Stock of Carl Icahn's Investing Arm Falls to 19-year Low Ahead of Quarterly Earnings

Icahn Enterprises L.P.'s stock concluded the week at its lowest level since June 8, 2004, just ahead of the impending release of its third-quarter earnings later this week.

‍

The stock, denoted as IEP, has struggled throughout this year, primarily due to a scathing report published by short seller Hindenburg Research, which targeted the company. Icahn Enterprises is the investment arm of billionaire activist investor Carl Icahn.

‍

Hindenburg Research, backed by Nate Anderson, accused Icahn Enterprises of exaggerating its asset values and paying dividends it couldn't afford. This critique had an immediate and substantial impact, causing the stock to shed billions of dollars in market capitalization. In response, the company reduced its dividend by half in August.

‍

The fallout from Hindenburg's report on Icahn was highlighted in an August New York Times article. Mark Stevens, the author of a book titled "King Icahn: The Biography of a Renegade Capitalist," noted, "It is very, very embarrassing for Carl because this guy beat him and beat him at his own game."

‍

Icahn himself acknowledged the impact of short selling on his companies, attributing it to the misleading and self-serving Hindenburg report in a statement. Hindenburg's revelation that Icahn had borrowed money from his own company, a detail buried in financial footnotes that Wall Street had previously overlooked, added to the negative sentiment surrounding Icahn Enterprises.

‍

Icahn Enterprises, primarily owned by Carl Icahn and his son, Brett, provides exposure to Icahn's diverse portfolio of public and private companies, including petroleum refineries, car-parts manufacturers, food-packaging firms, and real estate. The majority of its unit holders are retail investors.

‍

Over the past decade, the fund's performance has been lackluster. For several years, Icahn had expressed suspicion of the bull market, shorting the stock market as a hedge against his long activist positions. However, in more recent interviews, he admitted that his short position was a mistake and expressed a commitment to returning to his core strategy of activism, which he believes has created significant shareholder value.

‍

Looking ahead, Icahn Enterprises is expected to report third-quarter per-share earnings of 34 cents before the bell on Friday, as per analysts polled. This is in contrast to a loss of 37 cents reported a year ago. However, revenue is anticipated to decrease to $2.712 billion from $3.334 billion in the previous year.

‍

While the stock showed no significant change early on Monday, it's noteworthy that it has experienced a 66% decline in value year-to-date, in stark contrast to the S&P 500, which has gained 7%.

‍