Carl Icahn dismisses short-seller report, cuts dividend, loses $2.7 billion.

Carl Icahn dismisses short-seller report, cuts dividend, loses $2.7 billion.

Carl Icahn’s Net Worth Drops to Lowest Level as Icahn Enterprises Faces Turmoil

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Legendary billionaire activist investor, Carl Icahn, is facing challenging times as his net worth hits a low point. The Bloomberg Billionaires Index, which has been tracking Icahn’s wealth for the past 11 years, reveals that his net worth has dropped to $7.8 billion, less than a third of what it was in April. This significant decline in wealth is largely attributed to the turmoil surrounding Icahn Enterprises LP, his main investment vehicle.

Icahn Enterprises recently experienced a sharp 26% plunge in its stock price to $24.20 after the company announced that it would be cutting its dividend in half to $1 per share. This decision was triggered by allegations made by short seller Hindenburg Research back in May. Hindenburg’s claims included the accusation that Icahn Enterprises was overvalued and that Icahn’s practice of leveraging his shares left the company vulnerable in a downturn.

One of Hindenburg’s key allegations was that the company’s $2 dividend payout was only made possible because Icahn, being the biggest shareholder, took his payment in the form of new shares instead of cash. Hindenburg argued that the company consistently operated with negative cash flows and that Icahn’s method was the only way the hefty dividend could be sustained.

The repercussions of Hindenburg’s report have been severe for Icahn. The portfolio manager blamed the short seller for the lackluster second-quarter results, which saw Icahn Enterprises’ net loss increase to $269 million, more than double the previous year. In a letter to investors, Icahn referred to Hindenburg’s report as “misleading and self-serving.”

Since the release of Hindenburg’s report, Icahn has seen his net worth plunge by more than $17 billion. However, Icahn has taken steps to protect his investments by amending his loan agreements. Initially, the collateral for his loans was tied to the market value of Icahn Enterprises’ shares, making it vulnerable to a selloff. But now, the pledged shares are tied to the company’s book value, a measure that is generally less volatile.

While the recent events have undoubtedly had a significant financial impact on Icahn, it is important to remember that his career as an investor has been marked by volatility and resilience. Despite the challenges he currently faces, Icahn has a track record of coming out on top in difficult situations. It remains to be seen how he will navigate the current storm surrounding Icahn Enterprises and if he can rebuild his fortune in the coming years.

With assistance from Tom Maloney.