Investments and Related Matters

6 Months Ended

Jun. 30, 2019

Investments and Related Matters.

Investment

Investments and securities sold, not yet purchased consist of equities, bonds, bank debt and other corporate obligations, all of which are reported at fair value in our condensed consolidated balance sheets. These investments are considered trading securities. In addition, our Investment segment has certain derivative transactions which are discussed in Note 6, “Financial Instruments." The carrying value and detail by security type, including business sector for equity securities, with respect to investments and securities sold, not yet purchased held by our Investment segment consist of the following:



	June 30, 2019		December 31, 2018
Assets	(in millions)
Investments:
Equity securities:
Basic materials	$	410	$	414
Consumer, non-cyclical	1,752		2,161
Consumer, cyclical	1,907		1,161
Energy	2,546		1,598
Financial	241		167
Technology	989		1,040
Other	155		145
	8,000		6,686
Corporate debt securities	191		181
	$	8,191	$	6,867
Liabilities
Securities sold, not yet purchased, at fair value:
Equity securities:
Consumer, non-cyclical	$	42	$	57
Consumer, cyclical	86		106
Energy	18		305
	146		468
Corporate debt securities	—		—
	$	146	$	468

The portion of unrealized (losses) gains that relates to securities still held by our Investment segment, primarily equity securities, was $(118) million and $345 million for the three months ended June 30, 2019 and 2018, respectively, and $434 million and $397 million for six months ended June 30, 2019 and 2018, respectively.

Our Investment segment is deemed to have significant influence with respect to its investments in Hertz, Herbalife Ltd. ("Herbalife") and Caesars Entertainment Corporation ("Caesars") after considering the collective ownership in such entities by the Investment Funds and affiliates of Mr. Icahn, as well as their collective representation on each of the boards of directors. Our Investment segment has elected the fair value option with respect to each of these investments as such investments would have otherwise been subject to the equity method of accounting. Hertz, Herbalife and Caesars each file annual, quarterly and current reports, and proxy and information statements with the SEC, which are publicly available.

As of June 30, 2019, the Investment Funds owned approximately 23.1% of the outstanding common stock of Hertz. Our Investment segment recorded net (losses) gains of $(27) million and $(106) million for the three months ended June 30, 2019 and 2018, respectively, and net gains (losses) of $68 million and $(158) million for the six months ended June 30, 2019 and 2018, respectively, with respect to its investment in Hertz. As of June 30, 2019 and December 31, 2018, the aggregate fair value of our Investment segment's investment in Hertz was $310 million and $320 million, respectively.

As of June 30, 2019, the Investment Funds owned approximately 18.6% of the outstanding common stock of Herbalife. Our Investment segment recorded net (losses) gains of $(288) million and $173 million for the three months ended June 30, 2019 and 2018, respectively, and net (losses) gains of $(456) million and $717 million for the six months ended June 30, 2019 and 2018, respectively, with respect to its investment in Herbalife. As of June 30, 2019 and December 31, 2018, the aggregate fair value of our Investment segment's investment in Herbalife was approximately $1.2 billion and $1.7 billion, respectively.

As of June 30, 2019, the Investment Funds owned approximately 11.8% of the outstanding common stock of Caesars. We obtained significant influence over Caesars, and elected the fair value option with respect to our investment in Caesars, beginning in the first quarter of 2019. Our Investment segment recorded net gains of $249 million and $275 million for the three and six months ended June 30, 2019 with respect to its investment in Caesars. As of June 30, 2019, the aggregate fair value of our Investment segment's investment in Caesars was $939 million. During the second quarter of 2019, we agreed to sell our interest in Caesars to Eldorado Resorts, Inc. ("Eldorado") in a transaction comprised of cash and shares of common stock of Eldorado. The transaction has not yet been consummated as of June 30, 2019.

Other Segments and Holding Company

With the exception of certain equity method investments at our operating subsidiaries and our Holding Company disclosed in the table below, our investments are measured at fair value in our condensed consolidated balance sheets. The carrying value of investments held by our other segments and our Holding Company consist of the following:



	June 30, 2019		December 31, 2018
	(in millions)
Equity method investments	$	189	$	143
Other investments (measured at fair value)	478		1,327
	$	667	$	1,470

The portion of unrealized (losses) gains that relates to equity securities still held by our Other segments and Holding Company was $(326) million and $32 million for the three months ended June 30, 2019 and 2018, respectively, and $(480) million and $55 million for the six months ended June 30, 2019 and 2018, respectively.