On Tuesday, billionaire Carl Icahn saw his net worth decline by 41% to $14.6 billion following the publication of a report by Hindenburg Research accusing him of operating a “ponzi-like” financial structure at his investment company, Icahn Enterprises. The report accuses the company of being over-leveraged and trading at an extreme premium to its net asset value. Icahn Enterprises fell by a record 20% after the report was published, wiping out $3.1 billion from his fortune. Furthermore, the report detailed a margin loan collateralised by Icahn’s stake in the company, taking an additional $7.3 billion from the calculations. This marks the steepest ever fall in Icahn’s fortune, demoting him from the 58th richest person in the world to the 119th.
Icahn’s firm, Icahn Enterprises, which operates as a publicly traded limited partnership, has investments in funds managed by Icahn. Hindenburg Research claimed that the firm used new investments to pay out dividends to old investors. In response to the report, Icahn called it “self-serving,” while stating that the company “operates from a position of strength” with $2 billion in cash as of 21 March.
This is not the first time that Hindenburg Research has targeted a high-profile public figure in recent months. The short-seller has released reports accusing India’s Adani Group of engaging in “a brazen stock manipulation and accounting fraud scheme” and claiming that payments company Block possessed “wildly overvalued technology.”
Icahn, who holds more than 85% of Icahn Enterprises’s units through various entities, has come under heat for failing to disclose how much he has borrowed against his shares. Meanwhile, analysts suggest that the short attack on Icahn and others will direct greater focus toward the “parent/child” structures used by family offices.
In conclusion, Carl Icahn saw his fortune plummet by over $10 billion after short-seller Hindenburg Research accused him of using a “ponzi-like” financial structure at his investment company, Icahn Enterprises. This comes following a stinging report that alleged that the company was over-leveraged and trading at an extreme premium to its net asset value. Icahn, who called the report “self-serving,” holds more than 85% of Icahn Enterprises’s units through various entities, making up the bulk of his fortune.
