Carl Icahn

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On December 21, 2015, Carl Icahn commented on Carnival Corporation :

Scott, I was so interested in your question about capacity planning that I set up a phone call with the CFO of Carnival Corp, David Bernstein, to discuss it. He had a few very interesting thoughts:

The total global cruise capacity is only 250,000 beds. This is such a small piece of the overall tourism market, there is plenty of room to grow. Las Vegas alone has 150,000+ rooms.

The cruise industry is healthily growing.

There are only a few ship builders capable of building a cruise ship. Even if you had the $1B it costs to build a ship, you’d have to wait until about 2021 to get it built. This restricts the growth of the industry and has made sure that supply doesn’t out pace demand.

The Chinese are starting to cruise in huge numbers. Last year, Carnival Corp had about 500,000 Chinese guests. This year it will have about 1 M Chinese guests. Any capacity growth is easily soaked up by the growing Chinese market.

He also mentioned that his largest concern is the macro tourism climate. For example, any large scale terrorist attach has huge implications for the cruise industry.

I hope these thoughts were helpful!

On December 14, 2015, Carl Icahn commented on Carnival Corporation :

Scott, thanks for the post! We could use your keen eye when we plan our next hostile take over of a company.

Cruise lines are bullish on the future of the economy and the cruise industry as a whole. The amount of people taking cruises has been growing each year. This is due to a number of factors, including new geographies, better ships, and more activities aboard ships. Additionally, more young people are cruising than ever before. Individual cruise lines need to be constantly developing new ships to meet this demand and so they can retire their ships when they become too old. It would go against a premium cruise line’s business model to operate a very old ship. There is such a large market out there, I don’t think these large cruise lines are having troubling filling ships.

I love the comment about the specialization of staff – you’re absolutely right. Running one of these large ships is incredibly complex and everyone has their job. While I don’t know the specifics on all the jobs on board, I do know a large portion of the crew is cross trained so they are able to deal with emergency situations. This cross training helps keep customers safe on board!

On December 14, 2015, Carl Icahn commented on Nike: Lapping The Competition :

Great post! Nike is an awesome brand that was a huge part of my childhood. It seems that all of my favorite athletes are sponsored by Nike – it’s one of the reasons I was drawn to them as a child.

I’m very curious about their sponsorship model. Does Nike utilize the ‘shot gun’ approach where they place small endorsement deals with many athletes or are they capable of picking out the future stars? If it is the former, do you think that other competitors might be able to copy it?

On December 13, 2015, Carl Icahn commented on Hello Alfred: Your new best friend when life is a clutter :

Hi Joker, I think you’re being a little too nice on Alfred. At the current price points, I see this as too difficult to grow profitably. For $32 a week, a customer gets a weekly tidy up, grocery shopping, laundry drop off/return, and dry cleaning drop off/return (and more!). Based on their strategy of providing a trusted butler to each of their clients (they have 20% hire labor costs b/c they don’t hire as a contractor), I don’t see how they’ll be able to pay their employees a fair wage with out using VC money to subside their salaries. I’m curious what Hello Alfred’s butlers earn per year.

On December 13, 2015, Carl Icahn commented on Unpacking Trader Joe’s :

Great article and very interesting! I did not realize that they were so well known for employee satisfaction. Thinking back to my most recent trip to TJs, all the employees were very happy and friendly!

I’m very curious about one additional aspect of their operational strategy. How do they handle distribution? Do they ever use a locally sourced method for meats/produce? Do they utilize a massive warehouse to distribute to a large region? I’m sure having 75% of their SKUs be private label will affect their decision. I’m sure their distribution method is one way to keep prices low!

On December 13, 2015, Carl Icahn commented on Rocket Internet: Starting Businesses in the Fast Lane :

Brian, I’m very curious how long it takes their average business to have positive cash flow. I understand that part of their strength lies in how well funded the start ups are, but how long does Rocket Internet typically keep pouring money in? Many start ups today don’t become cash positive for a very long time. How much of a cash reserve does Rocket Internet have? Are they able to fund their companies for many years if necessary? Additionally, does Rocket Internet typically sell their start ups or are they interested in holding them for the long term?