Key Points
In a report published on Tuesday, Hindenburg accused IEP of overvaluing its holdings and relying on a Ponzi-like structure to pay dividends..
Icahn said in an IEP statement that Hindenburgs self-serving report was aimed at generating profits at the expense of IEPs long-term shareholders.. Hindenburg Research, the short investor whose reports on companies have erased a big chunk of their value, criticized Icahn Enterprises LP (IEP) on Tuesday over the reporting of its finances, leading to a 20% drop in the shares of activist investor Carl Icahns firm..
The development represents a rare challenge for Icahn who is accustomed, as one of the pioneers of shareholder activism, to dressing down companies over their governance and transparency, but has not had to field such criticism himself...
IEP recorded its 90% stake in meat-packaging business Viskase Companies Inc at $243 million at year-end when its market value at the time, based on how its shares were trading, was just $89 million, Hindenburg said, citing IEPs filings...
The short seller noted that Jefferies, the only major brokerage to cover IEP, assumes in its equity research that Icahns dividends will be paid in perpetuity even in a worst-case scenario, while at the same time profiting from arranging IEPs stock sales..
