We recently compiled a list of the Billionaire Carl Icahn's Top 10 Stocks. In this article, we are going to take a look at where Bausch Health Companies Inc. (NYSE:BHC) stands against Carl Icahn's top stock picks.

One would expect legendary investor Carl Icahn to go slow and cherish his extraordinary and successful career on Wall Street. However, that is not the case as he continues to push to shake up corporate America in pursuit of shareholder value.

At 88 years old, Icahn remains one of the most feared and revered hedge fund managers because he can move the markets as he wishes. While he is often compared to legendary investor Warren Buffett, Icahn deploys a far more aggressive investment strategy beyond value investing.

READ ALSO: 18 Best 52-Week Low Stocks to Buy Now According to Short Sellers and Top 10 ADR Stocks To Buy According to Hedge Funds.

The founder of Icahn Enterprises has built a reputation as a "corporate raider" and a ferocious activist investor. Icahn is recognized for his bold investment strategies, where he purchases a share in a company and leverages his power to achieve quick gains in the company's stock value. This frequently includes participating in proxy battles, issuing public requests, and initiating a takeover campaign.

Likewise, he boasts of one of the most impressive track records on Wall Street, with his investment firm, Icahn Enterprises, having generated an annualized rate of return of about 14% between 2000 and 2022, according to Financhil. In contrast, the S&P 500 enjoyed an average annual return of 6% over the same period, while Buffett's Berkshire Hathaway recorded an annualized return of about 9%.

Similarly, Icahn has seen an impressive 31% annualized return since 1968. Meanwhile, Buffett achieved a return of 19.5% over a similar timeframe. However, when considering the power of compounding, Buffett's wealth generated from investment returns is significantly less than that of Icahn. Icahn's investment prowess has led to a return of $65 for every $1 generated by Buffett.

The high returns that Icahn has succeeded in generating stem from implementing a high-risk, high-reward strategy. Therefore, Billionaire Icahn's top 10 stocks involve stocks likely to benefit from short-term volatility to generate big gains.

Similarly, Icahn has never avoided cutting his losses when things go wrong. The corporate raider was forced to sell all his equity stakes in one of his holdings when the company filed for bankruptcy in 2020.

Unlike most hedge fund managers, Icahn focuses on an opportunistic investment strategy rather than on specific sectors. In this case, billionaire Icahn's top 10 stocks are usually spread across various sectors, from technology to healthcare and energy. He also takes a keen interest in companies undergoing restructuring or radical changes.

Icahn has consistently advocated for change within company boards as a corporate raider and activist shareholder throughout his career. However, in recent years, he has experienced a reversal of fortune.

Icahn’s publicly listed firm faced significant scrutiny in 2023 when it was the focus of criticism from short-seller Hindenburg Research, which alleged that the company was overvalued and engaged in a Ponzi-like economic scheme.

In its report, Hindenburg alleged that Icahn has been running a Ponzi-like scheme by taking money from new investors to pay dividends to old investors. The allegations have since escalated, with the US Securities and Exchange saying that the billionaire investor had pledged up to 82% of shares in his companies to secure billions of dollars of margin loans.

“Hindenburg’s modus operandi, which is to publish scurrilous and unsupported allegations, did damage to IEP and its investors. We are glad to put this matter behind us and will continue to focus on operating the business for the benefit of unit holders,” said Icahn, according to CNN.

Icahn and his firm have since agreed to settle the charges for failing to disclose pledges of the company’s securities as collateral in billions of dollars worth of personal loans. Consequently, Icahn and his company will pay $1.5 million and $500,000 in civil penalties to settle the charges.

Our Methodology

To compile the list of billionaire Icahn's top 10 stocks, we screened Carl Icahn's investment portfolio and scanned for his biggest holdings. Next, we ranked the stocks based on the value of the billionaire investor's stakes in the company, as of Q2 2024. The stocks are ranked in ascending order.

We also mentioned the total number of hedge funds that had bought these stocks per Insider Monkey’s data. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A series of pharmaceutical and medical products in a warehouse, displaying the range of products available.

Bausch Health Companies Inc. (NYSE:BHC)

Icahn Capital LP’s Equity Stake: $242.01 Million

Number of Hedge Fund Holders: 32

Bausch Health Companies (NYSE:BHC) is one of billionaire Icahn's top 10 stocks in the healthcare sector. As a diversified specialty pharmaceutical and medical device company, it develops, manufactures, and markets a range of products, primarily in gastroenterology, hepatology, neurology, dermatology, and international pharmaceuticals.

Bausch Health Companies (NYSE:BHC) delivered solid second-quarter results, with net revenue increasing 6% year-over-year to $1.19 billion. This growth was driven by organic expansion and strong performance in key areas, with Xifaxan leading the charge with a 10% increase year-over-year.

The Asia Pacific market is becoming an important part of the equation, having delivered a 19% increase in sales during the period. The company's impressive revenue growth, coupled with its solid international presence, is noteworthy.

Bausch Health Companies (NYSE:BHC) stands out as one of billionaire Icahn's top 10 stocks owing to its ability to grow earnings over the past five years. The company's adjusted EBITDA rose 8% year-over-year, reaching $614 million. Bausch Health also secured a solid operating cash flow of $380 million, attributed to its improved business operations and favorable cash flow management.

At its current valuation, BHC is considered undervalued. It trades at just 1.6 times its forward earnings, representing a significant discount to its industry average. Furthermore, analysts expect the company's earnings to grow by 2% this year, reaching $1.04 billion.

Insider Monkey reviewed the second quarter 2024 shareholdings of 912 hedge funds and discovered that 32 of them had invested in the firm. Bausch Health Companies Inc. (NYSE:BHC)’s largest hedge fund shareholder is Carl Icahn’s Icahn Capital LP through its $242.01 million stake.

Overall BHC ranks 6th on our list of Carl Icahn's top stock picks. While we acknowledge the potential of BHC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BHC, check out our report about the cheapest AI stock.

READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article is originally published at Insider Monkey.