them. I was just talking to Larry Fink. I don’t think he does enough. I like him. I think he’s a good guy.
RUHLE: You don’t think he does enough —
CARL ICAHN: Does enough on corporate governance. He says he does. He thinks about it. But there’s one thing that might be an unintended consequence happening because of these index fund’s popularity, and that is that – that is that a lot of the other mutual funds are getting hurt because why should you pay them an extra 1 percent? Why should you pay them 1.25 when you can get it for 0.33 and have the index if they can’t do better than the index?
So many of these mutual funds buy pretty much the index stocks but overweight or underweight, all right? So the stuff they overweight, they wanted something to happen there because that’s their livelihood now. So these guys are pretty good analysts. They find a company and it’s undervalued. And one of the reasons it’s undervalued I believe is because the management is mediocre and they come – literally I get calls from these guys behind the scenes so to speak telling me you ought to look at this, you ought to look at this one.
And they – and so they are with me. Instead of me having to go beg them to vote for me, they’re already talking to me. And because they want performance, and how do they get performance to beat the index? Guys like me – look at the money I made these guys over the years. A few of them say to me, hey, you’ve made us a fortune. Chesapeake, Forest Labs to name a few, Hain. So they come in and they say, you know what? Hey Carl, it’s almost, we want you to help us, or at least they’ll say, we’re with you. And so it’s changing from that aspect.
And I think managements and boards are becoming more aware of it and trying to do more things than just literally play golf and go – go on golfing weekends for four or five days. I used to say the only way you can get a CEO off the golf course is I file a 13D on them. And so – but I want to make it clear and I hope it’s not – it gets taken out of context. There are many good CEOs, many very good CEOs and very good boards.
But – but one of the very few that we got involved with because we weren’t looking to change them was Apple. And there the only thing we did that I think we helped quite a bit was get them to do a bigger buyback. So they bought $50 billion back and $17 billion just this quarter, and that’s because Tim really feels it’s undervalued, and that’s good.
RUHLE: How do you feel about Hertz Global right now?
CARL ICAHN: The Hertz —
RUHLE: Mean anything?
CARL ICAHN: You mean the rent-a-car?
RUHLE: Yeah, of course.
CARL ICAHN: Yeah, but it’s a little tough to talk about it because we’ve just got on the board and I don’t like talking about something we’ve just got on the board on. Obviously we bought it and obviously we’re involved with it. And I think like anything else, I hope we can help. And we’ve helped in the past on a lot of companies like this. But I’d rather not talk about anything that we’ve just got representation on.
RUHLE: Herbalife?
CARL ICAHN: Herbalife we’re on the board also. Herbalife, I have – I can only say this. I never sold a share. And maybe – you’re laughing at me on that because it went way up and it went way down. Now it’s come back up again. But I – people don’t believe this about me, but I really don’t buy for the short term. The stock price to me doesn’t matter until you buy or you sell. And that’s what you have to be thinking if you’re a successful investor.
RUHLE: Well then a true activist, what should his or her time horizon be in terms of getting involved, being invested?
CARL ICAHN: Yeah. Look, I agree with Larry on this. Some of – some of the activists are too short-term oriented. I agree. We’re not. You look at our portfolio. We’ve kept stocks for 20 years, maybe more. I bought ACF in the mid ’80s. So if you look at – if you – if you look at us, we’re not short-term oriented and some are. I don’t think it’s good. I think he’s right on that, unless there’s a reason for that. If the stock goes way up, it doubles in value, maybe you sell it. Although we never sold Apple.
RUHLE: All right. Before we go, we’ve been very US-centric. Are you looking at all at the ECB right now? Last week I know when you had dinner with Ben Bernanke other attendees walked out and said, I’m nervous about Europe. I don’t think they can do whatever it takes. Are you paying attention? Are you worried? Because many investors weren’t worried in ’08.
CARL ICAHN: Well at the risk of being immodest, one of our major positions is a short on the eurodollar. So I will say that we sort of guessed right on that. And I think Europe has major problems. We own companies there. Western Europe is really a problem. And – and again, there’s a little bit of what I talked about, Atlantic City. You have to get realistic. And the thing about Atlantic City I’ll just say again is we’re not really hurting anybody. These people have to understand. The unions are just telling a lot of hogwash. The low priced ones – lower priced employees are better off if they go to the Obamacare thing. So Europe is the same thing. You can’t – you have to get realistic in France, in Spain. Until they do, I’m staying short the eurodollar.
RUHLE: Well then fundamentally Europe has had problems for years. Look at the peripheral countries. Look at unemployment. But we’ve been ignoring it because of LTRO, because of ECB intervention. Has that – is the reality that it’s ended up hurting the European economy because we’ve ignored the fact that much of it is a rotting pile of garbage?
CARL ICAHN: Well you’re being – you’re being much worse than I am. I don’t think it’s a pile of garbage. Northern Europe is pretty good actually. Scandinavia is pretty good. I think that some of these countries have to get realistic, and I think they might. The ECB is finally lowering interest rates and they’re lowering them pretty dramatically. And if they do, maybe that’ll be a time when you cover the eurodollar. Right now I think the eurodollar is too high still.
RUHLE: But when the ECB says we’re going to come in and buy bonds back and all they buy is two-year covered bonds, it makes many people feel like, well, maybe I have no powder left.
CARL ICAHN: You could find a lot better experts to talk about what they’re doing in Europe than me. I really – I – I look at things very simplistically. And I just shorted the eurodollar because it was simple to think about. I look at simple things. High yield. One day you and I will be talking I believe and you’ll say you were right about that bubble, but it might be three years from now or five years. And I hope we’re able to do it. But – but what I am saying is it’s simple. The eurodollar was simple. But you could find much better experts. If you want to talk corporate governance, you want to talk Ebay, you want to talk company, Apple, maybe I – I think I know what I’m doing.
RUHLE: But at least you have to pay attention to Europe. In 2008 there were many investors here who could know everything there is to know about a tech company in Texas but they didn’t know where Portugal was on a map. And not knowing where Portugal was took people down. At a point like this —
CARL ICAHN: Why did it take them down? Were they investing in Portugal?
RUHLE: No, because this is a global economy. We are all connected.
CARL ICAHN: Well then if you think it’s a global economy, you got to be worried about this market, right? If you think it’s really a global economy and you know that you really have some problems abroad, you have to worry a bit about this market. As that dollar increases, that’s going to affect a lot of our international companies. Thirty, forty percent of our revenue comes from abroad somewhere.
So you can argue either way then. As the dollar goes up, that could be a problem for a lot of these guys if you think about it, right? They’re going to have trouble – they’re going to have trouble – if you take it to the logical conclusion, if – if the currency of – of a foreign country is going to hell and you’re making money in that currency, it doesn’t do you much good because nobody will give you a dollar for it, right?
So you really do have some problems there maybe. But I’m not going that far yet. I’m not that concerned about it yet. I think – I think oil prices may help the – the economy worldwide for a while. You haven’t asked me about energy, and I’ll just throw this in for what it’s worth. I think energy stocks – we own a lot of them. I think maybe don’t buy them yet. But I think they’re getting to a point where they’re very, very cheap because I really don’t think oil can stay down forever. So I’ll leave you with that. But I’m not telling you – I don’t tell you what to do tomorrow. I’m not that guy.
RUHLE: All right. Before you go, you said your mother told you you had a warrior spirit. Start this all over again. If you weren’t going to end up the financial giant that you are, what would you have done for a living if you started all over again?
CARL ICAHN: Well what do you mean? What would I have chosen?
RUHLE: Any other industry. Any other industry. What would you have done if you were to start all over again?
CARL ICAHN: I never really thought of it. I was a real good student in school. I went to a real tough high school. Somehow I got into Princeton and I was a real good student. I got really into philosophy. You read some of this pap these guys in Silicon Valley put out. You read it and you laugh at it because they’re all trying to be great philosophers because they think they made some money and they’re smart.
RUHLE: Carl Icahn the philosopher. Carl, thank you so much.
