As simple as it sounds, one of the biggest differences between billionaire investors and the average investor is that the average investor hates uncertainty, while billionaire investors view uncertainty as an opportunity to make money.
With sky-high inflation, the Fed determined to cool it any cost, trouble in the housing market, wars, and plenty of other destabilizing issues, this is actually a billionaire's paradise for investing.
Yesterday, we shared how Warren Buffett's Berkshire Hathaway (BRK.A) was investing.
In today's edition of Billionaire Snapshots, we're going to share a recent investment made by Carl Icahn.
But before we jump into that, here's a quick background if you aren't familiar with him.
Carl Icahn
Founder of Icahn Enterprises L.P.
Known as a corporate raider and activist investor
Net worth of $18.7 billion
Famous quote: “Some people get rich studying artificial intelligence. Me, I make my money studying natural stupidity.”
Icahn had a meandering path toward investing, graduating from Princeton in 1957 with a degree in philosophy and studying medicine at New York University.
He then dropped out and joined the Army.
After being discharged, he became a stockbroker and joined the Dreyfus Corp., later leaving to trade stock options at another firm.
Eventually, Icahn borrowed $400,000 to purchase a seat on the New York Stock Exchange (NYSE) for his new brokerage firm, Icahn and Co.
He then became interested in buying stocks in anticipation of takeover bids, initiating a takeover himself of the kitchen stove manufacturer Tappan Co. in 1978.
He built a reputation as a feared corporate raider in the 1980s, making hostile takeover bids for companies either to influence how the businesses were run or to resell his shares for a profit.
In the last decade, Icahn has owned shares of Netflix Inc. (NFLX) and Lyft Inc. (LYFT). His approach can range from friendly to confrontational — it depends on the management team's response to his suggestions.
Icahn recently reported an 8.5% stake in beverage-can maker Crown Holdings Inc. (CCK), which operates 200 factories in 40 countries.
In its Q3 earnings report, Crown Holdings reported a decrease in revenue from $348 million in Q3 2021 to $297 million in Q3 2022.
The company said it had issues with too much inventory on hand and that challenges from inflation, energy prices, interest rates, and currency headwinds have only increased since its last reported earnings in mid-July.
Icahn believes that the company can do two things to increase shareholder value: sell non-core businesses and buy back shares.
Crown Holdings purchased the transit packing company Signode for $3.9 billion in 2017, runs an aerosol and food-packaging business, and owns a minority stake in a European food-can business. By selling non-core assets, Icahn believes there will be more opportunity to focus on the beverage can business.
He then wants to see the company use some of that money to repurchase stock.
Icahn may not be interested in a management change for now, but we'll see how it plays out if they don't listen to his suggestions.
Putting CCK under the TradeSmith microscope, its investment risk is medium, as it has a Volatility Quotient (VQ) of 25.84%.
VQ Level Breakdown:
Up to 15% = Low Risk
15%-30% = Medium Risk
30%-50% = High Risk
50% and above = Sky-High Risk
The stock is in our Health Indicator Red Zone, making it currently a company to stay away from, but it's still worth monitoring to see if Crown Holdings listens to Icahn and if our tools provide an Entry Signal on CCK.
The truth is, whether you like Icahn or not, you can't deny the guy is straightforward in what he wants to do — make money.
But just as important as watching what billionaire investors are buying is knowing what they are selling.
They don't want any ticking time bombs in their portfolios… and neither should you.
Because if you were alerted when a billionaire sold a stock you owned, an action that could send the price down, we're sure that's a warning you would want to receive as soon as possible.
Unfortunately, “pre-crash activity” is invisible to 99% of traders and investors. Fortunately, that's about to change.
Thanks to years of backtesting and millions of dollars in research and development, you could have the ability to see “pre-crash activity,” alerting you to the biggest market moves.
And with that information, when you gather with your family and friends during the holidays and they share what a tough market we're in, you'll know that you have an edge over everyone else.
You don't have to be part of the 99% of traders and investors who this “pre-crash activity” is invisible for.
TradeSmith is not registered as an investment adviser and operates under the publishers' exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith's content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results.
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