Icahn Enterprises stock drops following Hindenburg Research's concerns, short position

Yahoo Finance's Josh Schafer joins the Live Show to discuss Hindenburg Research's report claiming "Ponzi-like" business concerns surrounding shares of Icahn Enterprises, founded by majority shareholder Carl Icahn, as the stock hits a 52-week low.

影片文字轉錄稿

AKIKO FUJITA: Well, short seller Hindenburg Research has activist investor Carl Icahn in its sights. The firm now shorting Icahn Enterprises alleging it has inflated asset valuations. You can see shares they're closed down nearly 20%. Joining us now is Yahoo Finance Reporter Josh Schafer. Anytime we talk about Carl Icahn certainly a big move there today in terms of what we saw on the back of this.

JOSH SCHAFER: Yeah, Akiko, there's a bit of irony right when we're talking about Carl Icahn, who has made himself famous and made a career of basically calling out mismanagement, right? And now he has one of the more popular short sellers of the last couple of years calling out him for mismanagement. And so essentially what Hindenburg said here was that Icahn has been using money taken in from new investors to pay out dividends to old investors. Hindenburg highlights IEP's 15.8% dividend yield and says that Carl Icahn is essentially achieving that dividend yield through effectively what they called it, they said such Ponzi-like economic structures.

So Hindenburg essentially saying that Icahn is running a Ponzi scheme to some extent in order to pay out this dividend. The stock dropped about 20%. We have not heard from Icahn Enterprises. I reached out to Icahn Enterprises. We have not heard from them. Should note though, Akiko, they do have earnings expected on Friday and there is a conference call scheduled for 10:00 AM on Friday. So I would imagine if Carl Icahn does not speak out about this in the next couple of days we probably will still hear from him on Friday and get their formal response then because we know when these Hindenburg reports come in they often move the stock, but then usually the company that is being accused of wrongdoing has something to say on the other end of course.

AKIKO FUJITA: Yeah, I mean, no question. They'll be forced to respond if we see a move like we did today. Where you pointed to the Hindenburg Research note here, they do talk about Icahn being a legend of Wall Street but that he has made a classic mistake of taking on too much leverage in the face of sustained losses. A combination that rarely ends well. So how does it end, Josh?

JOSH SCHAFER: It's a great question. Akiko, I'm not sure we know the answer yet, right, because it gets too-- is what Hindenburg is reporting actually correct? Because they're reporting that Icahn has committed fraud. So then you'd have to see probably federal regulators get involved in order for this to play out further. That has happened in the past, we should point out, when Hindenburg has accused companies of fraud.

Remember back in 2021 they accused [? Nikola ?] of fraud. That's the electric vehicle maker, electric vehicle company. And that actually was proven and there was federal charges that did come from that. Hindenburg most recently has been in the news. They accused [? Bloch ?] of mismanagement. They accused [? Bloch ?] of basically lying about how many users they've had. Now [? Bloch ?] has come out and denied that.

So again, it's always Hindenburg saying one thing, the company coming and saying something else. But normally you do see some federal investigations when this kind of thing does happen. And that's sort of where we get the more clear cut answers about what's really going on here.

AKIKO FUJITA: Yeah, you're certainly right about that. We have seen a lot of investigations coming out of that report, which is why we saw such a big move on the back of that stock today. Josh, thanks so much for that.