Trading in shares of Icahn Enterprises LP was choppy Thursday amid the continued fallout from a short seller’s report that was critical of the investment arm of activist investor Carl Icahn.
The stock
IEP,
was moving between gains and losses, but has lost 36% of its value and $6.5 billion of market cap this week in the wake of the report, which accused Icahn Enterprises of inflating its value. On Wednesday, the company said it is moving the release of first-quarter earnings to before market open on May 10. The earnings were previously expected on Friday. It did not offer an explanation for the move.
The company’s bonds, meanwhile, also remained under pressure, as the following charts from market-data company BondCliQ show.
The longest-dated maturity, the the 4.375% notes that mature on Feb. 1, 2029, were trading below 80 cents on the dollar.
Icahn Enterprises corporate bond prices. SOURCE: BONDCLIQ
The volume chart shows that clients were buying more from dealers than they were selling, however.
Icahn Enterprises bond volumes. SOURCE: BONDCLIQ
The short-selling report by Nate Anderson’s Hindenburg Research also highlighted the existence of personal indebtedness — specifically, that Icahn had borrowed against shares, or units, he owned in Icahn Enterprises, his publicly traded investing vehicle.
The personal indebtedness had been fully disclosed by Icahn in securities filings, but few on Wall Street seemed to take notice.
The filings didn’t mention the purpose of the loan or where the proceeds were directed but did indicate that Icahn had “sufficient additional assets to satisfy any obligations pursuant to these loans without recourse to the depositary units.”
Icahn also that he had “no need or intention to allow foreclosure on such collateral.” There are no indications in Icahn Enterprises’ securities filings of when Icahn might need to put up more collateral to back his margin loans.
Icahn put out a statement Tuesday afternoon calling the Hindenburg report self-serving and saying the short seller’s aim was to profit in the short term from bets that Icahn Enterprises’ shares would decline. “We stand by our public disclosures and we believe that [Icahn Enterprises’] performance will speak for itself over the long term as it always has,” Icahn said in the statement.
For more, see: Hindenburg’s short-seller report highlights Carl Icahn’s margin loan, as stock tumbles a second day
Calls to Icahn have not been returned.
Icahn and his son Brett own 85% of Icahn Enterprises, leaving a small float for short sellers.
Hindenburg Research typically aims to profit from the decline in the value of the shares of the companies that it writes negative reports on. The short seller notably targeted zero-emission truck company Nikola about three years ago.
