Icahn Is Back Playing Hold’em in Atlantic City

Carl Icahn is now the proud owner of his second casino in Atlantic City – the Taj Mahal. He also owns a war; Icahn is engaged in a full-fledged battle with the union over benefits. UNITE HERE has done everything it could to stop Icahn; the union has kept up an unrelenting campaign against Icahn. However, he was really the only option for the bankruptcy court judge and the regulators. He already owned the debt of the Taj and with the gaming regulators’ permission he now owns the casino license too.

New Jersey gambling regulators are allowing Carl Icahn to double down on his casino holdings in Atlantic City. The Casino Control Commission approved the billionaire investor to own the Trump Taj Mahal Casino Resort. Icahn already owns Atlantic City’s Tropicana Casino and Resort. He has been locked in a battle with the city’s main casino workers’ union over the elimination of health insurance and pension plans. Icahn is swapping $292 million worth of the company’s debt that he owns in return for ownership of the company. He will invest as much as $100 million to keep the Taj Mahal afloat after bankruptcy. Wayne Parry, Associated Press, 6-10-15

It is not a good time to be buying into Atlantic City, but Icahn is not a novice on the Boardwalk. Icahn has made money there before. He always buys to sell. The last time around, he bought a failed casino and sold it for four times what he paid for it. This time, he bought the Taj debt in expectation of being able to sell it for more than he paid. It will not be easy for him to recoup the $292 million in debt, plus the $100 million he is projected to put into the property. That is nearly $400 million or ten times what the other recent entrants into AC paid.

Icahn also has scored in the New Jersey market. He bought the Sands casino for $65 million in a 2000 bankruptcy sale and eventually sold it to Pinnacle Entertainment in 2006 for $270 million. Robert Steyer, Motley Fool, 11-25-06

Carl Icahn has a herculean task before him. Icahn is a very successful investor, although he says he went broke in 1962 from bad investments. But like a good rodeo cowboy, he got right back on the bucking bronco. Icahn has proven his ability to finish the ride, sometimes that required holding on for years. Besides the six years he held the Sands in Atlantic City, Icahn held a majority interest in the Stratosphere in Las Vegas for nearly ten years. It may have taken years, but the profits were impressive; he made $230 million from the Sands in Atlantic City and $1 billion in Las Vegas from the Stratosphere.

American Entertainment Properties Corp., a wholly owned subsidiary of Icahn’s American Real Estate Partners, announced it has agreed to sell the parent company of the Stratosphere, both Arizona Charlie’s casinos and a Laughlin casino for $1.3 billion to Whitehall Street Real Estate Funds. Icahn said in a statement that American Entertainment Properties expects to realize a gain of $1 billion from the sale of American Casino & Entertainment Properties. Las Vegas Review-Journal, 4-24-07

Icahn knows what and when to buy. Just as he did in Atlantic City with the Trump properties, Icahn bought back into Las Vegas. In January, 2010, he bought the unfinished multi-billion-dollar Fontainebleau for $156 million. He said at the time he was willing to wait until property values on the Strip recovered. That was five years ago, but it is not as if he needs the money. In June he banked $2 billion by selling his stake in Netflix. Forbes lists him as 31st on its list with a $21 billion fortune.

Carl Icahn, perhaps the greatest investor in recent years, sold off the remainder of his Netflix stock earlier this week, closing the curtain on one of the most brilliant trades in recent memory. Icahn netted over $2 billion on the trade, which he entered when the stock was at its bottom in 2012, trading at just $58, and began selling once it hit $341. To better understand why Icahn sold Netflix, it’s worthwhile to look at his statements upon buying the stock. Jeremy Bowman, Motley Fool, 6-27-15

In fact, Icahn is so good at making money that Donald Trump wants Icahn to be his Treasury Secretary when he becomes president. Given the histories of Trump and Icahn, if Trump became president Icahn could end up owning the White House. Who knows, he might even start buying up the national debt.

Trump, who kicked off his 2016 presidential bid this week, thinks the U.S. economy need fixing. He says he’s the man for the job, especially if he had a Treasury Secretary like hedge fund manager Carl Icahn by his side… “I was extremely surprised to learn that Donald was running for president and even more surprised that he stated he would make me Secretary of Treasury,” wrote Icahn. Patrick Gillespie, CNN Money, 6-19-15

Carl also appears to have a sense of humor. When he learned of Trump’s suggestion, he did not laugh at Trump or criticize him. Instead, Icahn said he was too old and needed his sleep too much.

“I am flattered but do not get up early enough in the morning to accept this opportunity,” Icahn said. Reason No.1 why Icahn is unfit for the Treasury: he doesn’t wake up early enough. Icahn, 79, would rather kick it in the mornings than do the Washington D.C. grind every day. Patrick Gillespie, CNN Money, 6-19-15

Trump is not likely to become president, his greatest skills seem to be getting in the news and bankruptcy court – neither is particularly appealing in a presidential candidate. Carl on the other hand is skilled at making money. To do that he may need his sleep and he certainly needs patience. He has always had enough of both to be a success. Unlike most casino people, he does not think about the nuts and bolts of operating, instead he thinks about opportunity – opportunity to buy and opportunity to sell. Even if Unite Here does not like him, my money is on Icahn in Atlantic City.


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