In a surprising move, Icahn Enterprises, the investment firm owned by renowned activist investor Carl Icahn, has decided to cut its quarterly payout by half. This decision comes just months after short-seller Hindenburg Research accused the company of operating a “Ponzi-like” structure to fund its dividends. As a result, the company’s shares took a 23% hit, adding to the already 35% drop since the short seller’s disclosure on May 2. Hindenburg Research remains short on the company and reiterated its position on X (formerly known as Twitter).
Icahn Enterprises has a history of challenging overvalued companies, making Hindenburg’s attack a rare challenge to Icahn’s own firm. Hindenburg had previously stated that Icahn Enterprises would likely cut or eliminate its dividend completely unless there was a significant improvement in investment performance. In response to the allegations, Icahn Enterprises announced on Friday that it would distribute $1 per depositary unit to investors for the second quarter, a decrease from the usual $2 payout.
Icahn has strongly denied the allegations made by Hindenburg Research and has vowed to fight back against the short seller’s report. On Friday, the company released a statement asserting its commitment to continue distributing dividends despite Hindenburg’s claims. Furthermore, Icahn recently took steps to address the damage caused by the short seller by restructuring $3.7 billion in personal loans, effectively separating his obligations from the holding company’s share price.
In terms of financial performance, Icahn Enterprises reported a net loss of $269 million or 72 cents per depositary unit for the three months ending June 30. This represents a significant increase compared to the $128 million or 41 cents per unit loss reported during the same period last year. Despite the challenges and negative press, Icahn remains a prominent figure in the investment world, known for his activist approach and ability to identify overvalued companies.
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