Icahn Enterprises L.P.\u2019s stock tumbled 30% on Friday, after the company said it\u2019s cutting its quarterly distribution to $1 from $2 previously. <\/p>\n
The company \u201cI believe the second quarter partially reflected the impact of short selling on companies we control or invest in, which I attribute to the misleading and self-serving Hindenburg report concerning our company, \u201cIcahn said in a statement. <\/p>\n \u201cIt also reflected the size of the hedge book relative to our activist strategy.\u201d <\/p>\n Icahn was referring to a report by short seller Hindenburg Research published on May 2 that accused IEP, Icahn\u2019s publicly traded investing arm, of overstating asset values. Hindenburg also revealed that Icahn himself had borrowed from the company, among other issues.<\/p>\n That had been disclosed in a footnote to financials that Wall Street had overlooked. <\/p>\n Read:<\/strong>\u00a0What we know about Carl Icahn\u2019s margin loan<\/p>\n See also:<\/strong> Carl Icahn rebuts short seller Hindenburg Research\u2019s report. It\u2019s already cost his company $6 billion in market cap.<\/p>\n The report shaved billions off IEP\u2019s market cap and was firmly rebutted by Icahn, who recently said he has finalized amended loan agreements with banks\u00a0that untie his personal loans from the trading price of his company\u2019s shares.<\/p>\n Icahn said IEP has paid out distributions for 73 continuous quarters and does not intend for a \u201cmisleading\u201d report to interfere with that practice. <\/p>\n \u201cThe payment of future distributions will be determined by the board of directors quarterly, based upon current economic conditions and business performance and other factors that it deems relevant at the time that declaration of a distribution is considered,\u201d said Icahn.<\/p>\n On a call with analysts, IEP\u2019s Chief Executive David Willetts highlighted the long-term \u201clumpiness\u201d of the business, given its many moving parts. <\/p>\n \u201cWe have large wins at times and we have volatility, we\u2019re not a company that necessarily has predictable cash flow, there are no guarantees,\u201d he told analysts. <\/p>\n But IEP is not changing its strategy on distributions, he added.<\/p>\n The stock was headed for the biggest one-day selloff since it went public 36 years ago. The next biggest drop was 20.0% on May 2, when the Hindenburg Research report was released.<\/p>\n The company, which is 84% owned by Icahn and his son, Brett, offers exposure to Icahn\u2019s personal portfolio of public and private companies, including petroleum refineries, car-parts makers, food-packaging companies and real estate. Its unit holders are mostly retail investors.<\/p>\n The fund has performed poorly in the past decade. For many years Icahn has publicly expressed suspicion of the bull market that raged around him. He shorted the stock market in a big way as a hedge against his long activist positions. Going into 2021, for example, Icahn\u2019s investment fund had a short exposure of 142%, SEC filings show.<\/p>\n For more, see:<\/strong>\u00a0Carl Icahn admits he was wrong to take a huge short position on the market that lost $9 billion<\/p>\n Hindenburg, the short selling firm founded by Nate Anderson, took a victory lap on Elon Musk\u2019s X platform, the renamed Twitter, noting that it had predicted that IEP\u2019s poor investment performance would eventually force it to cut the distribution.<\/p>\n Icahn has himself waged endless activist campaigns against companies and their management teams, and most recently succeeded in his effort to shake up management at gene sequencing test maker Illumina Inc. In June, that company accepted the resignation of its Chief Executive and director, Francis DeSouza, ending a monthslong heated battle over its $7.1 billion acquisition of cancer test maker Grail that has faced regulatory hurdles, as the Associated Press reported. <\/p>\n Icahn had urged shareholders to vote out its chairman, John Thompson, and DeSouza. Company shareholders voted out Thompson in late May.<\/p>\n
\n IEP,
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\n made the announcement as it reported a surprise quarterly loss with Chairman Carl Icahn, the billionaire activist investor, blaming the news squarely on one thing.<\/p>\n
\n ILMN,
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