Business

Carl Icahn’s hedge fund suffers 20% stock drop after revealing federal probe

By
Social Links for Ariel Zilber
Published May 10, 2023, 12:30 p.m. ET

Shares of billionaire Carl Icahn’s hedge fund tumbled 20% on Wednesday after it revealed that federal prosecutors sought documents from the company just a day after Hindenburg Research took a short position on the firm.

Icahn Enterprises said in a Wednesday filing with the Securities and Exchange Commission that the US Attorney in the Southern District of New York reached out to the fund on May 3.

According to the filing, prosecutors contacted the company “seeking production of information” about its corporate governance as well as “capitalization, securities offerings, dividends, valuation, marketing materials, due diligence, and other materials.”

Icahn Enterprises — whose 87-year-old founder is among the most iconic investors on Wall Street — said in the filing that it was cooperating with the request.

“The US Attorney’s office has not made any claims or allegations against us or Mr. Icahn with respect to the foregoing inquiry,” the company said in the filing.

“We believe that we maintain a strong compliance program and, while no assurances can be made and we are still evaluating the matter, we do not currently believe this inquiry will have a material impact on our business, financial condition, results of operations or cash flows.”

A spokesperson for the Southern District of New York declined to comment.

Carl Icahn has seen his net worth plunge by more than $10 billion since Hindenburg Research took a short position on his company, Icahn Enterprises.
Carl Icahn has seen his net worth plunge by more than $10 billion since Hindenburg Research took a short position on his company, Icahn Enterprises. NBCU Photo Bank/NBCUniversal via Getty Images
Shares of Icahn Enterprises fell by as much as 20% during trading on Wall Street on Wednesday.
Shares of Icahn Enterprises fell by as much as 20% during trading on Wall Street on Wednesday. Google Finance

Last week, Hindenburg took aim at Icahn’s holding company whose portfolio includes companies that specialize in energy, automotive, food packaging, real estate, and metals.

Icahn Enterprises said on Wednesday that it would take steps to “fight back” against Hindenburg, which last week accused the company of operating a “Ponzi-like” structure that has falsely inflated the value of his investments.

“Hindenburg Research, founded by Nathan Anderson, would be more aptly named Blitzkrieg Research given its tactics of wantonly destroying property and harming innocent civilians,” Icahn Enterprises said in a statement.

The billionaire, whose net worth fell from around $25 billion at the end of April to around $14.4 billion as of Wednesday, vowed “to protect our unitholders and fight back.”

The data on Icahn’s wealth was compiled by Bloomberg Billionaires Index.

Icahn acknowledged that the investment division of his company has underperformed in recent years.

“We recently have taken steps to reduce the short positions in our hedge book and concentrate for the most part on activism, which has served us so well in the past,” Icahn said in a press release.

“We believe our existing portfolio has considerable upside potential over the coming years,” he said.

Icahn Enterprises released its earnings report on Wednesday showing a $250 million loss in net income.