New York (AP) – After months of fallout from a Damned short selling reportShares of activist investor Carl Icahn’s Icahn Enterprises group of firms plunged on Friday after the corporate halved its quarterly dividend.
In sharing its second-quarter monetary outcomes on Friday, Icahn Enterprises introduced a dividend of $1 per unit of deposit, representing an annualized yield of 12%. That is half of the corporate’s earlier $2-per-unit fee. After the announcement, IEP inventory fell about 30% on Friday morning.
The quarterly break up reduce comes months after a Could 2 report from short-selling agency Hindenburg Analysis, which claimed the IEP was utilizing inflated asset valuations. The report additionally referred to “Ponzi-like financial buildings” on the holding firm – alleging that Icahn had used cash from new traders to pay dividends to outdated traders.
The IEP and Icahn deny the allegations within the Hindenburg Report, and have beforehand said that they “will combat again.”
Properly earlier than Friday’s announcement, the IEP’s market capitalization and shares had each fallen because the Hindenburg issued its quick place. The corporate’s market capitalization has been reduce almost in half — from about $18 billion on Could 1 to about $9 billion on Friday — and IEP inventory is down about 51% because the starting of Could.
For the second quarter, the IEP reported a internet lack of $269 million, larger than final yr’s lack of $128 million.
“I consider that the second quarter displays partially the affect of quick promoting on firms that we management or put money into, which I attribute to the deceptive and self-righteous Hindenburg Report on our firm. It additionally displays the dimensions of the hedge e book relative to our activist technique,” Icahn mentioned in a press release on Friday, including. that the corporate “doesn’t intend” to permit the Hindenburg Report back to intervene with the dividend.
In a Friday publish on X, the platform previously often known as Twitter, Hindenburg mentioned he stays quick on the IEP — and in addition referenced his Could forecast, which said that “Icahn Ventures will finally reduce its dividend or eradicate it totally, barring a miraculous turnaround in funding efficiency.”
The Hindenburg is infamous for its quick promoting. This includes borrowing shares that one expects to lose worth and promoting them on the present market worth with a plan to purchase again the identical variety of shares later at a cheaper price.
Icahn is a Wall Avenue legend recognized for concentrating on weak firms and promoting them off for elements himself. Critics mentioned the Hindenburg’s findings look like an entire second — with Invoice Ackman, CEO of Pershing Sq. Capital Administration and longtime Icahn rival, significantly “karmic quality” From the quick report in Could.
Icahn reiterated on Friday that activism is the “finest funding mannequin” and that the corporate will refocus on activism.