Thursday, May 11, 2023

After the Hindenburg report, Carl Icahn's empire suffers a $6 billion loss in one day

Carl Icahn's empire loses $6 billion in a day after Hindenburg report

 In New York: The shares of Carl Icahn's holding company plunged even further on Wednesday as a result of a critical report from short seller Hindenburg Research. This brought the company's valuation down to more than $6 billion since the short seller attacked it.

On Tuesday, Hindenburg said that Icahn Enterprises LP (IEP) overvalued its holdings and used a "Ponzi-like" dividend structure. Icahn supported IEP's assertions regarding its finances and called the report "self-serving." On Wednesday, he did not respond to a request for information.

IEP shares hit an intraday low of $31.78 - their most minimal in over 10 years. The company's value has decreased by 35% since Monday, when Hindenburg released its report, to $11.5 billion.

Icahn has pledged over 60% of his stake in IEP as collateral for personal loans and owns approximately 85% of IEP. Forbes reports that the Hindenburg report has reduced Icahn's wealth by $7.5 billion, leaving him with a net worth of $10.8 billion.

IEP is booked to report its first-quarter profit on Friday, limiting its capacity to remark exhaustively on its funds ahead of time.

According to Josh Black, editor-in-chief of Insightia, which provides data on shareholder activism and corporate governance, "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."

The sole major Wall Street brokerage that has coverage of IEP, Jefferies Financial Group Inc., declined to comment on Wednesday on whether it intended to alter its "buy" rating. Since 2013, its analyst Daniel Fannon has consistently given IEP this positive rating. Fannon didn't answer demands for input.

Icahn is now in uncharted waters as a result of the attack. Known for his face-offs with industry heavyweights, for example, AIG and McDonald's Corp, the tycoon has never seen his firm turned into an objective of lobbyist contributing.

In recent months, Hindenburg has targeted Adani Group, an Indian conglomerate, and Block Inc., a digital payments platform run by Jack Dorsey. The Hindenburg report has been dubbed a "must-read" by hedge fund veteran William Ackman, who famously fought with Icahn over their opposing views on Herbalife supplements.

He tweeted on Tuesday, "There is a karmic quality to this brief report that reinforces the idea of a circle of life and death."

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