Short seller Hindenburg Research hit again at Carl Icahn’s investment firm, saying the famed corporate raider failed to disclose enough in response to questions raised in its critical report.
(Bloomberg) — Short seller Hindenburg Research hit again at Carl Icahn’s investment firm, saying the famed corporate raider failed to disclose enough in response to questions raised in its critical report.
Icahn Enterprises LP’s response to Hindenburg didn’t provide any additional color on its “opaque book of private investments” or their valuations, Hindenburg said on its website Thursday.
The company also failed to address Hindenburg’s charge that its dividends weren’t supported by free cash flow, it said. Hindenburg said it has initiated a short position in Icahn Enterprises’s bonds, in addition to its bet against the group’s units.
The statement comes a day after Icahn called Hindenburg “Blitzkrieg Research” and said it was “wantonly destroying property and harming innocent civilians.” It’s the latest salvo in a fight that pits Icahn, usually the aggressor in corporate tussles, against Nathan Anderson, the short seller who’s attacked other big names in finance, such as Indian billionaire Gautam Adani.
“Given that Carl Icahn has styled himself as a 50+ year warrior for corporate transparency, we expected he would provide clarity on the issues we highlighted,” Hindenburg wrote.
“Icahn Enterprises failed to address every key issue we raised. Instead, it rehashed its prior opaque and inadequate disclosures.”
It said the response from Icahn Enterprises still didn’t have enough information about Icahn’s margin loans, which it strongly suspects “represent a near-term critical threat to IEP unitholders.” Icahn didn’t immediately respond to a request for comment on Thursday.
Icahn Enterprises dropped as much as 6.7% in early morning trading New York on Thursday.
Icahn Enterprises responded in detail for the first time Wednesday to Hindenburg’s May 2 report, which claimed that the company is overpriced and said it found evidence of inflated valuations for some assets.
In a press release, Icahn said that the company’s net asset values use “standard industry valuation methods” and that it was assisted by third-party consultants.
He added that comparing Icahn to Dan Loeb’s and Bill Ackman’s closed-end funds is like “comparing apples to oranges” since Icahn said he doesn’t charge fees to investors.
Icahn Enterprises also reported first quarter-earnings Wednesday, with Chief Executive Officer David Willetts saying it stands behind its fundamentals.
Icahn disclosed on Wednesday that federal prosecutors in New York are seeking information on Icahn Enterprises’s corporate governance, securities offerings, dividends and due diligence, among other materials, according to a filing.
Icahn Enterprises said it was cooperating and that the inquiry won’t have a material impact on its business.
Read more: Icahn Woes Mount as Federal Inquiry Adds to Short Seller Hit
(Updates with background information from third paragraph.)
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