Hindenburg takes aim at Carl Icahn’s empire

Icahn Enterprises LP (NASDAQ: IEP) tanked nearly 20% this morning after Hindenburg Research revealed a short position in billionaire Carl Icahn’s empire.

IEP doesn’t deserve the current premium

On Tuesday, the short seller blasted Icahn Enterprises that it said was similar in structure to a Ponzi scheme.

Hindenburg alleged that the premium at which “IEP” trades is based on massively “inflated” asset valuations. Its report reads:

Following today’s development, shares of Icahn Enterprises are down more than 25% versus their year-to-date high. Remember that Carl Icahn is an activist investor himself and his recent investments include McDonald’s and Illumina Inc.

How is Icahn Enterprises a ponzi-like scheme?

Hindenburg also took a shot at the dividend stock for the high yield that it said was not backed by the company’s cash flow.

The conglomerate, as per the short seller, is using money from new investors to continue its dividend payouts that makes it similar to a ponzi-like scheme.

Icahn Enterprises is yet to officially respond to the report. Hindenburg Research has been fairly active with its short positions this year, having revealed them in two other notable names earlier this year – Block Inc and Adani Group.