{"id":11683,"date":"2023-05-21T09:01:07","date_gmt":"2023-05-21T13:01:07","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/carl-icahn-admits-he-was-wrong-to-take-a-huge-short-position-on-the-market-that-lost-9-billion\/"},"modified":"2023-05-21T09:01:07","modified_gmt":"2023-05-21T13:01:07","slug":"carl-icahn-admits-he-was-wrong-to-take-a-huge-short-position-on-the-market-that-lost-9-billion","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=11683","title":{"rendered":"Carl Icahn admits he was wrong to take a huge short position on the market that lost $9 billion"},"content":{"rendered":"
\n
<\/p>\n
\n

\n \u201c<\/span>\u2018I\u2019ve always told people there is nobody who can really pick the market on a short-term or an intermediate-term basis. Maybe I made the mistake of not adhering to my own advice in recent years.\u2019\u201d<\/span>\n <\/p>\n


\n \u2014 Carl Icahn, activist investor<\/span>
\n <\/small><\/p><\/div>\n<\/p><\/div>\n

That\u2019s Carl Icahn, legendary activist investor and billionaire, admitting in a Financial Times interview that he was wrong when he made a massive bet that the stock market would crash.<\/p>\n

In 2017, his bet lost about $1.8 billion on hedging positions, according to FT calculations, that would have made money if asset prices had fallen. The trade lost another $7 billion between 2018 and the first quarter of 2023, according to the paper.<\/p>\n

\n

Icahn\u2019s investing arm Icahn Enterprises LP
\n IEP,
\n -1.47%<\/bg-quote>
\n started to short the market after the 2008 financial crisis, and became more aggressive in subsequent years. The company used a strategy of shorting broad market indexes, individual companies, commercial mortgages and debt securities.<\/p>\n

\u201cYou never get the perfect hedge, but if I kept the parameters I always believed in\u2009.\u2009.\u2009.\u2009I would have been fine,\u201d he said. \u201cBut I didn\u2019t.\u201d <\/p>\n

Instead, regulatory filings show that IEP lost $4.3 billion on short positions in 2020 and 2021 as the market rallied off the pandemic slump, buoyed by the Federal Reserve\u2019s massive stimulus.<\/p>\n

\u201cI obviously believed the market was in for great trouble,\u201d Icahn said. \u201c[But] the Fed injected trillions of dollars into the market to fight COVID and the old saying is true: \u2018Don\u2019t fight the Fed.’\u201d <\/p>\n

Icahn also explained what exactly he did with margin loans he borrowed from IEP that were recently highlighted by short-seller Hindenburg Research in a stinging report.<\/p>\n

Also read:<\/strong>\u00a0What we know about Carl Icahn\u2019s margin loan<\/p>\n

The loans were disclosed in regulatory filings in early 2022, but few seemed to notice at the time.<\/p>\n

The Hindenburg report accused the company of inflating asset values and quested whether a margin call would send the company into a spiral if the stock price were to fall. <\/p>\n

IEP\u2019s stock did fall after that report \u2014 at the cost of about $6 billion of market cap.<\/p>\n

For more, see:<\/strong> Carl Icahn rebuts short seller Hindenburg Research\u2019s report. It\u2019s already cost his company $6 billion in market cap.<\/p>\n

Icahn addressed the report on the day it was released and offered an update on IEP\u2019s recent earnings, saying he was fully in compliance with loan terms.<\/p>\n

He told the FT he had used the money borrowed from IEP to make additional investments outside of his publicly traded vehicle.<\/p>\n

\u201cOver the years I have made a great deal of money with money,\u201d he said. \u201cI like to have a war chest and doing that gave me more of a war chest,\u201d he added, referring to the margin loan. <\/p>\n

Earlier this month, IEP disclosed a federal probe into its corporate governance\u00a0and other issues. It\u2019s not clear if that was related to the Hindenburg report.<\/p>\n

That same day, it posted earnings showing it swung to a loss in the first quarter from a profit a year ago, missing consensus estimates by a wide margin.<\/p>\n

IEP shares have fallen 32% in the year to date, while the S&P 500
\n SPX,
\n -0.14%<\/bg-quote>
\n has gained 9%. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u201c\u2018I\u2019ve always told people there is nobody who can really pick the market on a short-term or an intermediate-term basis. Maybe I made the mistake of not adhering to my own advice in recent years.\u2019\u201d \u2014 Carl Icahn, activist investor That\u2019s Carl Icahn, legendary activist investor and billionaire, admitting in a Financial Times interview that […]<\/p>\n","protected":false},"author":1,"featured_media":6901,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-11683","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nCarl Icahn admits he was wrong to take a huge short position on the market that lost $9 billion | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u201c\u2018I\u2019ve always told people there is nobody who can really pick the market on a short-term or an intermediate-term basis. 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