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Icahn Enterprises LP, under pressure from a short seller, fell as much as 20% after disclosing that federal prosecutors had reached out seeking information.
It also released a letter responding to claims by short seller Hindenburg Research in the most detail yet since Icahn’s stock came under scrutiny May 2. It said it had “the liquidity, the strategy and the know-how” to fight the investor.
Before that statement, Icahn Enterprises said in a filing Wednesday that the US Attorney’s office for the Southern District of New York was “seeking production of information relating to it and certain of its affiliates’ corporate governance, capitalization, securities offerings, dividends, valuation, marketing materials, due diligence and other materials.”
Icahn Enterprises said it was cooperating with the request and providing documents.
“The US attorney’s office has not made any claims or allegations against us or Mr. Icahn with respect to the foregoing inquiry,” the company said.
A spokesman for the US attorney’s office declined to comment.
Icahn Enterprises fell 20% to $30.72 at 11:22 a.m. in New York trading Wednesday, giving it a market value of about $11.3 billion.
“We believe that we maintain a strong compliance program and, while no assurances can be made and we are still evaluating the matter, we do not currently believe this inquiry will have a material impact on our business, financial condition, results of operations or cash flows,” the company said.
The news came as Icahn Enterprises reported first quarter earnings, with Chief Executive Officer David Willetts saying it stands behind its fundamentals. Icahn didn’t appear on the call.
Hindenburg said May 2 that Icahn Enterprises’ value is inflated by 75% or more, noting that it trades at a premium of more than 200% to its net asset value. Other closed-end holding companies including Dan Loeb’s Third Point and Bill Ackman’s Pershing Square trade at discounts to their NAV.
In a press release responding to Hindenburg Wednesday, Icahn said that the company’s NAV use “standard industry valuation methods” and that it was assisted by third-party consultants.
Icahn said that that comparing Icahn to Loeb’s and Ackman’s closed-end funds is like “comparing apples to oranges” since Icahn said he doesn’t charge fees to investors.
“There is no comparison between our activist strategy and operating businesses and the closed-end funds managed by others,” the company said.
Icahn, in his usual brash style, also took some shots at the short seller. “Hindenburg Research, founded by Nathan Anderson, would be more aptly named Blitzkrieg Research given its tactics of wantonly destroying property and harming innocent civilians,” he said.
Anderson didn’t immediately respond to a request for comment.
