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Carl Icahn Buys Activist Target Illumina, Adds Stake in Southwest Gas

  • The investor entered a position in IlluminaILMN and added to the Southwest Gas investment.
  • It restricted the holdings of Herc Holdings and Newell BrandsNWL.

Billionaire investor Carl Icahn (Operations, Portfolio) revealed his firm’s first-quarter stock portfolio earlier this month.

The guru’s Florida-based firm, Icahn Capital Management, is known for taking activist positions at struggling companies and working with management to improve profitability and build shareholder value.

The 13F filing for the three months ended March 31 shows it entered a new position in Illumina Inc. (ILMN, Financial), which is a recent target, as well as adding to its stake in Southwest Gas HoldingsSWX Inc. (SWX , Finance). It also reduced its holdings in Herc Holdings Inc. (HRI, Financial) and Newell Brands Inc. (NWL, Financial).

Investors should note that 13F filings do not provide a complete picture of a company’s holdings, as the reports only include their positions in US stocks and US certificates of deposit, but they can still provide valuable information. Additionally, the reports only reflect trades and holdings as of the most recent portfolio submission date, which may or may not be in the hands of the reporting company today or even when this article was published.

illuminate

The guru invested in 430,000 Illumina (ILMN, Financial) shares, allocating 0.45% of the equity portfolio to the position. The share traded at an average price of $210.38 per share during the quarter.

The San Diego-based biotech company, which focuses on genomics, has a market capitalization of $30.29 billion; Its shares were trading around $195.55 on Tuesday with a price-to-book ratio of 4.62 and a price-to-sales ratio of 6.92.

GF Value LineVALU suggests the stock is a potential value trap currently based on its historical ratios, past financial performance and analysts’ future earnings projections. As such, potential investors should be cautious when making a decision.

This extreme undervaluation and lack of profitability, along with the questionable acquisition of Grail, caught Icahn’s attention. In a series of letters, he has called for major reforms within the company’s board of directors and among executives.

At 83 out of 100, the GF Score indicates that the company has good potential for outperformance. While it received high marks for profitability, value and momentum, the growth and financial strength ratings are more moderate.

Of the investing gurus in Illumina, Baillie Gifford (Trades, Portfolio) has the largest stake with 9.54% of its outstanding shares. The Vanguard Health Care Fund (Trades, Portfolio) also has a prominent position.

southwest gas

Icahn increased the stake in Southwest Gas (SWX, Financial) by 59.12%, acquiring 3.91 million shares. The transaction impacted the variable income portfolio by 1.11%. The shares traded at an average price of $63.73 each during the quarter.

Another recent activist target, he now owns 10.52 million shares of the company, occupying 2.98% of the stock portfolio. GuruFocus estimates that Icahn has lost 19.09% on the investment, which is his fifth largest holding so far.

The Las Vegas-based utility, which provides natural gas services to more than 2 million customers in Arizona, Nevada and California, has a market capitalization of $4.17 billion; Its shares were trading around $58.52 on Tuesday with a price-to-book ratio of 1.27 and a price-to-sales ratio of 0.74.

According to GF’s value line, the stock, while undervalued, is a potential value trap. As such, potential investors should do extensive research before making a stock decision.

A GF score of 71 implies that the company is likely to perform average in the future thanks to high profitability and value ratings, medium growth and financial strength ratings, and a low momentum range.

With a 14.75% stake, Icahn is now the company’s largest guru shareholder. Other guru investors include Mario Gabelli (Trading, Portfolio), Steven Cohen (Trading, Portfolio), Hotchkis & Wiley and Paul Tudor Jones (Trading, Portfolio).

Herc Holdings

The investor cut his investment in Herc Holdings (HRI, Financial) by 93.77%, selling 3.46 million shares. The operation had an impact of -2.10% on the variable income portfolio. During the quarter, the shares traded at an average price per share of $137.90.

He now owns 230,160 shares in total, representing 0.12% of the stock portfolio. GuruFocus data shows it has gained 310.23% on long-standing investing, which was previously its sixth-biggest position.

The Bonita Springs, Florida-based equipment rental company has a market capitalization of $2.98 billion; Its shares were trading around $104.60 on Tuesday with a price-earnings ratio of 9.26, a price-to-book ratio of 2.77 and a price-to-sales ratio of 1.09.

Based on GF’s value line, the stock appears to be a potential value trap.

The GF Score of 85 means the company has good potential for outperformance, driven by high scores for four of the criteria, as well as a more moderate financial strength rating.

Gabelli is the company’s largest guru shareholder with a 5.90% stake. Herc is also held by Ken Fisher (trading, portfolio), First Eagle Investment (trading, portfolio), Jones, Bestinfond (trading, portfolio) and Cohen.

Brands Newell

Icahn reduced his stake in Newell Brands (NWL, Financial) by 9.33%, selling 3.08 million shares. The transaction impacted the equity portfolio by -0.19%. The share traded at an average price of $14.10 per share during the quarter.

He now owns 29.98 million shares, representing 1.69% of the stock portfolio and is his seventh largest holding. GuruFocus found that it has lost approximately 52.35% of the investment over its lifetime.

The Atlanta-based company, which makes consumer and commercial products under brands including Elmer’s, Sharpie, Paper Mate, GracoGGG, Rubbermaid and Ball, has a market capitalization of $3.6 billion; Its shares were trading around $8.69 on Tuesday with a price-to-book ratio of 1.08 and a price-to-sales ratio of 0.41.

The GF value line suggests that the stock is currently a potential value trap.

The company has performance potential based on its GF Score of 60. While it received moderate ratings for profitability, financial strength and value, growth and momentum ratings were low.

With a 12.27% stake, Richard Pzena (Trades, Portfolio) is Newell Brands’ largest guru shareholder. PRIMECAP Management (Operations, Portfolio) and Jefferies Group (Operations, Portfolio) also own the shares.

Portfolio Composition

Icahn did not make any other adjustments to his portfolio. Its top five holdings are Icahn Enterprises LPIEP (IEP, Financial), CVR Energy Inc. (CVI, Financial), FirstEnergyFE Corp. (FE, Financial), Occidental PetroleumOXY Corp. (OXY.WS, Financial) warrants and Southwest Gas.

The guru’s stock portfolio of $22.03 billion, which is made up of 17 stocks, is most heavily invested in the energy sector with a weight of 85.14%.

Disclosures

I/we have no positions in any of the mentioned stocks, and have no plans to buy any new positions in the mentioned stocks within the next 72 hours

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