New HBO documentary highlights the life and career of Wall Street’s most fearsome investor, Carl Icahn
He’s one of the shrewdest investors in America, but according to Carl Icahn, capitalism is broken.
The 86-year-old billionaire financier points to his own $16.6b fortune as evidence: ‘Frankly I made this money because the system is so bad, not because I’m a genius.’
Icahn is the subject of a new HBO documentary titled, Icahn: The Restless Billionaire, which tracks the supremo’s life from his modest beginnings as a Queens-born boy who paid for his Princeton education by playing poker before dropping out of med school to become one of the most fearsome investors on Wall Street.
For the last 50 years, Icahn, 86, has loomed large as a powerful and controversial figure in corporate America.
He is capable of moving markets with a single tweet. His high-profile 2013 investment in Apple instantly raised the value of its stock by $17billion – a phenomenon known as ‘The Icahn Lift.’
As a camera pans across his plush New York City home office, the lens picks up on a notebook resting on the desk titled, ‘People who I want to punch in the face.’ Next to it, a custom nameplate reads: ‘Master of the Universe.’
Icahn is known to be tough. Intimidating. Relentless. As a child, his mother said he had the spirit of Genghis Khan. His wife Gail, says he can be ‘a bull dog’ when he sets his mind to something.
The late T. Boone Pickens said ‘he’s about smooth as a stucco bathtub.’
The Wall Street iconoclast is infamously known for his hostile takeovers of blue-chip companies like Xerox, TWA, Texaco, Herbalife and Marvel Comics and well-known investments in Netflix, Ebay, Lionsgate and Time Warner, US Steel Corps and Dell Technologies.
He calls himself a ‘shareholder activist’ and is every CEO’s worst nightmare.
Carl Icahn, 86, is known as an ‘activist investor’ which means he uses his considerable shareholder stake in a corporation to put pressure on its management and force change as he sees fit. His goal is to boost profits for himself and fellow stockholders of the company. But detractors say that he’s a ‘corporate raider’ who enriches himself at the harm of the company and its employers
Icahn is known to be tough, relentless and intimidating. As a child, his mother said he had the spirit of Genghis Khan. His wife Gail, says he can be ‘a bull dog’ when he sets his mind to something
Icahn was born an only child to a family with modest means and grew up playing basketball with the Gotti brothers on the streets of Queens. He taught himself poker to afford his room and board at Princeton. After dropping out of med-school, he took his skill with numbers to Wall Street where he eventually became known as a ruthless foe to CEOs and friend of shareholders
But to his detractors, Icahn is a bloodsucking ‘vulture capitalist,’ and ‘corporate raider,’ who enriches himself at the expense of employees and the better interest of the company. .
Nothing gets his hackles up quite like an overpaid, incompetent CEO that lacks accountability – and leaves everyman investors in the lurch.
The combative moneyman thinks C-suite executives are more akin to country club committees that business. ‘They spend no time thinking about the company. They’re collecting their fee and they’re playing golf all day,’ said CNBC journalist, Scott Wapner to HBO.
Rather than ‘corporate raider,’ he much prefers to consider himself an advocate and insists that everything he does is good for his fellow stockholders.
‘It’s sort of colorful term, ‘corporate raider,’ but it’s far from the truth,’ he tells HBO. ‘It’s the opposite of what we do. We bring things to the party, we don’t raid them and take them out. Activist or raider, I haven’t changed what I’ve done one iota. Call me whatever you want.’
As an ‘activist investor,’ Icahn focuses on purchasing large quantities of stock in undervalued companies with the goal of increasing their worth. ‘You have to buy things where the rest of the world are looking at you and thinking you’re a little bit crazy, you’re going against the trend,’ he says.
After amassing large stakes in the undervalued company, Icahn then weaponizes his position to get seats on the board, so he can enforce change as he sees fit.
Sometimes this means huge layoffs across the company, or adjustments in the structure of operations – but most of the time it means massive changes in upper management.
If they refuse, he will do whatever it takes to browbeat them into submission. He will threaten executives with a shareholder revolt, undertake massive PR campaigns to sway public opinion and run his own alternate slate of directors at annual board meetings. For Icahn, waging proxy battles is sport.
Identifying opportunity, imploding from within, and rebuilding companies stronger is a strategy that has made him fabulously rich, (he’s ranked 43 among the world’s richest people) while also padding the pockets of small-time investors.
His singular goal is to boost shareholder profit. He argues that what’s good for himself as a majority stakeholder, is also good for small stockholders.
Bryan Burrough, author of Barbarians At The Gate told HBO: ‘He has helped stockholders quite a lot, including plumbers and teachers whose pension funds, fund their retirement. So this is not just for hoity toity big time investors.’
To prove the point, Icahn Enterprises LLP stock has increased 1,931% since the year 2000, ‘that’s when we really started getting into the activism,’ he tells the filmmaker. By comparison the S&P only increased 324% in that same time period. ‘The proof is in the pudding.’
The film tracks Icahn’s career highlights from his first corporate takeover in 1978 when he took a controlling stake in the appliance company, Tappan – to one of his largest failures: the eventual bankruptcy of Trans World Airlines in 1985
Icahn believes that capitalism is broken. ‘Frankly I made this money because the system is so bad, not because I’m a genius.’ He says we exist in a ‘corporate welfare’ state. ‘You have levels and levels of vice presidents in corporations that really actually produce nothing,’ he says in old archival footage. ‘It’s survival of the unfittest’
Icahn insists that everything he does is good for his fellow shareholders. Finance writer, Bryan Burrough told HBO: ‘He has helped stockholders quite a lot, including plumbers and teachers whose pension funds, fund their retirement. So this is not just for hoity toity big time investors’
Icahn’s age old gripe with CEOs is that he believes they have grown fat at the expense of investor money.
He says we exist in a ‘corporate welfare’ state. ‘You have levels and levels of vice presidents in corporations that really actually produce nothing,’ he says in old archival footage. ‘It’s survival of the unfittest.’
Sound familiar? That’s because the legendary moneyman was part inspiration for Gordon Gekko’s infamous ‘greed’ speech in the 1987 film, Wall Street. The iconic scene which lambasts ‘bureaucrats, with their luncheons, their hunting and fishing trips, their corporate jets and golden parachutes’ was informed by talks that director Oliver Stone had with Icahn while writing the script.
‘He was telling us how it was necessary to attack these companies because they take profit for the executives and they don’t care about the shareholders,’ recalls Stone of his meeting with Icahn. ‘Of course there is some truth to that but, nonetheless, Gordon Gekko is also out for himself.’
Herein lies the great complexity of Carl Icahn: he is at once greedy and ruthless while at the same time a Robinhood-figure who advocates for smaller shareholders.
Born during the Great Depression, Icahn was the only child of a demanding schoolteacher mother, and a father who was a cantor at the local synagogue.
He grew up on the streets of Far Rockaway, Queens, where he played basketball with the Gotti brothers.
As a child, Icahn was constantly told that he possessed ‘absolutely no talent,’ and while his parents bragged about him publicly, they would berate him privately.
One of the more compelling moments in the doc is when the financier opens up about his ‘stormy’ relationship with his ‘egomaniac’ mother who demanded perfection, and his father whom he says: ‘I was never close to him. I never respected him or admired him.’ (It didn’t help either, that he suspected him to be a communist).
For years, Icahn’s father never bothered to ask what he did for work. ‘Even when I went on Wall Street and was making the money. He never tried to have me explain it,’ he said while choking back tears. ‘I still cry about that.’
‘I was never really happy in that whole environment, so I really wanted to get out of there.’
Icahn was a natural student with possessing intellect. His parents agreed to pay for his college tuition if he was accepted into Yale, Harvard or Princeton. It was a great surprise to everyone when he was accepted to all three, ‘because nobody ever got in from Far Rockaway High School.’ None were more surprised than his own parents, he laughed.
In order to pay for his room and board at Princeton where he majored in philosophy, Icahn became a self-taught poker prodigy.
He was working as a cabana boy in Atlantic City when a group of New Jersey business men invited him to play cards. ‘They wiped me clean,’ he said. Determined to not make the same mistake twice, Icahn checked out three poker books from the library – he walked away one week later, $800 richer.
‘Activist or raider, I haven’t changed what I’ve done one iota,’ he tells the doc. ‘Call me whatever you want’
The proof of his skill is in the numbers: Icahn Enterprises LLP stock has increased 1,931% since the year 2000, ‘that’s when we really started getting into the activism,’ he tells HBO. By comparison the S&P only increased 324% in that same time period
Icahn’s critics who accuse him of running companies into the ground for his own financial gain are quick to remember his role in Trans World Airlines bankruptcy. His reputation as a ‘corporate raider’ was cemented when he acquire the company through a leveraged buyout in 1985. After massive layoffs, TWA holding the bag for $540million debt, while he ran off with $469million for his personal coffers
After college, Icahn pursued his mother’s dream of entering medical school but dropped out a number of times before he finally quit to join the military. As he saw it there were two options: face the ire of her disappointment, or enter the Army.
He spent most of his time in uniform playing poker and left the Army with $25,000 in winnings. Using his talent for numbers, Icahn started his career as a stockbroker for Dreyfus in 1962. ‘And I’m making a fortune, I’m making all this money. I bought a Galaxy convertible, I had a beautiful girlfriend.’
Then the market dropped out one year later and the novice banker was broke. ‘I don’t know which one went first, the Galaxy or the girlfriend,’ laughed Icahn. ‘You always pay for hubris.’
From there, the film tracks Icahn’s career to his first corporate takeover in 1978 when he took a controlling stake in the appliance company, Tappan, which had been trading at $7 per share. Within seven months, Icahn forced the company to sell itself to competitor Electrolux and the stock value rose to $18 per share. The deal doubled Icahn’s personal investment, earned him a cool $2.7million profit and padded the pockets of shareholders too.
But there have been some big career missteps along the way. Icahn’s critics who accuse him of running companies into the ground for his own financial gain are quick to remember his role in Trans World Airlines bankruptcy and closure.
He acquired the company in a leveraged buyout in 1985 and began systematically selling off its assets to repay the loans. He cut down on overhead with massive pay cuts which resulted in strikes that grounded the airline. Protesters stood outside his Bedford, NY compound where he put his foot in his mouth by accusing their leaders of lying to them.
His reputation as a ‘corporate raider’ was sealed when he left TWA holding the bag for $540million debt, while he ran off with $469million for his personal coffers.
He admits in the documentary, ‘I made a lot of mistakes.’ And says that his line of work can often result in ‘collateral damage.’
‘There’s no question,’ he says his line of work is ‘creative destruction.’ But ultimately, he believes that his corporate takeovers lead to changes that make companies more productive and ‘create more jobs in the macro picture.’
He points to Icahn Enterprises LLP to prove his point. Icahn Enterprises is his conglomerate holding company that owns minor and major interests in major corporations in a variety of industries. It employs over 20,000 people, has more than $10billion in revenue and over $2billion in assets.
The film tracks his other greatest hits: in 1989, Icahn was responsible for the largest dollar transaction ever on the New York Stock Exchange when he sold his considerable stake in Texaco for $2billion. He also had his hand in businesses such as: RJR Nabisco, Blockbuster, Time Warner, Lear Corporation, US Steel, Hertz, Gannett, Pep Boys, PayPal, and a portfolio of Las Vegas casinos.
As for what keeps him motivated, his wife Gail says, ‘It isn’t money, strangely enough. He just becomes obsessed on something and he just keeps going and going until he gets what he wants.’
Critics say that Icahn is exclusively motivated by money. In old footage featured on the doc, Icahn tells the interviewer: ‘Part of my values is to make money and I cant change my values. A great painter loves to paint. What do you do, criticize him because he likes to paint?
Today Icahn says he’s driven by competition and winning. As a diehard history buff, he compares himself to the explorers like Cortez. ‘They believed in going for the gold. But I think the actual finding and doing is so much more exciting than having money.’
Money, he says, is ‘not all what it’s drummed to be.’
Icahn served as a special advisor to former president Donald Trump on issues relating to regulatory reform during his presidency. In a press release, Trump said of his longtime pal: ‘Carl was with me from the beginning and with his being one of the world’s great businessmen, that was something I truly appreciated. He is not only a brilliant negotiator, but also someone who is innately able to predict the future, especially having to do with finances and economies’
Carl Icahn’s wife of 22 years, Gail, began working for her husband as a secretary in 1978. They finally got married in 1999. Sitting in their resplendent toile chintz dining room in East Hampton, Gail tells filmmakers how she was originally hired through an employment agency. ‘This employment agency said, ‘I have this guy, I’ve had a hard time keeping people with him.’ She adds: ‘In the first two weeks, I was ready to quit’
Today Icahn says he’s driven by competition and winning. As a diehard history buff, he compares himself to the explorers like Cortez. ‘They believed in going for the gold. But I think the actual finding and doing is so much more exciting than having money.’ Money, he says, is ‘not all what it’s drummed to be’