Carl Icahn’s hedge fund plunge worst since 2008
Billionaire investor Carl Icahn, who briefly flirted with a stint as Donald Trump’s Treasury secretary, posted his worst investment losses since the financial crisis as declines in oil and other commodity prices continued to drag on his portfolio.
The 80-year-old investor’s hedge fund lost 18% last year as investments in companies such as Chesapeake Energy Corp. were crushed by fears a global economic slowdown could crimp demand for oil, copper and other commodities. That follows a loss of 7.4% in 2014.
“2015 was a challenging year, to say the least,” Keith Cozza, chief executive officer of Icahn Enterprises, said in a conference call Monday. “We are quite disappointed in our results.”
The billionaire posted a loss of 36% in 2008 due to the mortgage meltdown. He came back strong, however, with a 33% gain in 2009, a 15% rise in 2010 and a 35% gain in 2011 — a year when most hedge funds lost money. Since its founding in 2004, the fund, which also shorts stocks, has returned 9% annualized, the company said.
Icahn’s 2015 losses come as U.S. ratings agency Standard & Poor’s has warned it may cut Icahn Enterprises’ credit rating to junk status due to its heavy commodity sector losses. S&P placed the company’s unsecured debt on “CreditWatch with negative implications,” the agency said in a February statement.
S&P warned the company has been spending cash at a time when it has debts coming due, including $1.175 billion in senior unsecured notes in January 2017.
Icahn continues to spend on new investments, including $1 billion to buy auto repair chain Pep Boys, announced late last year. Monday, auto supplier Federal-Mogul said Icahn also agreed to pay $7 a share to buy up the stock it does not currently own.