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A short-seller called Icahn Enterprises overvalued, saying it relies on a "Ponzi-like" structure to fund its dividend. Federal officials are also investigating.
Icahn Enterprises L.P. NASDAQ: IEP is a diversified holding company founded in 1987 by famous American Investor Carl Icahn.
Recently, the investment research firm Hindenburg Research issued a short report on Carl Icahn's Icahn Enterprises. Bill Ackman called the report "fascinating" on Twitter and seemed to agree with several parts of the short thesis.
Carl Icahn (Trades, Portfolio) is a legendary investor who is known for being Wall Street's most feared corporate raider, or activist investor. Recently, his investment vehicle Icahn Enterprises ( IEP , Financial) has gotten a taste of its own medicine from a scathing short seller report by the notorious Hindenburg Research.
Icahn Enterprises shares have been crushed following short-seller Hindenburg's report on the company being overleveraged. However, with little fundamental change and the company maintaining their $2.00 per share in quarterly distributions, the near 40% annual yield is extremely attractive. The reward clearly outweighs the risks here, I believe, and I've turned increasingly bullish on Icahn Enterprises' future prospects.
Icahn Enterprises LP's stock IEP, -3.93% fell another 3% Friday to extend its month-to-date losses to 61%. The stock has been under pressure since a May 2 report by short-selling firm Hindenburg Research that accused Icahn's publicly traded investment vehicl eof inflating asset values and causing his company to trade at a large premium.
Icahn Enterprises is an investment vehicle run by Carl Icahn. Short-sellers are alleging the stock is overvalued due to strange financial engineering tactics.
IEP has seen its shares drop around 60%. Bill Ackman added to the selling pressure experienced by IEP via his recent comments.
When hedge fund managers lock horns, investors certainly perk up and pay attention. Notable adversaries for years, hedge fund managers Bill Ackman and Carl Icahn have once again dropped the gloves.
Ackman's tweet echoed Hindenburg's allegation that Icahn Enterprises was relying on a "Ponzi-like structure" to pay dividends.