Carl Icahn: Lost In A World He Predicted (MOT)(YHOO)(BIIB)(BBI)

Carl Icahn has evolved over the years, first rising to fame a "corporate raider", followed by an ill-fated journey into actual management at the helm of TWA and, most recently, as a kinder, gentler version of his old self: Icahn the "shareholder activist."

A piece in The Wall Street Journal looks at Icahn’s "week of mixed results." If Bristol-Myers Squibb’s offer to acquire ImClone succeeds, Icahn will earn an 80% return on his original investment in the company. He’ll walk away with a pretax profit of more than $300 million, but that will be more than offset by the beating he took last week on Biogen (BIIB) and the continued decline of WCI Communities.

What’s especially interesting is the reason Biogen dropped 28%: there are reports that the company’s Tysabri multiple-sclerosis drug may have caused two cases of brain infections. Since when does Icahn get involved in companies like that? v

And then there’s the Yahoo (YHOO) fiasco, but that’s a book unto itself. But looking at Icahn’s troubles with Yahoo, Biogen and WCI, it all looks so. . . random. So where does that leave Icahn? Lately, all over the place and with poor results. He’s bet big on mismanaged companies like Motorola (MOT) and, although the company has ceded to many of his demands, operational and stock price improvements have not followed. Ditto for Blockbuster (BBI), where Icahn has been on the board since 2005. What exactly is Icahn up to? As he rants with righteous indignation at the travesty that is corporate governance in America, most recently on his new blog, I can’t help but think that maybe Icahn has become preoccupied with battling incompetent and self-serving executives that it’s interfering with is ability to make money. His track record is still incredibly good but he’s had some very big flops of late — several of which Yahoo! outlined in an 8-K trashing him, pointing out that 11 of his 15 most recent investments had declined in value. Make that 12 of 16.

Part of the problem with the evolution of Icahn may be that many of the strategies that worked so well for him in his heyday of notoriety don’t work anymore. In the 1980s he made billions attacking bureaucracy at bad companies, warning that if they didn’t shape up soon, globalization would render them permanently irrelevant.

Icahn’s forecast has come true and similar companies he’s gotten involved with lately, including Lear, may well be at that stage of permanent irrelevance, too late even for a hawk like Icahn. Icahn won the intellectual battle against corporate gluttony and the CEO as benevolent dictator but, as a matter of practicality, many of the companies that didn’t make the changes he thought necessary in corporate America then are beyond repair now. Doing what he did then won’t work, for exactly the reasons he predicted it wouldn’t. And that’s leaving him lost as an investor.

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Zac Bissonnette