The company controlled by renowned activist investor Carl Icahn posted losses on its investment activities, dragging the company into the red for the quarter. Shares of Icahn Enterprises (NASDAQ: IEP) traded down 4% as of 1 p.m. ET following release of the results.
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Tough time for investors
Icahn Enterprises is a holding company that wholly owns stakes in businesses in the energy, automotive, food packaging, real estate, home fashion, and pharma industries. The company reported a loss of $0.79 per share in the quarter on revenue of $1.87 billion. There was no consensus earnings estimate, but the revenue figure was down 24% year over year and missed Wall Street expectations by about $750 million.
Ichan Enterprises said that indicative net asset value of the portfolio decreased by $336 million compared to the end of 2024. The decrease was primarily due to a $224 million loss in the investment segment, driven primarily by losses in the healthcare sector.
The company did declare a dividend of $0.50 per share for the quarter. At an annualized rate, the $2 dividend represents about 23% of the stock’s current trading price.
Is Icahn Enterprises a buy?
Icahn Enterprises, like Berkshire Hathaway and other companies with large investment portfolios, is required to mark its investments to market every quarter. Assuming those investments are not sold, it is not a material loss, and it can be ignored by investors.
But the overall health of the portfolio can’t be ignored. Icahn Enterprises’ collection of investments has been under pressure for some time now, and the stock itself has been pressured by lingering questions about the sustainability of the dividend.
Icahn has a well-earned reputation as a stock picker, but until there is more clarity about the health of this business, investors would be wise to steer clear of Icahn Enterprises.
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Lou Whiteman has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
