Carl Icahn used to be on the offensive, but this time, he’s the one on all-out attack.
on May 2 a reportWell-known short-selling firm Hindenburg Research has targeted Icahn’s publicly traded conglomerate, Icahn Enterprises, alleging that the company uses an ample but unsustainable dividend yield to lure retail investors into a “Ponzi-like” operation.
“Icahn has been using money taken from new investors to pay dividends to old investors,” Hindenburg wrote while revealing that he had taken a short position against his company’s stock.
Icahn Enterprises did not immediately respond to Fortune’s request for comment on Hindenburg’s allegations. But on May 10th statement Responding to the Hindenburg Report, Icahn pushed back with his exemplary bravery.
“Hindenburg Research, founded by Nathan Anderson, would be more appropriately called Blitzkrieg Research due to its tactics of willfully destroying property and harming innocent civilians. Anderson’s modus operandi is to launch disinformation campaigns to tarnish companies’ images, damage their reputations, and destroy the hard-earned savings of individual investors,” he wrote. billionaire, vowing to “answer” the allegations.
Billionaire Icahn’s arch-rival, Pershing Square Capital co-founder and CEO Bill Ackman, was quick to comment on the irony of the company’s attacker, well known for his harsh criticism of executive mismanagement and corporate wrongdoing, being accused of his crimes. There is a karmic quality to this short report that reinforces the idea of the circle of life and death. As such, it should read,” he wrote on May 2 tweet.
Ikan had a long-running feud with Ackman, which culminated in 2013 CNBC interview He called the founder of Pershing Square Capital a “liar” and a “crybaby” after the two took opposing positions at multi-tiered market company Herbalife. Ackman famously shorted Herbalife in 2012, arguing that the company was a Ponzi scheme and that its stock would eventually drop to $0 per share, but he was forced to drop his bet in 2018 as the stock soared after Icahn invested in the company.
But on Thursday, it was Icahn who came under pressure, as Hindenburg alleged in a follow-up report that he had borrowed billions against his holdings in Icahn Ventures (IEP) and invested “some or all” of the money in his own funds.
“These funds subsequently caused great losses, which could be extremely dangerous both for Carl Icahn himself, and for the owners of the IEPs,” Hindenburg wrote, noting that he multiplied on its bet against Icahn companies by also shorting its bonds.
Icahn Enterprises did not immediately respond to Fortune’s request for comment.
Carl Icahn was known for his violent tactics as a corporate raider in the 1980s, played by director Oliver Stone Depends on For creating Michael Douglas’ character “Good Greed” Gordon Gekko in the 1987 film Wall Street. A billionaire typically buys a large number of shares in companies he feels have been mismanaged and then pushes for board changes, layoffs or asset sales in an effort to improve profits and share prices. Although Icahn, 87, isn’t quite the aggressive activist investor he once was, he still likes to criticize corporate mismanagement.
In 2015, he warned of a pending recession and criticized US CEOs for borrowing money for buybacks and acquisitions in an attempt to artificially inflate profits in a 15-minute video titled “imminent danger. ”
“It is financial engineering at its height,” he said. “The earnings being made today, I think are very suspicious.”
But now Icahn is being accused of his own kind of financial engineering. Icahn Enterprises stock is down more than 30% since Hindenburg first disclosed its short position earlier this month, dropping Icahn’s personal net worth by more than $10 billion, according to the Bloomberg Billionaires Index.
The Icahn fallout comes after Hindenburg targeted India’s Adani Group in January, sending the company into a tailspin that saw CEO and co-founder Gautam Adani’s net worth drop by $60 billion, according to Bloomberg Billionaires Index.
The Hindenburg may not be the investor’s only problem. Icahn Enterprises disclosed in a May 10 regulatory filing that federal prosecutors from the United States Attorney’s Office for the Southern District of New York were seeking information regarding “corporate governance, capitalization, stock offerings, earnings, valuation, marketing materials, due diligence and other materials.” .” The revelation came just over a week after the first Hindenbug attack on the company.
Icahn Enterprises said it is cooperating with the request, adding that “the U.S. Attorney’s Office has not made any claims or allegations against us or Mr. Icahn.”
