Icahn Enterprises, the conglomerate owned by Carl Icahn, cut its quarterly dividend in half on Friday as a result of a prominent short sale campaign led by Hindenburg Research.
IEP reported on Friday that it has distributed $1 per depositary unit, or a 12% annualized dividend. Comparatively, the previous quarter’s dividend was $2. The announcement caused the stock to plunge by a staggering 30%.
Since the Nathan Anderson-led short seller established a public short position in May, alleging “inflated” asset prices among other things, Icahn’s company has been riding a rollercoaster. The second quarter saw a nearly 44% decline in the share price of IEP, a holding company with operations in a variety of industries, including real estate, automotive, and energy. The stock has lost 54% so far this year.
IEP’s high dividend yield, according to Hindenburg, is “unsupported” by the company’s cash flow and investment performance.
“The payment of future distributions will be determined by the board of directors quarterly, based upon current economic conditions and business performance and other factors,” 87-year-old investor Icahn said in a statement Friday. “We do not intend to let a misleading Hindenburg report interfere with this practice.”
In the second quarter, Icahn Enterprises recorded a net loss of $269 million, more than tripling the loss of $128 million from the same quarter a year earlier. Icahn blamed the short-selling activities in his controlling businesses and interests for the underwhelming quarter.
“I believe the second quarter partially reflected the impact of short-selling on companies we control or invest in, which I attribute to the misleading and self-serving Hindenburg report concerning our company. It also reflected the size of the hedge book relative to our activist strategy,” Icahn said.
Federal authorities sought information about IEP’s corporate governance, capitalization, securities offerings, dividends, valuation, marketing materials, due diligence, and other materials in the wake of Hindenburg’s remarks.
Icahn, the most well-known corporate raider in history, rose to prominence in the 1980s by completing a hostile acquisition of Trans World Airlines and seizing all of the airline’s assets. The multibillionaire investor most recently invested in McDonald’s and the biotech company Illumina as an activist.
