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."

RELATED TERMS
  1. Shareholder Activist

    A shareholder activist is a person who attempts to use his or ...
  2. Raider

    A raider, in business, is a private equity firm that targets ...
  3. Premium Raid

    Premium raid is an action akin to a hostile bid for a company ...
  4. Hostile Takeover

    A hostile takeover is the acquisition of one company by another ...
  5. Busted Takeover

    A busted takeover is a leveraged buyout in which some of the ...
  6. Hands-On Investor

    A hands-on investor is one who holds a large portion of a company's ...
Related Articles
  1. Investing

    Where Does Carl Icahn Keep His Money?

    Learn about where Carl Icahn keeps his money. Read about how a number of his investments in energy companies lost significant value in 2015.
  2. Managing Wealth

    Turnaround Titan: How Carl Icahn Does It

    Carl Icahn's investment strategy, explained to regular investors.
  3. Investing

    Billionaire Icahn Trimmed Xerox, AIG, and More: 13F Filing

    The billionaire activist investor Carl Icahn trimmed his stake in American International Group last quarter.
  4. Investing

    Recent events may impact Icahn's portfolio (AAPL, AIG)

    Recent Events Surrounding Apple Inc. (AAPL) and American International Group Inc (AIG) May Impact Carl Icahn's Hedge Fund
  5. Insights

    Carl Icahn Biography

    Carl Icahn is a New-York-based investor and one of the 50 richest men in the world, with more than $20 billion in personal assets. He is known for his brash style as a corporate raider and as ...
  6. Investing

    Carl Icahn Nearly Exits Allergan Position in Q3 (AGN, HLF)

    Icahn makes a big reversal on the embattled pharmaceuticals company, according to his Q3 13F.
  7. Investing

    Icahn Hopes To Buy and Privatize Federal-Mogul

    The activist investor may have reached a deal with the auto parts company to buy up the remaining minority share.
  8. Investing

    S&P Cuts Icahn Enterprises to Junk Status

    S&P Global Ratings downgraded Icahn Enterprises LP (IEP) to junk status Tuesday at 12:27 EDT, following up on a threat made in February.
  9. Investing

    Carl Icahn Buys Precision Auto Care

    Activist investor Carl Icahn has acquired Precision Auto Care, Inc., expanding his automotive company empire.
  10. Insights

    Carl Icahn Increased Position in Herbalife, Entered Cigna: 13F

    The billionaire investor's 13F filing reveals new investments during Q2.
RELATED FAQS
  1. What are some of the top hostile takeovers of all-time?

    Learn about some of the most noteworthy hostile takeovers in history, including the KKR acquisition of RJR Nabisco and the ... Read Answer >>
  2. What happens to the shares of a company that has been the object of a hostile takeover?

    Learn about the effect on the share price of companies that are targets of hostile takeovers, which are tactics used by famed ... Read Answer >>
Trading Center