Investments

9 Months Ended

Sep. 30, 2019

Investments.

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:



	September 30, 2019		December 31, 2018
Assets	(in millions)
Investments:
Equity securities:
Basic materials	$	262	$	414
Consumer, non-cyclical	1,704		2,161
Consumer, cyclical	2,149		1,161
Energy	1,943		1,598
Financial	264		167
Technology	2,092		1,040
Other	135		145
	8,549		6,686
Corporate debt securities	169		181
	$	8,718	$	6,867
Liabilities
Securities sold, not yet purchased, at fair value:
Equity securities:
Consumer, non-cyclical	$	12	$	57
Consumer, cyclical	93		106
Energy	118		305
	$	223	$	468

The portion of unrealized (losses) gains that relates to securities still held by our Investment segment, primarily equity securities, was $(513) million and $(4) million for the three months ended September 30, 2019 and 2018, respectively, and $(99) million and $356 million for nine months ended September 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 September 30, 2019, the Investment Funds owned approximately 23.5% of the outstanding common stock of Hertz. Our Investment segment recorded net (losses) gains of $(29) million and $23 million for the three months ended September 30, 2019 and 2018, respectively, and net gains (losses) of $39 million and $(135) million for the nine months ended September 30, 2019 and 2018, respectively, with respect to its investment in Hertz. As of September 30, 2019 and December 31, 2018, the aggregate fair value of our Investment segment’s investment in Hertz was $462 million and $320 million, respectively.

As of September 30, 2019, the Investment Funds owned approximately 18.6% of the outstanding common stock of Herbalife. Our Investment segment recorded net (losses) gains of $(138) million and $23 million for the three months ended September 30, 2019 and 2018, respectively, and net (losses) gains of $(594) million and $740 million for the nine months ended

September 30, 2019 and 2018, respectively, with respect to its investment in Herbalife. As of September 30, 2019 and December 31, 2018, the aggregate fair value of our Investment segment’s investment in Herbalife was approximately $1.1 billion and $1.7 billion, respectively.

As of September 30, 2019, the Investment Funds owned approximately 13.5% 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 $26 million and $301 million for the three and nine months ended September 30, 2019 with respect to its investment in Caesars. As of September 30, 2019, the aggregate fair value of our Investment segment’s investment in Caesars was approximately $1.1 billion. During the second quarter of 2019, we agreed to vote our Caesars’ shares in favor of the proposed merger between Caesars and Eldorado Resorts, Inc. (“Eldorado”). Pursuant to the merger, Caesars will merge into a subsidiary of Eldorado and Caesars stockholders will have the right, subject to certain allocation limitations, to elect to receive cash, stock in Eldorado, or a combination of cash and stock. Upon consummation of the merger, depending on what consideration we and other stockholders elect, we expect to receive a combination of cash and Eldorado shares. The transaction has not yet been consummated as of September 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:



	September 30, 2019		December 31, 2018
	(in millions)
Equity method investments	$	199	$	143
Other investments (measured at fair value)	520		1,327
	$	719	$	1,470

The portion of unrealized gains (losses) that relates to equity securities still held by our other segments and our Holding Company was $42 million and $36 million for the three months ended September 30, 2019 and 2018, respectively, and $(438) million and $91 million for the nine months ended September 30, 2019 and 2018, respectively.