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Wednesday, March 12, 2008

Personal Finance QuickTake: Carl Icahn

Carl Icahn is a pretty interesting guy. Along with Henry Kravis of KKR, he was one of the most feared names in Industry. The shear mention that Carl Icahn was "on the phone to talk to you", would scare most CEOs into writing him a check to go away!

60 Minutes had a great piece on him and how he makes his money, and as one of the Top 20 richest people on the planet, he does know a thing or two about how to make money. He might not make companies cower with just a call anymore, but he does know how to rattle his sabre.

Icahn was one of a handful of Corporate Raiders that bought up companies with little or no cash, loaded the company with debt and would then spin then off or tear them apart. Think Gordon Gekko from the movie "Wall Street". Icahn's famous takeover of TWA in 1985 is the stuff of legends. But the Airline was stabilized and saved, at least for a time, but a lot of people were put out of work.

He is now known more as a Board of Directors worst nightmare. In an era of huge CEO pay packages Carl has the audacity to ask if they are worth it! And if doesn't get the answer he wants he isn't afraid to try and replace the Board themselves.

His recent fight with TimeWarner about their disastrous merger with AOL is a great example. He disagreed with the direction of the company, tried to force CEO Dick Parson to sell or spin off large portions of the company, and even though he lost got the stock moving enough to still make $300 Million in the process.

Like him, hate him or don't understand him, he is still fascinating and offers a great glimpse into what happens backstage at some of the largest companies in the world. And bigger isn't necessarily smarter!


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