Topline
Shares of billionaire investor Carl Icahn’s holding company rallied Monday to their highest price since mid-May after the 87-year-old decoupled collateral for personal loans with his position in Icahn Enterprises, a key issue flagged by activist firm Hindenburg Research in its fiery May report revealing a short position in the company.
Carl Icahn added back nearly $1 billion to his fortune Monday.
Key Facts
Icahn inked new agreements with several banks Sunday which increased the amount of private collateral pledged for his personal loans, the Wall Street Journal first reported and Icahn Enterprises later disclosed in a regulatory filing.
Previously, Icahn pledged about 60% of his Icahn Enterprises stake as collateral for these loans, Hindenburg alleged.
Icahn’s loans now are levered against the total value of Icahn Enterpises’ portfolio rather than its stock price.
Icahn Enterprises is a publicly traded company, owned primarily by Icahn himself, enabling retail investors to follow the billionaire into his diverse investment portfolio including CVR Energy and Pep Boys.
Shares of Icahn Enterprises rallied 18% to $34 in early Monday trading, hitting their highest price since May 18.
Even still, the stock is still down more than 30% since May 1, the day before Hindenburg published its scathing report on Icahn.
Forbes Valuation
Icahn is worth $10.3 billion, according to our latest calculations, making him the 180th richest person in the world. Despite tacking on $1.1 billion to his fortune Monday, Icahn is still far less rich than he was two months ago just before the Hindenburg report, when he was worth $18.3 billion. Icahn lost more than $6 billion on May 2 alone.
Key Background
A renowned “corporate raider” who upended various public companies in his decades-long career as an activist investor, Icahn became forced to fight an outsider challenge of his own in recent months. In addition to flagging Icahn Enterprises’ significant exposure to the personal dealings of its chairman, Hindenburg also called out the company’s “ponzi-like economic structure” to sustain its high dividend payments. In a May 10 statement, Icahn dismissed Hindenburg as a “blitzkrieg” operation that launches “disinformation campaigns to distort companies’ images, damage their reputations and bleed the hard-earned savings of individual investors.” The research firm is perhaps best known for its 2020 report on the CEO of Hydrogen and electric vehicle maker Nikola, who now faces up to 20 years in prison for fraud.
Further Reading
Carl Icahn Gets Breathing Room From Lenders Following Short-Seller Attack (Wall Street Journal)
Billionaire Carl Icahn’s Empire Propped Up By ‘Ponzi-Like’ Scheme, Short-Seller Hindenburg Claims (Forbes)
Hedge Fund Billionaire Carl Icahn Lost Over $6 Billion Yesterday (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2023/07/10/icahn-enterprises-shares-jump-to-7-week-high-as-billionaire-chief-reportedly-fixes-loan-issue-flagged-by-short-sellers/