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Investments

12 Months Ended

Dec. 31, 2022

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. 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,
	2022		2021

	(in millions)
Assets
Investments:
Equity securities:
Communications	$	199	$	352
Consumer, cyclical		692		1,281
Energy		909		3,184
Utilities		1,205		992
Healthcare		320		1,009
Technology		655		931
Materials		153		194
Industrial		486		895
		4,619		8,838
Debt securities:
Financials		1,958		—
Real Estate		131		1
Communications		11		—
Consumer, non-cyclical		—		113
		2,100		114
	$	6,719	$	8,952
Liabilities
Securities sold, not yet purchased, at fair value:
Equity securities:
Consumer, non-cyclical	$	1,006	$	—
Consumer, cyclical		352		848
Energy		2,690		2,028
Utilities		813		659
Healthcare		387		1,049
Materials		598		365
Industrial		480		391
		6,326		5,340
Debt securities:
Materials		169		—
		169		—
	$	6,495	$	5,340

The portion of unrealized (losses) gains that relates to securities still held by our Investment segment, primarily equity securities, was $(1,544) million, $1,153 million and $65 million for the years ended December 31, 2022, 2021 and 2020, 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.


	Voting	Fair Value of				Gains (Losses)
	Interests	Investment				Recognized in Income
	December 31,	December 31,				Year Ended December 31,
	2022	2022		2021		2022		2021		2020

		(in millions)
Xerox Holding Corporation	22.0%	$	500	$	—	$	(230)	$	—	$	—
Herbalife Nutrition Ltd.	—		—		—		—		—		161
Hertz Global Holdings, Inc.	—		—		—		—		—		(637)
		$	500	$	—	$	(230)	$	—	$	(476)

We obtained significant influence over Xerox Holding Corporation and elected the fair value option with respect to our investment in Xerox, beginning in the first quarter of 2022.

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.

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.

Due to the nature of our Investment segment’s operations, the sales of Hertz 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 Xerox, 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,
		2022
	Xerox
		(in millions)
Total assets	$	11,543
Total liabilities		7,966
Non-controlling interests		10
Equity attributable to investee shareholders		3,343

The majority of total assets in the table above consists of receivables, goodwill and inventories. The majority of total liabilities in the table above consists of debt.


	Xerox							Hertz					Herbalife

	Year Ended December 31,							Year Ended December 31,					Year Ended December 31,
	2022		2021		2020			2022		2021		2020	2022		2021		2020

	(in millions)
Net sales/Other revenue from operations	$	7,107	$	—	$	—	$	—	$	—	$	2,755	$	—	$	—	$	2,609
Cost of goods sold/Other expenses from operations		7,435		—		—		—		—		3,231		—		—		518
Net income (loss)		(322)		—		—		—		—		(1,209)		—		—		161
Net income (loss) attributable to investee shareholders		(322)		—		—		—		—		(1,203)		—		—		161

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,
	2022		2021

	(in millions)
Equity method investments	$	76	$	79
Other investments measured at fair value		14		120
	$	90	$	199

The portion of unrealized losses that relates to equity securities still held by our other segments and our Holding Company was $61 million, $61 million and $36 million for the years ended December 31, 2022, 2021 and 2020, respectively.