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Activist investor Carl Icahn, his strategy and new stake in JetBlue

Posted:Feb 13, 2024 09:29 Category: Americas , Forex , M&A , Posted by Lea Hogg

Carl Icahn has just reported a nearly 10 percent stake in JetBlue Airways, causing the airline’s stock to spike more than 15 percent in extended trading. Icahn believes the airline stock is undervalued.  He has already had discussions with the company regarding the possibility of board representation. This move is not surprising, given Icahn’s history of activist investing and his reputation for turning around struggling companies.

JetBlue has been working diligently to return to profitability following a post-Covid travel surge and a blocked merger with budget carrier Spirit Airlines. The company has been cutting costs and improving operations, efforts that are likely to continue following Icahn’s involvement.

Who is Icahn?

Carl Icahn, an American businessman, investor, and philanthropist, is the founder and controlling shareholder of Icahn Enterprises. Born on February 16, 1936, Icahn has been shaking up corporate America for decades. He is known for his strategy of taking large stakes in companies that he believes will appreciate from changes to corporate policy. Subsequently, Icahn pressures management to make the changes that he believes will benefit shareholders. This strategy has earned him the reputation of being one of the most successful hedge fund managers of all time and one of the greatest investors on Wall Street.

This is not Icahn’s first investment into the airline industry. In the late 1980s, he took TWA private in one of his more infamous activist campaigns, only to see the airline struggle and file for bankruptcy. Despite this setback, Icahn’s involvement in JetBlue signals his continued belief in the potential of the airline industry.

JetBlue argued it needed the merger with Spirit Airlines to help it compete against the largest American carriers. However, a federal judge ruled against the combination of the two airlines last month, citing reduced competition. JetBlue and Spirit are appealing the judge’s ruling.

In the last 12 months, JetBlue’s stock was down more than 27 percent. Despite this, the NYSE Arca Airline index, which tracks the broader sector, is up nearly 7 percent over the same period. With Icahn’s involvement and the appointment of new CEO Joanna Geraghty, JetBlue is set to work through the challenges ahead and get the company back on track.

Activist hedge fund

Carl Icahn, known for his strategy of taking large stakes in companies and pushing for change, has invested in a variety of companies across different sectors As of the end of 2023, some of the top holdings in his portfolio included:

 

Investment Carl Icahn’s 2023 Portfolio
Icahn Enterprises LP (IEP) Carl Icahn’s diversified holding company, with subsidiaries in investments, energy, automotive, food packaging, and real estate.
CVR Energy Inc (CVI) An American petroleum company.
Occidental Petroleum Corp (OXY.WS) An American company engaged in hydrocarbon exploration.
Southwest Gas Holdings Inc (SWX) An investor-owned utility based in Las Vegas, Nevada.
FirstEnergy Corp (FE) An electric utility company based in Akron, Ohio.

 

 

In the past, Icahn has also had significant positions in companies like eBay. In 2014, he took a significant position in eBay, calling it one of the worst-run companies he’d ever seen. He urged the company to spin off PayPal, which it announced it would do in August 2014.

 

 

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