Investments

12 Months Ended

Dec. 31, 2020

Schedule of Investments [Abstract]

Investments

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 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:

	December 31,
	2020		2019
	(in millions)
Assets
Investments:
Equity securities:
Basic materials	$	—	$	281
Consumer, non-cyclical		1,548		2,085
Consumer, cyclical		2,073		2,427
Energy		2,654		1,717
Utilities		107		—
Technology		1,578		2,425
Industrial		158		127
		8,118		9,062
Corporate debt securities		121		145
	$	8,239	$	9,207
Liabilities
Securities sold, not yet purchased, at fair value:
Equity securities:
Basic materials	$	—	$	209
Consumer, non-cyclical		424		29
Consumer, cyclical		572		379
Energy		1,476		124
Utilities		49		—
Financial		—		152
Technology		—		217
Communication		—		80
	$	2,521	$	1,190

The portion of unrealized gains (losses) that relates to securities still held by our Investment segment, primarily equity securities, was $65 million, $706 million and $(800) million for the years ended December 31, 2020, 2019 and 2018, respectively.

As discussed in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” when certain investments become subject to the equity method of accounting, our Investment segment elects the fair value option to such investment. Investments become subject to the equity method of accounting when we possess the ability to exercise

significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when we possess more than 20% of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. Conversely, there is a presumption that for investments in which we have less than 20% of the voting interests of the investee that we do not have the ability to exercise significant influence. However, such presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is present, such as when we have representation on the board of directors of such investee.

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 of our Investment segment. The following table summarizes our direct ownership in the most significant of such investees.

	Voting	Fair Value of				Gains (Losses)
	Interests	Investment				Recognized in Income
	December 31,	December 31,				Year Ended December 31,
	2020	2020		2019		2020		2019		2018
		(in millions)
Herbalife Nutrition Ltd.	15.5%	$	985	$	1,343	$	161	$	(318)	$	864
Hertz Global Holdings, Inc.	—		—		551		(637)		105		(197)
Caesars Entertainment Corporation	—		—		1,243		49		478		—
		$	985	$	3,137	$	(427)	$	265	$	667

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.

In addition, in August 2020, the Investment Funds sold a portion of their investment 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 to have an 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. In January 2021, Herbalife repurchased shares of its common stock from us and as a result, we owned 6.7% of the outstanding common stock of Herbalife.

Due to the nature of our Investment segment’s operations, the sales of Hertz, Caesars and Herbalife are deemed to be in the ordinary course of business.

The following tables contain summarized financial information with respect to our investments in Hertz and Herbalife during the respective periods (or partial periods) in which we possessed the ability to exercise significant influence over the operating and financial policies of the investee.

	December 31, 2019
	Hertz		Herbalife
	(in millions)
Total assets	$	24,627	$	2,679
Total liabilities		22,739		3,069
Non-controlling interests		119		—
Equity attributable to investee shareholders		1,769		(390)

The majority of total assets in the table above consists of property, plant and equipment, net for Hertz and cash and cash equivalents, inventories, net and property, plant and equipment, net for Herbalife. The majority of total liabilities in the table above consists of debt for each of Hertz and Herbalife.

	Hertz						Herbalife
	Year Ended December 31,						Year Ended December 31,
	2020		2019		2018		2020		2019		2018
	(in millions)
Net sales/Other revenue from operations	$	2,755	$	9,779	$	9,504	$	2,609	$	4,877	$	4,892
Cost of goods sold/Other expenses from operations		3,231		8,051		8,045		518		958		919
Net (loss) income		(1,209)		(50)		(227)		161		311		297
Net (loss) income attributable to investee shareholders		(1,203)		(58)		(225)		161		311		297

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 consolidated balance sheets. The carrying value of investments held by our other segments and our Holding Company consist of the following:

	December 31,
	2020		2019
	(in millions)
Equity method investments	$	120	$	201
Held to maturity debt investments measured at amortized cost		20		—
Other investments measured at fair value		534		537
	$	674	$	738

The portion of unrealized losses that relates to equity securities still held by our other segments and our Holding Company was $36 million, $421 million and $339 million for the years ended December 31, 2020, 2019 and 2018, respectively.