Carl Icahn Bets Big on 23 Stocks

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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