Activist Investor Carl Icahn divests stake in AIG

Last week, we heard the news about Warren Buffett adding another 75 million shares of Apple (AAPL) and increasing Berkshire Hathway’s stake in the tech giant to 5%.  Now, the absence of insurance giant American International Group (AIG) in the latest investor report published by activist investor Carl Icahn’s company is raising eyebrows. The report stirred up speculations that Icahn sold the 4.8% stake he owned in AIG.

AIG shares slipped modestly in early trading on Monday when media reports revealed the billionaire investor ended his two-year-long engagement with AIG. It is learned that Icahn divested the stock, valued around $2.56 billion, at the end of January or early February. Following the divestiture, Icahn’s representative on the AIG board hinted at not seeking re-election in the upcoming poll.

The AIG leadership has been under pressure from investors as the persisting softness in the company’s core business worsened in recent quarters despite assurances of a rebound. And, Icahn called for major structural changes, ranging from a split into two separate entities and a leadership change.

Icahn’s representative on the AIG board hinted at not seeking re-election in the upcoming poll

Though Icahn, who was AIG’s third largest shareholder, failed to push the split proposal, his intervention resulted in the resignation of former CEO Peter Hancock. Meanwhile, Icahn softened his demand for breaking up AIG, satisfied over the change of guard and the company’s turnaround program.

Indicating that the fiscal crisis is deep-rooted, AIG this month reported a 24% fall in first quarter profit, mainly due to catastrophe-related losses involving natural disasters. The lower than expected earnings and downbeat revenues triggered a stock selloff.  The CEO assured investors that AIG would register profit growth by the end of the year, but failed to elaborate on the strategy.   

Icahn, who is often referred to as ‘corporate raider’ for the tactics he uses to coax the targeted enterprises into repurchasing stock at a high premium, recently upset a move by Xerox (XRX)  to take over Fujifilm Holdings in a $6.1 billion deal. As part of a settlement with Icahn over a lawsuit, the company’s CEO Jeffrey Jacobson and six board members were forced to resign.

In April, Icahn Enterprises sold Federal-Mogul, the automotive equipment company it had controlled for several years, to Tenneco Inc. for $5.4 billion.

AIG’s stock, which lost nearly 11% since the beginning of the year, traded lower in the early hours on Monday, before paring the loss in the afternoon.