Billionaire investor Carl Icahn’s estimated net worth has fallen by nearly $3 billion in the past 24 hours after New York-based activist investor Hindenburg Research accused his holding company of artificially pumping its stock price with a “ponzi-like economic structure.”
File Photo: Carl Icahn’s holding firm has been accused of engaging in a “ponzi-like” scheme to ... [+]
According to Forbes estimates, Icahn’s current net worth stands at $14.7 billion, down $2.9 billion from the previous day.
The 87-year-old billionaire is currently 123rd on Forbes’ real-time list of the world’s wealthiest people.
Icahn’s drop of nearly $3 billion from his total net worth was the steepest decline for any individual on the real-time billionaire’s list since 5 p.m. ET Monday.
On Tuesday, shares of Icahn Enterprises—the holding company behind the billionaire’s investments—fell nearly 20% and they were down a further 0.64% in pre-market trading early on Wednesday.
Alongside its accusations, Hindenburg disclosed it had taken a short position against Icahn Enterprises.
In a report published on Tuesday, Hindenburg said it believed Icahn Enterprises (IEP) units were overvalued by 75%. The short seller claimed that IEP’s stock was trading at such a high premium because of its dividend yield of 15.8%—the highest for any large company in the U.S. and accused Icahn of inflating this dividend yield with a “ponzi-like economic structure.” Hindenburg alleges that “Icahn has been using money taken in from new investors to pay out dividends to old investors.” The short seller also accused the investment bank Jefferies of being involved in this process by “luring in retail investors” to Icahn Enterprises by having its research unit publish bullish reports about the company and then selling the stock to investors.
Responding to Hindenburg’s report, Icahn said: “We believe the self-serving short seller report published by Hindenburg Research today was intended solely to generate profits on Hindenburg's short position at the expense of IEP's long-term unitholders. We stand by our public disclosures.”
In its report, Hindenburg wrote: “Carl Icahn has built an aura of invincibility around himself—a titan of Wall Street with a knack for coming out on top. But while the focus has always been on his grand public activist campaigns, quieter long-term investment losses, along with the substantial use of leverage, have whittled away his empire…Overall, we think Icahn, a legend of Wall Street, has made a classic mistake of taking on too much leverage in the face of sustained losses: a combination that rarely ends well.”
Billionaire Carl Icahn’s Empire Propped Up By ‘Ponzi-Like’ Scheme, Short-Seller Hindenburg Claims (Forbes)