As the market continues to juggle high interest rates and inflation and the third quarter prepares to come to a close later this week, a couple stocks in Carl Icahn (Trades, Portfolio)’s equity portfolio have retreated near their 52-week lows.
In contrast, after returning -18.11% in 2022, the S&P 500 Index has gained around 13% so far this year.
The guru’s Florida-based firm, Icahn Capital Management, is known for taking activist positions in struggling companies and working with management to improve profitability as well as unlock value for shareholders.
The second-quarter 13F filing showed his equity portfolio consisted of 15 stocks, which was valued at $15.48 billion. Icahn’s holdings have had mixed performances so far in 2023, with seven of the positions declining.
As of Sept. 26, Icahn’s stocks that have collapsed to near their lowest prices in a year are Illumina Inc. (ILMN, Financial) and FirstEnergy Corp. (FE, Financial).
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Illumina
Illumina’s (ILMN, Financial) shares have fallen around 31% over the past year and nearly 36% year to date. The stock is currently 1.08% above its annual low of $127.37.
During the second quarter, the guru left his 430,000-share investment unchanged. It has a weight of 0.52% in the equity portfolio. GuruFocus estimates he has lost 38.80% on the position so far.
The San Diego-based biotech company, which focuses on genomics, has a $20.41 billion market cap; its shares were trading around $128.96 on Tuesday with a price-book ratio of 3.11 and a price-sales ratio of 4.51.
The GF Value Line suggests the stock is a possible 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.
At 77 out of 100, the GF Score indicates the company is likely to have average performance going forward. While it received a high profitability rating, the growth, value, financial strength and momentum ranks are more moderate.
Illumina also has a predictability rank of one out of five stars. According to GuruFocus research, companies with this rank return an average of 1.1% annually over a 10-year period. However, the rank is on watch as a result of a decline in revenue per share over the past 12 months.
Of the gurus invested in Illumina, Baillie Gifford (Trades, Portfolio) has the largest stake with 8.84% of its outstanding shares. The Vanguard Health Care Fund (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Ron Baron (Trades, Portfolio), Jerome Dodson (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio) and several other gurus also own the stock.
FirstEnergy
Shares of FirstEnergy (FE, Financial) have tumbled 7.33% over the past year and nearly 16% year to date. The stock is currently trading 2.61% above the annual low of $34.68.
The investor curbed his stake by 25.71% during the second quarter to 14.09 million shares. Occupying 3.54% of the equity portfolio, it is Icahn’s fifth-largest holding. GuruFocus data shows he has gained an estimated 11.92% on the investment to date.
The electric utility company headquartered in Akron, Ohio has a $16.95 billion market cap; its shares were trading around $35.42 on Tuesday with a price-earnings ratio of 44.83, a price-book ratio of 1.93 and a price-sales ratio of 1.57.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Score of 67 warns the company has poor performance potential on the back of moderate profitability, momentum and value ranks and low ratings for growth and financial strength.
It also has a one-star predictability rank, which is on watch due to a combination of declining revenue per share over the past several years as well as the issuance of new long-term debt.
With a 2.46% stake, Icahn is the company’s largest guru shareholder. FirstEnergy’s stock is also being held by First Pacific Advisors (Trades, Portfolio), Steven Romick (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Private Capital (Trades, Portfolio) and John Hussman (Trades, Portfolio).
