Source: Bloomberg
Icahn entreprises falls on request from Federal Prosecutors 10 may 2023
Icahn entreprises drops to decade low as rout from short report deepens 3 may 2023
Source: https://hindenburgresearch.com/icahn/
Icahn Enterprises (IEP) is an ~$18 billion market cap holding company run by corporate raider and activist investor Carl Icahn, who, along with his son Brett, own approximately 85% of the company.
Our research has found that IEP units are inflated by 75%+ due to 3 key reasons: (1) IEP trades at a 218% premium to its last reported net asset value (NAV), vastly higher than all comparables (2) we’ve uncovered clear evidence of inflated valuation marks for IEP’s less liquid and private assets (3) the company has suffered additional performance losses year to date following its last disclosure.
Icahn’s Investment Portfolio Has Lost 53% Since 2014.
Icahn’s Dividends Are Mathematically Unsustainable: Since 2014, $1.5
Billion In Cash Dividends Were Paid Despite Negative Free Cash Flow of $4.9 Billion, Owing To Poor Performance
Icahn’s Investment Portfolio Trades At A Higher Premium To NAV Than All U.S.-Based Closed-End Funds In Bloomberg’s Database.
IEP Trades At An Absurd 218% Premium To Its Last Reported Indicative NAV
By Comparison, Most Peers Trade Around Or At A Discount To NAV
The Company Has Supported Its Dividend And Declining Asset Values By Selling $1.7 Billion Through At The Market (ATM) Unit Sales Over The Past 4 Years. The means that Icahn has been using money taken in from new investors to pay out dividends to old investors. 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”.
Icahn has made a classic mistake of taking on too much leverage in the face of sustained losses: a combination that rarely ends well.
Icahn Enterprises Is Significantly Overvalued Relative to Its Last Reported NAV
Our Review Also Shows That Icahn’s Latest Reported NAV is Further Inflated By An Estimated 22% Due To (i) Continuing 2023 Year To Date Investment Losses And (ii) Overstated Valuation Marks On Less Liquid Investments
Icahn Started The Year With a 47% Net Short Position That We Estimated Has Contributed $272 Million In Year To Date Losses Due To Broad-Mark Gains
Icahn’s Disclosed Longs Also Declined, Contributing An Estimated $151 Million In Year To Date Losses
Icahn Has Not Disclosed Key Terms of His Margin Loans Such As Loan To Value (LTV) Or Other Key Criteria That Would Give Unitholders A Full Understanding Of This Risk