What's Carl Icahn Buying?
Forbes discusses how the legendary investor beat the market lately. Another piece profiles four values helped by the recent pullback.
According to Forbes.com, the fund operated by the legendary hedge-fund manager was helped in the second quarter by a large position in Apple (ticker: AAPL ), which scored a market-beating 25% gain in the past six months.
"Icahn increased his already big bet on Apple when its stock weakened to $72 at the end of January, buying $500 million more of Apple's shares," writes Nathan Vardi, a Forbes magazine associate editor who follows the hedge-fund industry. Apple, which currently trades at around $96, is "by far Icahn's largest trading position," Vardi adds.
Vardi writes that Icahn's fund also benefited in the second quarter from its stake in Chesapeake Energy ( CHK ), a natural-gas producer "whose direction has been significantly changed by Icahn, who helped push out its founding CEO Aubrey McClendon." That being said, Chesapeake, after rising nicely for most of the quarter, fell sharply in July. It's now up around 14% over the past six months, roughly double that of the Standard & Poor's 500.
According to Vardi, Icahn finished the first half of 2014 with his investment fund up 10.2%, outpacing the S&P 500, which returned 6.05% over the same time period. It also "crushed the average hedge fund manager," who returned 3.2% this year through June, according to HFR.
I had hoped to be learning from Icahn directly about his latest investing thoughts. That's because Yahoo Finance, in promoting its new contributor network on July 23, promoted Icahn as the leading name in its "truly all-star cast" of investment writers.
It's now been almost three weeks since Yahoo launched the new contributor page and Icahn still hasn't weighed in yet. http://carlicahn.tumblr.com/
To be sure, David Sterman is no Carl Icahn. But Sterman, a veteran financial writer with Street Authority, has nonetheless penned an interesting piece about four "deep-value stocks uncovered" by the recent market pullback.
It's a motley group of stocks, including conglomerate Loews (L); Abengoa Yield ( ABY ), a U.K.-based yield-oriented spinoff of global energy firm Abengoa; Roundy's ( RNDY ), a Wisconsin-based grocery chain; and the closed-end New Germany Fund ( GF ).
Regarding Loews, Sterman writes that "shares currently have a price-to-book value ratio of 0.81, meaning they trade for only 81% of the company's tangible book value.
"To be sure," he adds, "this isn't your typical financial services firm. Loews also owns hotels and has stakes in energy service providers, and it's that last segment that has weighed on results recently. Yet Loews is doing whatever any stock trading below book value should do: buying back shares. The company has already spent more than $300 million on buybacks this year, and it has left the door open to more repurchases as the year progresses."
Sterman writes that Abengoa Yield's dividend yield is marching toward 6% because of the recent price drop.
"It's hard to cite any specific reasons for recent share price weakness (for both the "yieldco" and the parent company), but it may reflect broader skittishness around European stocks. But Abengoa -- and the yield play -- are fairly well insulated from economic risk, thanks to long-term contracts."
I'll close with two less-than-encouraging columns about a slew of newspaper and other print-media assets that have been spun off into separate companies in the past year including Time Inc. ( TIME ) and News Corp ( NWSA ), the corporate parent of Barron's and the Wall Street Journal.
And recently, as New York Times media columnist David Carr puts it, "three of the biggest players in American newspapers -- Gannett, Tribune Co., and E.W. Scripps, companies built on print franchises that expanded into television -- dumped those properties like yesterday's news in a series of spinoffs."
Unfortunately, Carr has little good to say about the future of many of these new pure-play print-media concerns.
"It's a measure of the basic problem that many people haven't cared or noticed as their hometown newspapers have reduced staffing, days of circulation, delivery and coverage," writes Carr. "Will they notice or care when those newspapers go away altogether? I'm not optimistic about that."
Another respected media writer, Michael Wolff, is only a tad more optimistic about the future of print media as a viable business than Carr is.
Writing in USA Today, Wolff writes that "Wall Street clearly doesn't give great value to what we do. Often our own children seem to wonder why we do it. But on the brighter side, the powers that be aren't so much taking our livelihood from us as they are giving it back."