WASHINGTON, D.C. (AP) - The business empire owned by activist investor and corporate raider Carl Icahn is continuing to fall amid the fallout from a recent short-selling report by Hindenburg Research. Losses are accelerating after a longtime competitor echoes these allegations.
Then, you can get started.
Hindenburg published a report on May 2 claiming that Icahn Enterprises had been inflating asset values. The report also pointed out 'ponzi like economic structures' within the holding company, alleging that Icahn had used money from new shareholders to pay dividends to older investors. Icahn Enterprises, based in Sunny Isles Beach in Florida, has stakes across a range of industries, from automotive and food packaging to real estate, pharmaceuticals and real estate.
Icahn Enterprises' stock and market value have plummeted since Hindenburg announced its short position. IEP's share price has dropped by almost 63% and the company's market value has been cut in half since May 1.
Hindenburg has a reputation for short-selling. This involves borrowing an asset that one believes will lose value, selling it for its current price and then buying the same number back at a cheaper price later.
Icahn has responded to Hindenburg. The billionaire called the report "self-serving", and that it was aimed at generating profits from Hindenburg’s short position, while IEP’s long-term unitsholders were left out.
Icahn, in a statement issued on May 10, promised that his company would "take all necessary steps to protect unitholders' rights and fight back."
Some critics of Icahn - a Wall Street legend known for targeting weak companies to sell them as parts - say that the report's conclusions feel like a complete circle.
Bill Ackman (CEO of Pershing Square and long-time rival to Icahn) wrote on Twitter in May: "There is an karmic aspect to the short report of (Hindenburg), which reinforces the notion that life and death are a cycle."
Ackman has double-downed this week. He shared a longer tweet on Wednesday that covered multiple aspects surrounding the Icahn Enterprises fallout. This included a questioning as to why Icahn had not disclosed the terms of his loan and the potential concerns of market lenders over the situation.
According to a filing made by Icahn Enterprises in the SEC on May 10, a week after Hindenburg's report was published, the U.S. attorney's office of the Southern District of New York contacted the company on May 3, seeking information about the company and its finances. Icahn Enterprises stated that it would cooperate with the request.
Icahn Enterprises stated in the filing that the U.S. attorney's office had not made any allegations or claims against us or Mr. Icahn regarding the investigation. We do not believe that this investigation will have an impact on our financial situation, results of operation, or cash flow.
Icahn Enterprises stock fell more than 20% on Thursday, a day after Ackman tweeted his most recent message.
Icahn's favourite Wall Street saying is "If you want to be a friend, buy a dog." Icahn made many enemies during his long career. I don't think he has many real friends. Ackman wrote Wednesday that he could use a friend.
Ackman's and Icahn’s feud goes back decades. It includes a 2003 agreement
This led to a long-running business dispute.
The feud peaked in 2013 when Ackman denounced Herbalife and used short trades to bet heavily against nutrition supplements company. Icahn disagreed vehemently and increased his stakes in Herbalife. They then got into a screaming match on live TV.