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Investments

9 Months Ended

Sep. 30, 2020

4. 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,		December 31,
	2020		2019

	(in millions)
Assets
Investments:
Equity securities:
Basic materials	$	—	$	281
Consumer, non-cyclical		1,136		2,085
Consumer, cyclical		1,776		2,427
Energy		1,884		1,717
Technology		1,207		2,425
Industrial		74		127
		6,077		9,062
Corporate debt securities		100		145
	$	6,177	$	9,207
Liabilities
Securities sold, not yet purchased, at fair value:
Equity securities:
Basic materials	$	—	$	209
Consumer, non-cyclical		254		29
Consumer, cyclical		450		379
Energy		266		124
Financial		—		152
Technology		—		217
Communication		—		80
	$	970	$	1,190

The portion of unrealized gains (losses) that relates to securities still held by our Investment segment, primarily equity securities, was $(535) million and $(513) million for the three months ended September 30, 2020 and 2019, respectively, and $(1,560) million and $(99) million for nine months ended September 30, 2020 and 2019, respectively.

After considering specific facts and circumstances, including the collective ownership in entities by the Investment Funds and affiliates of Mr. Icahn, as well as their collective representation on each of the boards of directors, we have determined that we had the ability to exercise significant influence over the operating and financial policies of certain investees below. The following table summarizes our direct ownership in such investees as well as certain financial information with respect to such investees in our condensed consolidated financial statements.


	Voting	Fair Value of				Gains (Losses)
	Interests	Investment				Recognized in Income
	September 30,	September 30,		December 31,		Three Months Ended September 30,				Nine Months Ended September 30,
	2020	2020		2019		2020		2019		2020		2019

		(in millions)
Herbalife Nutrition Ltd.	15.5%	$	957	$	1,343	$	90	$	(138)	$	132	$	(594)
Hertz Global Holdings, Inc.	—		—		551		—		(29)		(637)		39
Caesars Entertainment Corporation	—		—		1,243		31		26		49		301
		$	957	$	3,137	$	121	$	(141)	$	(456)	$	(254)

Each of these investees file annual, quarterly and current reports, and proxy and information statements with the SEC. During the second quarter of 2020, the Investment Funds sold their entire investment in Hertz. Prior to the sale of its investment in Hertz, the Investment Funds owned approximately 38.9% of the outstanding common stock of Hertz. During the third quarter of 2020, the Investment Funds sold their entire investment in Caesars Entertainment Corporation (“Caesars”). Prior to the sale of their investment in Caesars, the Investment Funds owned approximately 16.7% of the outstanding common stock of Caesars. Due to the nature of our Investment segment’s operations, the sales of Hertz and Caesars are deemed to be in the ordinary course of business.

In addition, in August 2020, the Investment Funds sold a portion of their interest in Herbalife Nutrition Ltd. (“Herbalife”) pursuant to Herbalife’s “modified Dutch auction” tender offer to purchase its common shares, and as a result, the Investment Funds ceased their ability to exercise significant influence over the operating and financial policies of Herbalife. Prior to this transaction, the Investment Funds owned approximately 23.8% of the outstanding common stock of Herbalife.

The following table contains summarized financial information for Herbalife, which was a significant subsidiary as defined by SEC regulations, as if Herbalife was consolidated in our financial statements during the period in which we possessed the ability to exercise significant influence over their operating and financial policies.


	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019

	(in millions)
Net sales	$	2,609	$	3,657
Cost of goods sold		518		728
Net income (loss)		161		254
Net income (loss) attributable to shareholders		161		254

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,		December 31,
	2020		2019

	(in millions)
Equity method investments	$	140	$	201
Other investments (measured at fair value)		593		537
	$	733	$	738

The portion of unrealized gains (losses) that relates to equity securities still held by our other segments and Holding Company was $(93) million and $42 million for the three months ended September 30, 2020 and 2019, respectively, and $(259) million and $(438) million for the nine months ended September 30, 2020 and 2019, respectively.