Activist financial investor Carl Icahn is now feeling the effects of stock market bets against him firsthand. Shares of its conglomerate Icahn Enterprises fell 24.4 percent Tuesday to a three-year low of $38.10 after it was manhandled by short seller Hindenburg Research. Hindenburg announced a short position in Icahn Enterprises. In these stock market bets of falling prices, the short sellers usually sell borrowed securities with the aim of buying them back at a lower price. At the same time, Hindenburg publishes reports about alleged misconduct by the targeted companies, which cause prices to falter.
A prominent example this year was the Indian Adani group, which Hindenburg suffered a loss of around $100 billion in market capitalization as a result. In the case of Icahn, too, Hindenburg denounces alleged abuses: the valuation of some business units is more than 75 percent too high. It was also said that Icahn was working with structures similar to a Ponzi scheme. This term is used for a scam that steals money from investors with promises of high returns that are not fulfilled. Icahn Enterprises was initially unable to comment. Reuters was unable to verify the accuracy of the allegations mentioned.
Based in Sunny Isles Beach, Florida, Icahn Enterprises is one of the most successful activist investment firms and the primary investment vehicle of billionaire Icahn, himself known for his confrontations with several high-profile firms.