Carl Icahn says 'time to be cautious' on U.S. stocks

Billionaire activist investor Carl Icahn said on Thursday that it is time for US stock market investors to tread carefully after the run-up on Wall Street.

"In my mind, it is time to be cautious about the US stock markets," Icahn said in a telephone interview. "While we are having a great year, I am being very selective about the companies I purchase."

US stocks fell on Thursday as concerns about the financial health of Portugal's top listed bank gave investors a reason to cash in recent gains. The S&P 500 fell as much as 1 per cent at one point before sharply rebounding, to close down -0.41 per cent at 1964.68. [.N]

Icahn has been pressuring discount retailer Family Dollar Stores Inc to sell itself. On Thursday, Family Dollar said its profit fell by a third as it cleared inventory ahead of planned store closures and competition intensified.

Icahn, Family Dollar's largest shareholder with a 9.4 per cent stake, wants the company to sell itself to rival Dollar General Corp to help them cope with stiff competition from big-box retailers such as Wal-Mart Stores Inc.

Icahn said: "The leadership, to say the least, is questionable at Family Dollar and it's been that way for many years. Howard (Levine) might be a nice guy but he is far from the right leader for Family Dollar."

Icahn added: "We believe Family Dollar and Dollar General should merge as they would make for perfect partners. It is obvious that Family Dollar, especially in light of its record and the looming competition on the horizon, could use a partner.

"However, unfortunately, the announcement of Dollar General Chief Executive Rick Dreiling's retirement is a setback to an activist player like us that would like to accelerate this process but it doesn't mean it is insurmountable on a long-term basis" with regards to a possible merger between Dollar General and Family Dollar.