(Reuters) -Short seller Hindenburg Research on Thursday initiated a short position in Icahn Enterprises LP bonds and said the investment firm led by billionaire Carl Icahn has failed to address every key issue it had raised.
Hindenburg’s latest move comes a day after the company reported a surprise loss and disclosed it was contacted by U.S. prosecutors, though it was not clear if it was related to the short seller’s allegation made last week.
The short seller said Icahn’s latest disclosures raise critical new questions about margin loans and continued portfolio losses, sending the shares of the investment firm down 6.1% in premarket trading.
Hindenburg, whose reports on companies have erased a big chunk of their value, had criticized the investment firm of over-reporting its finances and accused it for relying on a “Ponzi-like” structure to pay dividends.
“We are short units of Icahn Enterprises and have initiated a short position in IEP bonds,” the research report said.
Icahn called the report “self-serving” and vowed to take all appropriate steps to “fight back”.
Known for his face-offs with industry heavyweights such as AIG and McDonald’s Corp, the billionaire has never seen his firm become a target of activist investing.
Icahn owns about 84% of IEP and had pledged more than 65% of his stake as collateral for margin loans for “unspecified purposes”, the short seller said.
Failure to disclose basic details about the margin loans represent a “near-term critical threat to IEP unitholders,” Hindenburg alleged.
(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Arun Koyyur)
