Carl Icahn is widely known today as an "activist" or "corporate raider." While those terms are not at all wrong in describing Icahn's investing approach, I believe there is a better to describe what he is doing: investor advocate.
There's no denying that Icahn has made some big money on bets that paid off in the short term. However, his long-term record speaks for itself. Unlike most active investors who fizzle out in a decade or so, Icahn has been successful over 30 years and has amassed one of the best investment records in the business.
Investors who want to educate themselves on what is going on today from a perspective of a professional who is on the front lines can now do so thanks to Icahn's new website, www.carlicahn.com.
Icahn recently released a position paper and a new video called "Danger Ahead." Such a title doesn't bode well for the market today or perhaps next week, but investors should be aware of the opinions of others and use those viewpoints to formulate rational expectations and make smart decisions.
Despite a stable U.S. economy, there are areas of froth. Low interest rates, while warranted to pull the economy out of a recession, have served as a slow drip drug that has made equities a superior asset class. Equities tend to favor the wealthy and upper middle class households who can invest in them. The majority of the population has not seen an increase in wealth at even the tiniest fraction of that created by the stock market, according to Icahn. In conclusion, Icahn says that things could get worse very soon.
But Icahn is not exiting the market. This morning, he revealed he had increased his stake in gas exporter Cheniere Energy (LNG). Icahn also recently took a position in commodity company Freeport-McMoRan (FCX). Meanwhile, he still holds large stakes in Chesapeake Energy (CHK) and Transocean (RIG), and is sitting on huge unrealized losses in those positions.
Icahn has substantial resources and can be a very, very patient investor. I would not follow him into any of these names unless you have the same stamina. Even so, Icahn is very good at what he does -- but he is not perfect.
The days of calm waters are likely over for now. You can't sail forever and not expect to hit some choppy seas or extreme headwinds. They will ultimately pass, but how you navigate now will determine the condition your ship is in once it exits the storm.
