What is the Icahn Lift
The Icahn lift is the name given to the rise in stock price that occurs when Carl Icahn begins to purchase shares in a company. The Icahn lift occurs because of Mr. Icahn's reputation for creating value for the shareholders of the companies in which he takes a stake.
BREAKING DOWN Icahn Lift
Carl Icahn is most famous for his work as an activist shareholder, but has also been referred to as a corporate raider. He purchases shares in companies that he believes are undervalued and then creates a plan to fix the problems. This usually involves spinning off profitable segments, changing management, cutting costs, and buying back stock.
History of Deals
Icahn has been in the investment business since the 1960s through various entities including his hedge fund. According to his website Carlicahn.com, companies in which he and his affiliates owned majority positions as of May 2018 included American Railcar, XO Communications, PSC Metals, Tropicana Entertainment, Viskase Companies, CVR Energy, WestPoint Home, Icahn Enterprises LP, and Federal-Mogul.
Over the years, he's caused major movements in stock prices among companies including RJR Nabisco, Texaco, Phillips Petroleum, Western Union, Gulf & Western, Viacom, Uniroyal, Dan River, Marshall Field, E-II (Culligan and Samsonite), American Can, USX, Marvel, Revlon, ImClone, Fairmont, Kerr-McGee, Time Warner, Yahoo!, Lions Gate, CIT, Motorola, Genzyme, Biogen, BEA Systems, Chesapeake Energy, El Paso, Amylin Pharmaceuticals, Regeneron, Mylan Labs, KT&G, Lawson Software, MedImmune, Dell, Herbalife, Navistar International, Transocean, Take-Two, Hain Celestial, Mentor Graphics, Netflix, Forest Laboratories, Apple, and eBay.
Perhaps his most famous deal and the one that earned him a reputation as a corporate raider, was his takeover of TWA Airlines in the 1980s, He stripped the airline's assets, piled on debt, and sold off air routes. The airline went bankrupt in 2001.
Icahn sees his role as a builder of shareholder value and the Icahn lift is a testament to that. "I look at companies as businesses, while Wall Street analysts look for quarterly earnings performance. I buy assets and potential productivity. Wall Street buys earnings, so they miss a lot of things that I see in certain situations," he once said. "My opinion is that, philosophically, I’m doing the right thing in trying to shake up some of these managements. It’s a problem in America today that we are not nearly as productive as we should be. That’s why we have the balance-of-payments problems. It’s like the fall of Rome, when half the population was on the dole."