 "Hindenburg takes on billionaire Icahn with latest short position")
Bre Bradham
Icahn Enterprises shares tumbled after becoming the latest target of a short call by Hindenburg Research, which claims the company is overpriced and said it found evidence of inflated valuations for some of its assets.
“We think Icahn, a legend of Wall Street, has made a classic mistake of taking on too much leverage in the face of sustained losses: a combination that rarely ends well,” Hindenburg said in the report.
Shares of Icahn Enterprises, of which famed activist investor Carl Icahn (pictured) holds stake of more than 88 per cent, fell as much as 24 per cent Tuesday morning in New York, their biggest intraday drop since March 2010, after Hindenburg said it was short units of the diversified holding company.
Icahn Enterprises didn’t immediately respond to a request for comment from Bloomberg News.
In its report, Hindenburg says Icahn Enterprises’ value is inflated by 75 per cent or more, noting that it trades at a premium of more than 200 per cent to its net asset value. By comparison, other closed-end holding companies like Dan Loeb’s Third Point and Bill Ackman’s Pershing Square trade at discounts to their NAV, according to Hindenburg.
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The report also raises questions about the size of Icahn Enterprises’ dividend yield.
“Icahn has been using money taken in from new investors to pay out dividends to old investors,” Hindenburg said in the report. Bloomberg