**Carl Icahn Slashes Quarterly Payouts, Acknowledging Hindenburg Research Complaints**
Shares of Icahn Enterprises fell significantly in response to the company’s decision to reduce its quarterly payouts by 50%. This move comes after short-seller Hindenburg Research raised concerns earlier this year. Icahn Enterprises, owned by famed investor Carl Icahn, saw its second-quarter loss more than double compared to the previous year. Icahn has pledged a “reset” for the company, focusing on reducing short bets and emphasizing activism. Despite the setback, Icahn remains confident that the firm’s current portfolio will yield positive results moving forward.
**Regulatory Scrutiny from the SEC**
In a recent filing, IEP disclosed that it had been contacted by the Securities and Exchange Commission (SEC)’s enforcement division in June. This comes after a previous report of contact from the US Attorney’s Office in May. The company is fully cooperating with requests for information related to various aspects of its operations. It’s important to note that no claims or allegations have been made against Icahn Enterprises or Carl Icahn by either regulatory body.
**Hindenburg Research’s Impact on Icahn Enterprises**
Carl Icahn attributes the recent struggles faced by Icahn Enterprises to the “misleading and self-serving Hindenburg report.” Hindenburg Research is known for making negative claims about companies in order to profit from short-selling their stocks. One of Hindenburg’s central claims, which Icahn acknowledges as proving to be true, involves the sustainability of Icahn Enterprises’ dividend. Hindenburg accused Icahn Enterprises of being over-leveraged and trading at an excessively high premium to its net asset value. Icahn Enterprises’ stock price plummeted following the release of Hindenburg’s report.
**Lowered Asset Value and Loan Renegotiation**
Following Hindenburg’s attack, Icahn renegotiated some loan terms, reducing the likelihood of a margin call. Icahn had pledged over 100 million shares in IEP as collateral, representing close to one-third of his stake in the company. The new agreement separates his personal loans from Icahn Enterprises’ share performance. Instead, his loans are now tied to the firm’s indicative net-asset value, which decreased in the first half of the year. Despite these challenges, Icahn believes that the revised terms have lessened the impact of Hindenburg’s report and allowed the company to focus on its activist strategy and reduce its hedge book.
**Financial Performance and Activism Focus**
Icahn Enterprises experienced a decline in revenue, from $3.5 billion in the previous year to $2.5 billion in the last quarter. Additionally, the company’s net loss widened from $128 million to $269 million during the same period. Despite these figures, Icahn Enterprises won a board seat in May at Illumina Inc. after criticizing the company’s board and their decisions. IEP’s activism strategy has proven successful, leading to changes within Illumina’s executive leadership.
In summary, Icahn Enterprises has faced significant challenges due to the Hindenburg report and subsequent market reactions. Through a series of strategic moves and adjustments, the company aims to overcome these obstacles and refocus on its activism agenda.