Icahn Versus Buffett: Does the Man Matter More Than the Business?
Here’s a frivolous but entertaining thought exercise: Would you rather own a stake in Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRKA)(NYSE:BRKB) or Carl Icahn’s Icahn Enterprises L.P. (NASDAQ:IEP)?
For many market watchers, the answer is simply a matter of preference — a question of which person they would rather stand behind rather than which company they would actually like to own a share of. Both of the businesses, two of the most successful conglomerates on the face of the planet, owe much of their success to the luck and savvy of their principals. Each a self-made billionaire in their own right, Buffett and Icahn are too well known and too successful to disassociate their personal reputations from the businesses they lead.
Although they both generally prescribe to a philosophy of value investing, there are some pretty fundamental differences in the way each investor approaches his work. For example, Icahn is a notorious contrarian and activist investor. He is an outspoken critic of anybody he thinks is running a company poorly and is not afraid to use his ownership stake in a business to shake people out of board positions. Icahn has a penchant for finding fixer-uppers and helping fix them.
Buffett, on the other hand, likes to invest in companies that are structurally sound and already have good management. Buffett’s annual letters to shareholders are usually dense with praise for the executives that run the myriad businesses owned by Berkshire. Where Icahn is known to enter a position in a company with the aim to do something with it, Buffett generally invests with the simple aim of holding on to the stock for the long term.