A critical report by the American short seller Hindenberg Research into famed activist investor Carl Icahn’s holding company caused its share price to plummet on Tuesday.
Hindenberg’s report is the latest in a series of detailed investigations that have taken on some of the biggest names in business including the business empire of Indian tycoon Gautam Adani, and the Jack Dorsey-backed payments company Block.
The release of the highly critical report into the business practices of Icahn Enterprises caused its share price to fall more than 25 percent on Tuesday afternoon.
Short sellers like Hindenberg take bets on stock prices going down, with the potential for large payouts if they do.
The report alleged that Icahn Enterprises had “inflated” the value of its assets, and that “Icahn has been using money taken in from new investors to pay out dividends to old investors.”
Icahn Enterprises did not immediately respond to AFP’s request for comment.
“Such Ponzi-like economic structures are sustainable only to the extent that new money is willing to risk being the last one ‘holding the bag,'” Hindenberg wrote in its report.
“Overall, we think Icahn, a legend of Wall Street, has made a classic mistake of taking on too much leverage in the face of sustained losses: a combination that rarely ends well,” they said.
