Wall Street legends Carl Icahn and Warren Buffett have taken different approaches to Occidental Petroleum stocks in recent weeks.
Icahn was selling to get out of his long position in stocks. Buffett’s conglomerate Berkshire Hathaway has built a position worth billions.
In an interview Tuesday on CNBC’s “Closing Bell: Overtime,” Icahn said his decision to dump Occidental as oil prices hit multi-year highs illustrated the contrasting philosophies between him and Buffett.
“He’s a tough guy to disagree with. I mean, look at his track record,” the Icahn Enterprises founder and chairman said, alluding to the fact that many consider Buffett the greatest long-term investor of all. the temperature.
“I don’t know if we completely disagree. I think we’re in a different business to some degree with Warren. I’m an activist,” Icahn said. “I’m looking for a company that is, in my mind, vastly undervalued, like [Southwest Gas], and there is something I can do about it. That’s what I like to do. That’s why I come to work every day.”
Billionaires Carl Icahn and Warren Buffett.
Getty Images | CNBC(l)
While both men may seek undervalued stocks, Buffett is known for his patience and extended time horizon. “In fact, when we own shares in exceptional companies with exceptional leaders, our preferred holding period is forever,” Buffett wrote in his 1988 letter to Berkshire shareholders, as he spoke of the company beginning a position in Coca-Cola.
On the other hand, Icahn said the positions he builds are less about building a portfolio to hold for the long term.
“We wait for the moment to strike and of course I might have made a lot more money if I had kept the apples and the Netflixs that we bought, but we bought them and made a big profit “, said Icahn.
Icahn told CNBC in 2016 that he sold Apple entirely. It’s the same year that Buffett’s Berkshire started buying shares of the iPhone maker. It has since become one of Buffett’s most successful investments on paper, rivaling the aforementioned ownership of Coca-Cola.
Icahn started buying shares of Occidental in 2019, around the time he was engaging in a bidding war for Anadarko Petroleum.
“We made almost $2 billion, actually, in stocks. And we as an activist, I think we did a really good thing,” said Icahn, who added that he still had a “complicated cover” on Occidental.
“I own the warrants and I’m shorting stocks against him, and I’m selling short against him,” Icahn said. “It’s my old days. I was an arbitrageur for a while, and I love playing with these derivatives, so it’s one of the games I’m into.”
Icahn also told CNBC on Tuesday that he thinks a recession or “or worse” could be on the way.