Carl Icahn’s empire loses $6 billion in one day after short-seller report
May 3 (Reuters) – Carl Icahn’s empire suffered another blow on Wednesday as his holding company’s shares plunged further in the wake of a critical report by short-seller Hindenburg Research, bringing the drop in value since the short-seller attacked it to more than $6 billion.
Hindenburg on Tuesday accused Icahn Enterprises LP ( IEP ) ( IEP.O ) of overvaluing its holdings and relying on a “Ponzi-like”[ads1]; structure to pay dividends. Icahn called the report “self-serving” and he stood by IEP’s statements about the economy. He did not respond to a request for comment Wednesday.
IEP shares hit an intraday low of $31.78 — the lowest in more than a decade. The company is now worth $11.5 billion, down 35% from its value on Monday before Hindenburg published his report.
Icahn owns around 85% of IEP and has pledged over 60% of the stake as security for personal loans. The Hindenburg report has wiped $7.5 billion off Icahn’s fortune, leaving him with a net worth of $10.8 billion, according to Forbes.
IEP is scheduled to report its first-quarter results on Friday, limiting its ability to comment in detail about its finances in advance.
“Activist short attacks a few days before an issuer reports earnings are common because regulatory quiet periods can limit the issuer’s ability to respond and catch them off guard,” said Josh Black, editor-in-chief of Insightia, which provides data on shareholder activism and corporate governance.
Jefferies Financial Group Inc ( JEF.N ), the only major Wall Street brokerage that covers IEP, declined to comment Wednesday on whether it planned to revise its “buy” rating. Its analyst Daniel Fannon has consistently given this positive rating on IEP since 2013. Fannon did not respond to requests for comment.
The attack has landed Icahn in uncharted waters. Known for his confrontations with industry heavyweights such as AIG ( AIG.N ) and McDonald’s Corp ( MCD.N ), the billionaire has never seen his firm become a target for activist investment.
Hindenburg has taken on several high-profile targets in recent months, including India’s conglomerate Adani Group and Jack Dorsey-led digital payments platform Block Inc ( SQ.N ).
William Ackman, a hedge fund veteran who famously feuded with Icahn over their opposition to nutritional supplement company Herbalife, called the Hindenburg report a “must read.”
“There is a karmic quality to this brief report that reinforces the notion of a circle of life and death,” he tweeted on Tuesday.
Reporting by Niket Nishant in Bengaluru; Editing by Saumyadeb Chakrabarty
Our standards: Thomson Reuters Trust Principles.