Companies spooked by the Carl Icahn name don’t look like getting respite any time soon. The legendary hedge fund manager is handing his son Brett and David Schechter $3 bn to invest in listed companies, according to a July regulatory filing.
The younger Icahn and Schechter have already successfully managed $300 mn for Icahn senior. The move allows the two younger men to further prove their ability to the 76-year-old hedge fund icon.
Brett started working for Icahn Enterprises 10 years ago as an analyst after an internship at Goldman Sachs and time directing some small art films. Schechter moved to the company from Citigroup, where he worked in a division that invested in distressed properties.
The elder Icahn gave his son and Schechter responsibility for the $300 mn, called the Sargon Portfolio, in April 2010. Investments were in companies of less than $2 bn market cap.
According to the New York Times, the fund returned 50 percent in 2010 and gross cumulative returns of 96 percent by June 2012.
Both Brett and Schechter are on the board of directors of a number of companies in which Icahn Enterprises has invested. Carl and Brett are said to be competitive, betting thousands of dollars on chess games Brett often wins.
The younger Icahn has large shoes to fill: Carl Icahn is estimated to be worth $14 bn after more than 30 years of activist investing.
Icahn Capital returned outside investor money last year, with Icahn stating in a letter to partners that given the market run-up over the last two years, economic concerns and Middle East tensions, he did not wish ‘to be responsible to limited partners through another possible market crisis’.
Another factor may have been regulatory changes that required greater disclosure by hedge funds, according to media reports.
Brett may still fail to show the promise Carl wants in someone to eventually take over the business. If so, the results the son has delivered on smaller funds could prove attractive to outside money, should he eventually go out on his own.
