Carl Ichan is an established investor that is the biggest shareholder of Icahn Enterprises (IEP). IEP stock fell from the $50 level it held in the last year, to $35.40 last week.
Hindenburg Research, best known for uncovering the fraud in Nikola (NKLA), accused IEP of serious issues. This includes margin loans and continued portfolio losses.
IEP posted a quarterly loss after the short report. It lost 75 cents a share as revenue fell by 35.5% Y/Y to $2.64 billion. Its net asset value of $5.6 billion is half that of its market cap of $11.2 billion (on May 12, 2023). The special $2.00 dividend will reward loyal investors.
IEP authorized a buyback of $500 million. With a 56 million share float, Icahn could retire up to 25% of the float. But after the $2 dividend, the firm may not buy back shares yet.
Looking ahead, the stock will drop on the ex-dividend date on May 19. Short-sellers must pay the $2.
Your Takeaway
Chances are low that short sellers would join Hindenberg’s short attack against IEP. Those who bet against must pay a high dividend yield.
Icahn could further increase shareholder value with the stock buyback. The firm may seek acquisition opportunities that increase its profitability.
