Icahn has problems?

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Ethan Wu (0:36)

Thank Pushkin, Carl Icahn, Wall Street legend, corporate raider, one of the most respected men and most feared men on Wall Street. He's running into some trouble recently. His investment company, Icahn Enterprises, the stock is down more than 50% this year after Icahn took an ill-advised bet against the US stock market. Today on the show, is Icahn going to be okay?

This is Unhedged, the markets and finance show from the Financial Times and Pushkin. I am reporter Ethan Wu, joined today in the New York studio by two guests, Robert Armstrong, US financial commentator, yo, and Ortenza Aliai, deputy corporate finance editor. Is that the right?

Ortenza Aliai (1:27)

That is right. I have the longest title at the FT.

Ethan Wu (1:30)

I'll call you Wall Street old guy whisperer. How about that?

Ortenza Aliai (1:33)

Oh, yeah. Or also one of the most feared people on Wall Street.

Ethan Wu (1:36)

Another one. Yeah, that's good.

We are here to discuss a little bit of Wall Street history that's not gone away. Carl Icahn is still in the news. But for listeners who maybe don't know the backstory, Rob, you've been around the block back in the old corporate raiding days. Tell us who this guy is.

Robert Armstrong (1:57)

Who's Carl Icahn? Carl Icahn age is 87 So he's been around Wall Street a long time and we were actually in the same class. At Princeton? At Princeton. That is not true.

Carl Icahn is an activist investor, the OG activist investor on Wall Street, famous for taking big stakes in companies, including Transworld Airlines, more recently Netflix, in between Herbalife. Who else? Or Tensa? Apple. So he buys these things, he makes a lot of noise and harasses them to do what he wants them to do. And then when they do it and their stock price goes up, if all goes well, he sells the company. And he's been doing this since the 80s.

He is at least in part the model for Gordon Gekko of Wall Street.

Ethan Wu (2:52)

Greed is good.

Robert Armstrong (2:53)

Greed is good. He is said to love the line, on Wall Street, if you want a friend, get a doll.

Although I will say he has a very strong reputation among journalists for picking up the phone when you call him.

Ethan Wu (3:09)

Yes.

Robert Armstrong (3:09)

And we want to encourage this among all sources.

Ethan Wu (3:13)

And someone who has been on the phone with him recently, Ortenza, you talked to him recently about his big hedge gone wrong against the US stock market.

Ortenza Aliai (3:21)

So that was... It was actually my colleague, Antoine.

Yeah, I was helping him run the data after the short seller report came out. But I just want to add to what Rob said on Icahn's history. So when things go bad for Icahn, no one feels sorry for him, right? Because he's sort of known for taking these big stakes in companies and then forcing them to fire people, cut costs. So when we were writing the news that things weren't looking too good, there was a lot of comments on the FT website saying, let me just pull out my small violin.

So no one is... There's a lot of short embroider.

Ethan Wu (3:56)

We said feared and respected, but not loved. He famously got into a live on-ear screaming match with Pershing Square's Bill Ackman on CNBC. And everyone just watched the fireworks.

It was fun. But you can't really say that this guy's got a lot of friends.

Robert Armstrong (4:09)

Let's get down to his problems though. He's got two problems. He's got a bad short bet.

And he's got this allegation that his holding company is economically unsustainable. Where do we want to start on those two?

Ethan Wu (4:21)

We should start with the short bet, because I think in many ways, this is the precursor to some of the problems he's having now with Icahn Enterprises. And Ortenza, you've done some very close reporting on this. About five years ago, roughly, Icahn takes out this huge bet against the US stock market. He's one of these classic guys in investing who thinks the sky is about to fall. The gains we have seen in the stock market, they're just not sustainable, and he wants to protect himself on the downside.