Icahn Enterprises Q4 2024: Contradictions in Portfolio Positioning, Real Estate Valuations, and Investment Strategies

These are the key contradictions discussed in Icahn Enterprises L.P.'s latest 2024 Q4 earnings call, specifically including: Portfolio Positioning and Fund Net Short Status, Real Estate Segment Valuation and Indicative Net Asset Value, Investment Strategy and Fund Positioning, and Real Estate Valuation Methods:



Decline in NAV and CVI Performance:
- Icahn Enterprises reported a decrease of $223 million in NAV from the third quarter of 2024, driven by a $286 million decline in CVR Energy (CVI).
- The decline in CVI was attributed to weakened crack spreads in the fourth quarter and the company's decision to cut its dividend in response to reduced refining margins and market conditions.

Real Estate Segment Surge and Property Sales:
- The Real Estate segment increased by $292 million in the quarter, primarily due to a combination of property sales and a change in valuation methodology.
- The increase was largely due to the sale of certain properties at a price that exceeded their book value, leading to a revaluation of the remaining assets.

Hedge Fund Performance and Positioning:
- The hedge funds ended the quarter with a net notional long of 22%, adjusting to 35% net long after excluding refining hedges.
- This shift was a result of the funds taking off refining hedges when crack spreads declined, and then putting them back on as spreads improved.

Energy Segment's Quarterly Performance:
- Energy segment EBITDA was $99 million for Q4 2024, down from $204 million in Q4 2023.
- The decrease was driven by reduced throughput and lower crack spreads, leading to a decline in refining margins per throughput barrel to $8.37 compared to $15.01 in the prior year quarter.

Investment Segment and Value Creation:
- Icahn Enterprises emphasized significant value creation potential in its top investment holdings, including SWICs, AEP, Caesars, IFF, and Bausch.
- These investments are expected to benefit from strategic initiatives, regulatory improvements, and under-appreciated asset values, with a focus on closing ROE gaps and enhancing shareholder returns.