Carl Icahn’s net worth plunges $10 billion after Hindenburg’s scathing report
Corporate activist Carl Icahn’s fortune has plunged by more than $10 billion after short-seller Hindenburg Research accused him of using a “ponzi-like” economic structure at his investment company.
Icahn Enterprises, his publicly traded limited partnership that operates as a holding company, fell by 20 per cent – the most on record – erasing $3.1 billion from his fortune. Hindenburg also disclosed Mr Icahn’s margin loan collateralised by his stake in the company, which was not previously accounted for by the Bloomberg Billionaires Index. That lopped off another $7.3 billion from the net worth calculation.
Overall, Mr Icahn’s fortune sank by an unprecedented 41 per cent to $14.6 billion, according to the wealth index, dropping him from the world’s 58th-richest person to 119th.
Mr Icahn is the latest billionaire to become the target of Hindenburg this year after the New York-based short-seller went after India’s Gautam Adani and Block’s Jack Dorsey.
Hindenburg’s attacks on the companies of Mr Adani and Mr Dorsey caused drops in their fortunes this year of $58 billion and $500 million, respectively.
The activist investor owns more than 85 per cent of Icahn Enterprises’ units through various entities, making up the bulk of his fortune. Hindenburg said the company, with investments in funds managed by Mr Icahn and controlling stakes in businesses, was overleveraged and traded at an extreme premium to its net asset value.
Hindenburg also questioned how the company valued some of its investments.
Mr Icahn, 87, called the report “self-serving” and “intended solely to generate profits on Hindenburg’s short position”.
He has boosted his holding in Icahn Enterprises by taking dividends in the form of additional units. Before Tuesday’s decline, his stake was worth $15.7 billion, compared with $8.4 billion in 2017, even as the value of its shares declined by 4.9 per cent.
Other unit holders received their dividends in cash, making the company attractive to retail investors, Hindenburg said. That was only possible because of Mr Icahn’s decision to take his payment in units, since the company was consistently operating with negative cash flows, the short-seller said.
Mr Icahn began reporting a margin loan collateralised by his stake in the company in 2021, at a time when he had about 65 per cent of his shares pledged.
He boosted the number last year and, as of February, had more than 181 million shares worth $9.2 billion backing the loan, according to the company’s 2022 annual report.