Carl Icahn, the corporate mogul who was brought down to earth

A few decades ago, Carl Icahn gained knowledge by reading the American author Theodore Dreiser. The billionaire businessman was drawn to two of Dreiser’s books, Financial and The Titanwhich describes the growth of industrialist Frank Cowperwood.

In financial trouble, Cowperwood’s enemies prepare to call the bank on his huge debts. But unknown to them, Cowperwood has a large reservoir that “could be drawn and fancied”. If he had been sent, Dreiser writes, “these men should have seen that he was strong and safe”. Cowperwood wins and Icahn says he learned a valuable lesson: always have a “war chest” of cash.

The 87-year-old is famous for his years of fighting shareholders and companies including Texaco, Trans World Airlines, Apple and McDonald’s. These wars have also changed the US financial markets by changing the way corporations are run, directing their management to the interests of large shareholders such as Icahn.

For almost half a century, the mere mention of his name has scared the heads of companies and moved the markets. But most of Icahn’s power comes from a little-known, little-traded public vehicle called Icahn Enterprises that has gone into obscurity.

This month, Icahn was besieged by a suspect named Nathan Anderson who, in a report published by his company Hindenburg Research, revealed the huge debt an investor had taken against his Icahn Enterprises shares. The revelations have revealed a shocking vulnerability in one of the world’s richest financial institutions. Icahn has vowed to “fight back”, but his intentions to protect his empire remain a mystery.

In recent years, Icahn has bet heavily on the fast-rising stock market to protect his money from losses. Instead of building an emergency reserve, the sale will bring about $9bn in losses. When confronted with those losses last week, one analyst Icahn admitted: “Maybe I made a mistake by not following my own advice in recent years.”

The crisis has shocked many Wall Street figures. “It’s one of those crisis moments where you go, ‘Holy shit, everything I thought about the other person was wrong,'” said the CEO of one major financial firm.

Bill Ackman, the billionaire entrepreneur with whom Icahn clashed in a famous battle over the future of the multinational advertising company, offered a more scathing assessment. “Icahn’s favorite Wall Street quote [is]: ‘If you want a friend, get a dog,’” Ackman wrote on Twitter. “In his long career, Icahn has made a lot of enemies. I don’t know if he has any real friends. He could use one here.”

Icahn was born to teachers in 1936, and grew up in a working-class New York neighborhood in Far Rockaway, Queens. After graduating from high school, he earned a degree in philosophy from Princeton University and earned a scholarship to support poker.

He briefly enrolled in medical school, but dropped out and joined the military before settling down as a stockbroker. In the late 1960s, a wealthy uncle bought Icahn a seat on the New York Stock Exchange, where he became an expert on “risk versus risk”, betting on promising businesses.

Icahn entered the public consciousness in the 1980s when he took over Trans World Airlines using money from junk bond king Michael Milken. He mercilessly sold off TWA’s stock for cash, and fought with unions, and became known as a “corporate destroyer”. This story helped inspire Gordon Gekko’s character in the film A wall The road.

In recent years, Icahn, who divorced his first wife and married his assistant, Gail, has moved his company from a high-rise overlooking Manhattan’s Central Park to Miami. He also worked closely with his older children, Brett and Michelle.

Brett helped realize successful bets on Apple and Netflix and was named his father’s successor. Michelle’s work at the Humane Society inspired Icahn to start a campaign against McDonald’s over its pet medication.

Icahn’s attack comes as he continues to fight against companies he feels are mismanaged. On Thursday, he joined the fight against Illumina, a company that makes machines that sequence human genomes. Icahn criticized Illumina’s management for reckless buying and asked shareholders to give their nominees three seats. He was able to chase Illumina’s seat, but failed to win two other seats, which would have helped him oust his incumbent. The latter underscores his enduring influence. But he is in the unrecognized territory.

This week, Icahn Enterprises fell 30 percent, adding to the slump that has cut the company’s value in half. It has cost Icahn billions and has led to the threat of “ordering” from immediate lenders.

Whether he succeeds may come down to a lesson he says he learned from Dreiser’s Cowperwood decades ago. Icahn told the Financial Times last week that he had billions sitting outside his car. If so, the “war chest” would give him one hand to play with.

Additional reporting by James Fontanella-Khan

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