- Hindenburg Analysis unveiled its brief place towards Carl Icahn’s holding firm on Tuesday.
- In a brand new report, the agency alleges Icahn Enterprises has used “inflated” asset valuations.
The shorter vendor that took on Asia’s richest man is focusing on the enterprise empire run by one other billionaire: Carl Icahn.
Hindenburg Analysis, which earlier this yr launched a scathing report on Indian conglomerate Adani Group, unveiled its brief place towards Icahn Enterprises on Tuesday. It claims the Wall Avenue legend’s holding firm has used inflated asset valuations and has been run like a Ponzi scheme.
Causes Hindenburg provides for its brief place embrace:
“(1) IEP trades at a 218% premium to its final reported web asset worth (NAV), vastly larger than all comparables (2) we have uncovered clear proof of inflated valuation marks for IEP’s much less liquid and personal property (3) the corporate has suffered extra efficiency losses yr up to now following its final disclosure.”
The report additionally says that Icahn’s agency has used new investor cash to pay outdated traders in a construction akin to a Ponzi scheme.
“Briefly, Icahn has been utilizing cash taken in from new traders to pay out dividends to outdated traders. Such Ponzi-like financial buildings are sustainable solely to the extent that new cash is prepared to threat being the final one ‘holding the bag’.”
Shares of Icahn Enterprises plunged practically 20% shortly after the opening bell, buying and selling at $41.49 at 10:05 a.m. ET.
Icahn Enterprises didn’t instantly reply to Insider’s request for remark.
“Total, we expect Icahn, a legend of Wall Avenue, has made a traditional mistake of taking up an excessive amount of leverage within the face of sustained losses: a mixture that hardly ever ends properly,” the report concludes.
Hindenburg’s report on Gautam Adani’s firm shaved billions off of its market cap and resulted in an enormous blow to the billionaire’s web value.
Hindenburg accused the corporate of “brazen inventory manipulation” and “accounting fraud” in its report in January. A number of months later, the brief vendor revealed that it was additionally focusing on funds firm Block, claiming that it was peddling inaccurate person metrics for its Money App service to mislead traders.