(Bloomberg) — Under pressure from the short seller, Icahn Enterprises LP plunged as much as 20% after revelations that federal prosecutors had reached out for information.
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It also released a letter responding to short seller Hindenburg Research’s allegations in the most detail yet since Icahn’s shares came under scrutiny on May 2. She said she had “the liquidity, the strategy and the know-how” to fight back against the investor.
Prior to that statement, Icahn Enterprises said in a filing on Wednesday that the US Attorney’s Office for the Southern District of New York was “seeking information relating to it and certain of its corporate governance, capitalization of stock offerings, dividends, valuation, marketing, due diligence, and other materials.”
Icahn Enterprises said it is cooperating with the application and providing the documents.
“The U.S. Attorney’s Office has not made any allegations or allegations against us or Mr. Icahn in connection with the prior investigation,” the company said.
A spokesman for the US Attorney’s office declined to comment.
Shares of Icahn Enterprises fell 20% to $30.72 in 11:22 a.m. New York trading Wednesday, giving it a market value of about $11.3 billion.
“We believe we are maintaining a robust compliance program, and while no assurances can be provided and we are still evaluating the matter, we do not currently believe that this inquiry will have a material impact on our business, financial condition, results of operations or cash flows,” the company said.
The news came as Icahn Enterprises reported first-quarter earnings, with CEO David Willetts saying it stands behind its fundamentals. Icahn did not appear on the call.
Hindenburg stated on May 2 that the value of Icahn’s companies have inflated by 75% or more, indicating that they trade at a premium of over 200% to their net asset value. Other closed holding companies including Dan Loeb’s Third Point and Bill Ackman’s Pershing Square trade at discounts to NAV.
In a press release in response to the Hindenburg Wednesday, Icahn said the company’s NAV uses “standard industry valuation methods” and has been assisted by third-party consultants.
Icahn said comparing Icahn to Loeb’s and Ackman’s closed-end funds is like “comparing apples to oranges” because Icahn said he doesn’t charge investors.
“There is no comparison between our activist strategy and business and closed-end funds managed by others,” the company said.
Icahn, in his usual reckless fashion, also took some shots at the short seller. “Hindenburg Research, founded by Nathan Anderson, would be more appropriately called Blitzkrieg Research due to its tactics of deliberate destruction of property and harm to innocent civilians,” he said.
Anderson did not immediately respond to a request for comment.
— with assistance from Chris Dolmich.
(Updates with a message from Icahn beginning in the second paragraph)
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