Why Icahn Enterprises Lost Half Its Value in May
For much of his nearly half-century career on Wall Street, Carl Icahn has been known as an activist investor. But in May, the tables were turned when a prominent short-seller released a report critical of his Icahn Enterprises (NASDAQ: IEP). Shares of Icahn Enterprises fell by 55.6% in May, according to data provided by S&P Global Market Intelligence, in the wake of that report and other commentary that followed.
Icahn is one of the best-known activist investors, with a strong track record dating back to the early 1980s of agitating corporate boards to make changes that he feels will boost share prices. But in early May, activist Hindenburg Research released a report calling Icahn Enterprises "substantially overvalued," accusing the company of overstating the value of its portfolio and relying on a "Ponzi-like" structure to fund its dividend.
Hindenburg has a decent reputation, and its reports are usually taken seriously. Icahn Enterprises responded by calling the report "self-serving," and vowed to fight back against the accusations, but the company also disclosed that the U.S. Attorney's office for the Southern District of New York had contacted it seeking information about corporate governance, dividends, valuations, and other topics.
Source Fool.com
