Icahn Enterprises Fires Back At Hindenburg's Ponzi-Like Scheme Allegations: 'Intended Solely To Generate Profits'

Icahn Enterprises LP IEP responded strongly to a short-seller report by Hindenburg Research that accused the investment firm's founder, Carl Icahn, of mismanagement.

What Happened: Hindenburg's report alleged that IEP operated a Ponzi-like scheme, utilizing funds from new investors to distribute dividends to previous investors, and raised doubts about the legality of IEP's then-15.8% dividend yield.

The report also criticized Icahn's use of leverage in the face of sustained losses, a combination that Hindenburg said, "rarely ends well."

In response, Icahn Enterprises said that it had around $2 billion in cash and cash equivalents on its balance sheet as of March 31 and was operating from "a position of strength."

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The company further asserted that Hindenburg's report was "intended solely to generate profits" on Hindenburg's short position at the expense of IEP's long-term unitholders. Icahn himself, the statement said, "continues to believe that activism is the best paradigm for investing."

Despite IEP's confident response, Hindenburg's report caused a significant drop in IEP's share price, which plunged 20% on Tuesday.

Icahn owns 85% of IEP with his "affiliates."

He has been involved in several high-profile activist campaigns in recent years, including McDonald's, Kroger, and Illumina, and has been known to engage in public spats with other investors like Pershing Square CEO Bill Ackman.

While Hindenburg's report raised concerns about IEP's financial practices and management, Icahn Enterprises stands by its public disclosures and maintains that its performance will speak for itself over the long term.

Price Action: Shares of IEP are trading 36% lower this week to $32.63. Shares have not traded in the $30 range since 2012.

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