old Icahn is not quite yet out of the game just yet. He’s rattling cages at numerous companies, including these three top Carl Icahn stocks.
American Electric Power (AEP)
Carl Icahn and his affiliates began accumulating a position in American Electric Power (NASDAQ:AEP) during Q4 2023. Although the investor has yet to acquire a position in the utility holding company large enough to require disclosure via a13D filing with the SEC (5% or higher), Icahn has already made major progress gaining influence on AEP’s board.
As announced on Feb. 12, American Electric Power has added two Icahn-affiliated directors to its board. While it appears Icahn is taking a more behind-the-scenes and collaborative approach with AEP stock, it could prove profitable to ride his coattails on this particular name.
A more aggressive push for efforts like cost reductions and divestitures, coupled with a potentially more favorable macro environment (utility stocks are very sensitive to interest rates), could lead to solid gains for AEP, which also sports a 4.35% forward dividend yield.
Illumina (ILMN)
Illumina (NASDAQ:ILMN) became one of the Carl Icahn stocks in early 2023. That’s when the activist investor first began accumulating a position, after shares in the gene sequencing products provider lost nearly two-thirds of their value, due to the company’s ill-fated acquisition of cancer detection company Grail.
Since building up a stake in ILMN stock, Icahn has gained a board seat, and the company now has a new CEO, but the activist is not done yet shaking things up. Icahn has taken the incumbent board to court, for alleged breach of fiduciary duty. He is also pushing for the removal of two legacy directors.
Boardroom drama notwithstanding, it remains to be seen whether Icahn’s efforts will lead to gains for Illumina shareholders. Although a divestiture of Grail could move the needle, the company’s latest guidance suggests uncertainty surrounding the extent in which Illumina’s operating performance will improve this year.
JetBlue Airways (JBLU)
Within weeks of the low-cost carrier’s plans to merge with Spirit Airlines (NYSE:SAVE) being blocked by a federal judge on antitrust concerns, JetBlue Airways (NASDAQ:JBLU) became the latest activist target of Carl Icahn.
On Feb. 12, Icahn disclosed a nearly 10% stake in the airline. Not too long after announcing his position, JetBlue announced that it was adding two Icahn nominees to its board. JBLU stock initially surged on the Icahn news yet has since pulled back. Perhaps, the market is remembering the activist’s last major move on an airline stock: TWA.
Yes, it’s premature to compare Icahn’s JetBlue investment with his controversial involvement with TWA. Still, it does highlight the challenges of activist investing in airlines. A profitable exit strategy for Icahn may also prove challenging. With the courts blocking JetBlue’s acquisition of Spirit, the same might happen if a strategic acquirer offers to buy JetBlue.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
