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Carl Icahn Icahn has made a name for himself as an activist investor, and he is one of the most successful investors in the U.S. Like Warren Buffett, Carl uses a strategy based on the Graham and Dodd tradition of finding undervalued stocks. However, unlike Buffett, Icahn becomes actively involved in the companies he invests in, aiming to improve their business and value.
This past quarter, Icahn sold a large stake in one stock that quadrupled in little over a year. Read on to find out more.
Carl Icahn's most recent moves
This past quarter Icahn bought shares in four positions and sold 20% of one of his top-performing holdings, Netflix .
Icahn first purchased Netflix in late 2012 for an average price of $58. One part of Icahn's strategy is to try to get the undervalued companies he owns to be acquired. He explained this part of his strategy as follows:
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During the next several years, we see a favorable opportunity to follow an activist strategy that centers on the purchase of target stock and the subsequent removal of any barriers that might interfere with a friendly purchase offer from a strong buyer. Alternatively, in appropriate circumstances, we or our subsidiaries may become the buyer of target companies, adding them to our portfolio of operating subsidiaries, thereby expanding our operations through such opportunistic acquisitions. We believe that the companies that we target for our activist activities are undervalued for many reasons, often including inept management. Unfortunately for the individual investor, in particular, and the economy, in general, many poor management teams are often unaccountable and very difficult to remove.
Icahn was reportedly interested in getting the company acquired by Apple, Amazon, or Microsoft though an immediate obstacle was put in his path when the company implemented a "poison pill" to make a hostile acquisition costly.
However, an acquisition wasn't needed for Icahn to profit, as the stock has risen 400% since then on the back of strong subscription growth and the popular original series House of Cards. Following the huge jump in share price, Icahn backed off. Last year Icahn sold half of his stake for an $800 million profit. At the time, he said: "We like Reed Hastings. I told him when a guy makes me 800 million bucks, I don't punch him in the mouth."
Icahn also commented, "I have learned that when you are lucky and/or smart enough to have made a total return of 457% in only 14 months it is time to take some of the chips off the table."
While Icahn's stake is no longer up so much, this quarter he sold another 353,000 shares -- a fifth of his position. He still owns 1.4 million shares, which make up 2% of his portfolio, and 2.3% of Netflix overall.
Netflix's stock is down about 11% for the year as the company's subscriber acquisitions have slowed versus a year ago, content costs are rising quickly, and international expansion is eating away at profits.
Fool contributor Brian Nichols recently picked Netflix as his top stock to buy today, as he believes Netflix's technology and knowledge of subscriber preferences will enable Netflix to make smarter content purchases than the competition and also help it develop the original programming that essential to attracting new subscribers.
Icahn will likely continue to slowly sell off his stake in the company going forward as he redeploys capital to new ideas with a better risk-reward ratio. You can read about Icahn's top buys last quarter here.
Learning from the greats
While some people blindly follow the moves of other investors, it is good to remember that the greatest investors in the world also make mistakes. It is worth taking the time to study their positions and learn from them.
The article The Only Stock Carl Icahn Sold Last Quarter originally appeared on Fool.com.
Dan Dzombak can be found on Twitter @DanDzombak, on his Facebook page DanDzombak, or on his blog where he writes about investing, happiness, Steve Jobs' secret to success in life, what is success in life, the NY Lottery, and the Fortune 500. He has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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