Icahn Enterprises (NASDAQ:IEP) stock rose over 10% after founder Carl Icahn said he “untied” his personal loans from the trading price of the stock. Icahn had borrowed against the value of shares in the company.
Links between the stock’s trading price and the 87-year-old investor’s personal loans were a key criticism of short seller Hindenburg Research in their May 2 report.
In the plan between Icahn and his banks, Icahn’s loans will be repaid over three years, and the collateral will be released. Icahn stock is set to open for trade this morning at about $32.50 per share, a market cap of $11.8 billion. The company’s value has fallen 42% since the report came out.
Icahn Stop Hindenberg?
Hindenberg said IEP stock traded for over twice the value of its net assets and inflated the value of less liquid and private investments. IEP said the company is still comfortable with valuations reported in its public filings.
Icahn’s initial response to the Hindenberg report was to denounce it as “self-serving.” He later offered investors a special $2/share dividend, which briefly halted the stock’s decline.
Icahn is a long-time corporate raider who is still actively attacking other companies. Most recently, he forced the resignation of Illumina (NASDAQ:ILMN) CEO Francis DeSouza after a proxy battle at the genetics sequencing company over an acquisition. Illumina then announced job cuts aimed at saving $100 million.
In 2023 alone, Hindenberg so far has issued reports against India’s Adani Group and Block (NASDAQ:SQ), the financial technology company formerly known as Square. On June 6, it announced a short position in Tingo Group (NASDAQ:TIO), which does business in Africa.
IEP Stock: What Happens Next?
The battle between Icahn and Hindenberg was one between different generations and styles of attack, each claiming to support small shareholders. Icahn buys stock and seeks to influence boards to change policies. Hindenberg shorts stocks while issuing negative reports on them.
Both strategies can work when the attacker does their homework.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
