Carl Icahn on the sixth annual CNBC Institutional Investor Delivering Alpha Convention on September 13, 2016.
Heidi Gutman | CNBC
Shares of Carl Icahn’s conglomerate Icahn Enterprises skilled a pointy sell-off Friday after the agency slashed its quarterly dividend in half amid notable quick vendor Hindenburg Analysis’s marketing campaign.
IEP introduced it issued a $1 per depositary unit distribution, which represents a 12% annualized yield. That is in contrast with a $2 dividend within the earlier quarter. The inventory tanked a whopping 23.2% after the information.
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Icahn’s firm has been on a roller-coaster experience because the Nathan Anderson-led quick vendor took a public quick place in Might, alleging “inflated” asset valuations, amongst different causes. Shares of IEP, a holding firm that’s concerned in myriad companies together with power, automotive and actual property, tumbled practically 44% within the second quarter. The inventory is down 50.5% yr thus far.
Hindenburg took subject with IEP’s excessive dividend yield, saying it is “unsupported” by the corporate’s money movement and funding efficiency.
“The cost of future distributions will likely be decided by the board of administrators quarterly, based mostly upon present financial circumstances and enterprise efficiency and different components,” 87-year-old investor Icahn mentioned in a press release Friday. “We don’t intend to let a deceptive Hindenburg report intervene with this apply.”
Icahn Enterprises on Friday reported a web lack of $269 million for the second quarter, greater than doubling the lack of $128 million from the identical quarter a yr in the past. Icahn attributed the disappointing quarter to the quick promoting exercise in his controlling firms and investments.
“I consider the second quarter partially mirrored the affect of short-selling on firms we management or spend money on, which I attribute to the deceptive and self-serving Hindenburg report regarding our firm. It additionally mirrored the dimensions of the hedge ebook relative to our activist technique,” Icahn mentioned.
Within the aftermath of Hindenburg’s feedback, federal investigators sought info relating to IEP’s company governance, capitalization, securities choices, dividends, valuation, advertising supplies, due diligence and different supplies.
Icahn, essentially the most well-known company raider in historical past, made his title after pulling off a hostile takeover of Trans World Airways within the Nineteen Eighties, stripping the corporate of its property. Most not too long ago, the billionaire investor has engaged in activist investing in McDonald’s and biotech agency Illumina.
