Tuesday saw a sharp decline in the holding company of renowned activist investor Carl Icahn as a result of a negative report by American short seller Hindenberg Research.
The analysis by Hindenberg is the most recent in a string of in-depth investigations that have targeted some of the greatest names in business, including the empire of Indian billionaire Gautam Adani and the payments startup Block, which is funded by Jack Dorsey.
Tuesday afternoon saw a more than 25% decline in the share price of Icahn Enterprises as a result of the publication of the highly scathing assessment into its business operations.
Stock price declines are the gamble that short sellers like Hindenberg make, with the possibility of significant payments if they are correct.
According to the investigation, Icahn Enterprises “inflated” the worth of its assets, and “Icahn has been using money taken in from new investors to pay out dividends to old investors.”
AFP's request for comment was not immediately answered by Icahn Enterprises.
“Such Ponzi-like economic structures are sustainable only to the extent that new money is willing to risk being the last one 'holding the bag,'” Hindenberg said in its research.
Icahn, a Wall Street titan, they claimed, “has made a classic mistake of taking on too much leverage in the face of sustained losses: a combination that rarely ends well.”
