US-based Icahn Enterprises LP on Friday slashed its dividend in half, just a few months after a prominent short-seller went after the company’s payout structure that triggered a selling frenzy in its shares.
Short seller Hindenburg Research, which made a series of accusations against Adani Group, targeted Icahn Enterprises LP (IEP) for its “Ponzilike” dividend policy.
Nathan Anderson-led Hindenburg had accused activist investor Carl Icahn’s eponymous firm of operating a “Ponzi-like” structure to pay dividends.
Hindenburg said it remained short on IEP in a post on messaging platform X, formerly known as Twitter.
“Icahn Enterprises will eventually cut or eliminate its dividend entirely, barring a miracle turnaround in investment performance,” Hindenburg had said in May when it announced the short position.
Meanwhile, Icahn Enterprises shares closed 23% lower on Friday, and have shed more than half of their value since May 2 when Hindenburg Research made the allegations against the company.
IEP said it would distribute $1 per depositary unit to its investors for the second quarter, lower than its usual payout of $2 per unit.
It also disclosed that it was cooperating with a division of enforcement of the US Securities and Exchange Commission (SEC)that had contacted in June for information on the company and its affiliates.
Neither the US Attorney’s office nor the SEC has made any claims or allegations against IEP or Icahn with respect to the foregoing inquiries, the company said.
It said losses widened to $269 million, or 72 cents per depositary unit, for the quarter. It lost $128 million, or 41 cents per unit, a year earlier.
In a letter to investors, Icahn touted his firm’s decision to reset its focus on its core activism strategy and said it had “significantly” reduced hedges over the past six months.
“Our returns have been overwhelmed by our overly bearish view of the market and related oversized short (hedge) positions,” the 87-year-old billionaire investor wrote.
Icahn last month said he had restructured $3.7 billion in personal loans to remove a link between his obligation to post collateral and his holding company’s share price.
In February this year, the Hindenburg research report accused billionaire Gautam Adani’s firms of improper use of offshore tax havens and stock manipulation.
The allegations wiped more than $100 billion from the conglomerate’s value. However, shares have recouped some of their losses since February.
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Updated: 05 Aug 2023, 08:38 AM IST