Chief executives of public companies have long feared Carl C. Icahn. The 88-year-old investor made a name and billions for himself by questioning the decisions and strategies of corporate leaders and agitating for change at companies like Apple, RJR Nabisco and Netflix.
But now Mr. Icahn is under intense scrutiny from Wall Street investors, who are rapidly selling his company’s stock. In the past year and a half, shares of Icahn Enterprises, his publicly traded investment company, have dropped more than 75 percent, losing nearly $20 billion of value. After dropping more than 30 percent since mid-August alone, it now trades at about $11 a share, its lowest level in more than two decades.
Mr. Icahn owns roughly 86 percent of the shares, so he has personally lost billions of dollars, too.
“There’s a confidence game and he’s lost the confidence of investors,” said Don Bilson, who focuses on activist investing as the head of event-driven research at Gordon Haskett Research Advisors.
Some Wall Street investors are now worried that the stock’s continuing fall could threaten the health of the entire company and that it could be forced to sell companies it holds. Icahn Enterprises holds a mix of public stocks, real estate and other investments, according to interviews with Mr. Bilson and several other market watchers.
Investors have been questioning whether Mr. Icahn himself has been selling his stock. He has taken out personal loans using his stock as collateral. Banks that offer these loans typically have strict requirements related to the value of a company. A sharp drop in a stock price could force a lender to sell shares.
In an interview this week, Mr. Icahn said that he was “absolutely not selling.” He also said there had not been any so-called margin calls on personal loans backed by his stock. Margin calls occur when a lender forces a borrower to sell stock to settle a loan. “I don’t foresee margin calls,” he said.
Shares in Mr. Icahn’s company started tumbling in May 2023 when Hindenburg Research, the short-selling firm run by Nate Anderson, published a report questioning Icahn Enterprises’ financials. Among other things, Hindenburg accused Icahn Enterprises of having a “Ponzi-like economic structure” and paying a dividend it couldn’t afford. (It has since cut its dividend.) He also questioned Mr. Icahn’s use of personal loans backed by the stock.
Mr. Anderson said in an interview this week that he expected Icahn Enterprises’ stock would still fall further. He continues to hold a short position, betting against the stock. He said Mr. Icahn’s extensive use of personal loans is still dangerous to the company’s future. “He’s got too much debt and needs cash. He’s really cornered himself,” he said. “There’s no safe exit.”
In April 2023, Icahn Enterprises stock traded around $50 to $55 a share.
But investors became increasingly skeptical of Mr. Icahn after the Hindenburg report was released, as evidenced by the sharp sell-off. The move out of the stock intensified after the firm cut its dividend in August that year.
The pressure mounted even further since last month, when the Securities and Exchange Commission charged Mr. Icahn with failing to disclose that he had personally pledged his own stock as collateral for margin loans worth billions of dollars. The settlement called for Mr. Icahn to pay $2 million in fines.
The stock has since continued to drop. Some investors said they are worried that Icahn may be forced to cut its quarterly dividend again.
Even with its rapid fall in share price, Icahn Enterprises still trades at a premium to its so-called net asset value, the value of a public company’s stakes, real estate and private company holdings, minus debt and liabilities. Many publicly traded investment firms trade at a discount to net asset value because of a presumption that certain stakes would lose value if the manager were forced to sell.
At Icahn Enterprises, Mr. Icahn holds the largest stake in certain public companies, and some have fared poorly. Shares of CVR Energy, a Texas-based oil refiner, for example, are down more than 30 percent in the past year, and Icahn Enterprises owns roughly 65 percent of the stock, one of Mr. Icahn’s largest holdings.
In the interview this week, Mr. Icahn said that Mr. Anderson’s statements on him and his firm are “what we consider to be compete and total lies and extremely misleading.”
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