Shares of Icahn Enterprises, the firm led by the billionaire financier Carl C. Icahn, fell as much as 30 percent on Friday after the saber-rattling investor, under pressure from a short seller, said his firm would halve its quarterly dividend and refocus on the style of activist investing that brought him his fame and fortune.
The announcement comes three months after Hindenburg Research, the short seller, released a report questioning the financials of Icahn Enterprises, and whether it had the wherewithal to continue paying a dividend to shareholders. Hindenburg, led by Nathan Anderson, accused Mr. Icahn’s firm of running “Ponzi-like economic structures.” Short sellers profit when stock prices fall.
The plunging stock price of Icahn Enterprises is the latest setback for the 87-year-old investor who, for more than four decades, has taken on publicly traded companies and pressured their chief executives to make changes.
Including the drop on Friday, shares of Mr. Icahn’s firm are down roughly 50 percent since Hindenburg released its report on May 2.
In the announcement, made as part of the firm’s second-quarter earnings report, Mr. Icahn called the Hindenburg report “misleading and self-serving.” But he issued a mea culpa in a separate letter to investors, saying that although he had delivered index-beating long-term gains through activist investing, his own short bets against the stock market weighed on his firm’s returns.
“While we made money on the long side through our activism efforts, our returns have been overwhelmed by our overly bearish view of the market and related oversized short (hedge) positions,” he wrote, noting that he has unwound most of his so-called hedges, or bets against a rising stock market.
The firm said that its net losses for the second quarter of 2023 jumped to $269 million on $2.5 billion of revenue compared with $128 million in losses on $3.5 billion of revenue in the second quarter of 2022.
Mr. Icahn also said that the board would continue to assess its plans for a dividend each quarter based on “current economic conditions and business performance,” among other factors.
Mr. Anderson took a victory lap on Friday morning. In a post on X, the social media site formerly known as Twitter, he noted his May 2 prediction that “Icahn Enterprises will eventually cut or eliminate its dividend entirely, barring a miracle turnaround in investment performance.”
He said he would continue to hold his so-called short bet against the stock.
Still Mr. Icahn has not shied away from his own fights in the last few months. Most recently, he secured a victory against the management of the gene-sequencing company Illumina. After he agitated for change at the company, shareholders voted in May in favor of adding an Icahn board member and voted to remove the Illumina chairman. In June, Illumina’s chief executive resigned.
Maureen Farrell is a business reporter, covering a wide-ranging beat that includes private equity, hedge funds and billionaires. More about Maureen Farrell
Source: Read Full Article