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Carl Icahn Bets Big on 23 Stocks

Stocks in this article: NAV AMLN CHK CMC ENZN HAIN LWSN MSI

BOSTON ( TheStreet) -- Activist-investor Carl Icahn, founder of Icahn Capital, held a concentrated equity portfolio of only 23 stocks at fourth-quarter's end. Icahn's bets on pharmaceutical and biotechnology companies are heavy. Here's a snapshot of the seven companies in which the famed investor amplified his stake.

Amylin (AMLN), +1.4 million shares
Chesapeake Energy (CHK), +4.2 million shares
Commercial Metals (CMC), +1.2 million shares
Enzon (ENZN), +1.9 million shares
Hain Celestial (HAIN), +311 thousand shares
Lawson Software (LWSN), +422 thousand shares
Motorola Solutions (MSI), +2.0 million shares

Icahn added one new position, Navistar International (NAV), to his portfolio, purchasing 9,326 shares. Navistar makes commercial trucks, buses, diesel engines, military vehicles and chassis. Its stock has soared 65% in the past 12 months.

>>> View Carl Icahn's Portfolio

Other hedge funds that own sizable stakes of Navistar include Owl Creek Asset Management, D.E. Shaw and Appaloosa Management.

Navistar's adjusted fiscal fourth-quarter earnings fell 66% to 61 cents, beating analysts' consensus estimate by 3.7%. Revenue, at $3.4 billion, exceeded the consensus by 3.9%. Navistar's quarterly gross margin narrowed from 23% to 20% and its operating margin contracted from 6.2% to 4.3%. The cash balance declined modestly to $1.2 billion, converting to a quick ratio of 1.1, and total debt decreased by 10% to $4.9 billion. However, Navistar is running a shareholders' deficit of $973 million. That figure has decreased 46% in 12 months as profitability resumed. The company will disclose fiscal first-quarter results in March.

During the latest quarter, performance was hampered by ratification of a new United Auto Workers contract, which entailed $10 million of one-time separation and layoff costs, but which should assist Navistar in achieving a cost-effective operating structure going forward. The trucking segment's sales multiplied from $5 million to $86 million, an encouraging sign since the trucking market has been in a three-year trough, according to management. The company also booked sizable orders in its military segment for mine-resistant and armored vehicles.

Navistar, which has a market value of $4.7 billion, is a cyclically-dependent company. It has a beta value of 1.2, tending to magnify market movements. Of analysts covering Navistar, 12, or 67%, advocate purchasing its stock, four say to hold and two recommend selling it. The stock has a median target of $72.60. Here is a closer look at sell-side ratings and targets:

Sterne, Agee & Leach, Buy, $96
Jefferies, Buy, $75
Goldman Sachs, Neutral, $71
Deutsche Bank, Buy, $71
JPMorgan, Underweight, $66

Here is a snapshot of the stock's valuation:

Forward Earnings Multiple: 8.9 (52% Industry Discount)
Trailing Earnings Multiple: 22 (19% Industry Discount)
Cash Flow Multiple: 4.3 (74% Industry Discount)
Sales Multiple: 0.4 (76% Industry Discount)
PEG Ratio: 0.3 (70% Growth Discount)

-- Written by Jake Lynch in Boston.


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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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