Short Investor Hindenburg Burns 20% Of Icahn Empire's Value

Hindenburg Research, the short investor whose reports on companies have erased a big chunk of their value, criticized Icahn Enterprises LP (IEP) over the reporting of its finances, leading to a 20% drop in the shares of activist investor Carl Icahn's firm, Manya Saini, Niket Nishant and Koh Gui Qing reported for Reuters.

Photo Insert: Icahn said in an IEP statement that Hindenburg's "self-serving" report was aimed at generating profits at the expense of IEP's long-term shareholders.

The development represents a rare challenge for Icahn who is accustomed, as one of the pioneers of shareholder activism, to dressing down companies over their governance and transparency, but has not had to confront such criticism himself.

In a report published on Tuesday, Hindenburg accused IEP of overvaluing its holdings and relying on a "Ponzi-like" structure to pay dividends.

The subsequent plunge in IEP shares wiped $2.9 billion off Icahn's net worth, leaving him with an estimated $14.7 billion, according to Forbes.

Icahn said in an IEP statement that Hindenburg's "self-serving" report was aimed at generating profits at the expense of IEP's long-term shareholders. "We stand by our public disclosures and we believe that IEP's performance will speak for itself over the long term as it always has," Icahn said.

Icahn's Sunny Isles Beach, Florida-based company holds his investments in the energy, automotive, food packaging, real estate, and other industries. He is IEP's controlling shareholder with an 85% stake.

Hindenburg said IEP's units are overvalued by more than 75% and that "IEP trades at a 218% premium to its last reported net asset value (NAV), vastly higher than all comparables."

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