“Why Carl Icahn’s Wealth Dropped $10 Billion in a Day: Accused of Ponzi Scheme”

Jakarta –

The wealth of one of the most successful activists and investors on Wall Street, Carl Icahn dropped to US$ 10 billion or the equivalent of Rp. 150 trillion (exchange rate of Rp. 15,000/US$) in a day. This condition was caused by his company, Icahn Enterprises, which was accused of using a ponzi scheme.

Reported from Fortune, Wednesday (3/5/2023), the accusation was filed by Hindenburg Research. As a result, in Tuesday’s trading, shares of Icahn Enterprises fell by 20%. This figure is the highest on record, cutting US $ 3.1 billion or the equivalent of Rp. 46.5 trillion from his wealth.

Not only that, Hindenburg also detailed the investor loan margin guaranteed by Icahn’s shares in his company, which were not previously accounted for by the Bloomberg Billionaires Index. This amount also reduced Icahn’s net worth to US$ 7.3 billion or the equivalent of Rp. 109.5 trillion. So that in total, the amount of cuts exceeds US$ 10 billion or the equivalent of Rp. 150 trillion.

Meanwhile, according to the wealth index, Icahn’s overall wealth fell 41% to US$ 14.6 billion or the equivalent of Rp. 219 trillion. This condition made him free fall from the position of the 58th richest person in the world, to be ranked 119th.

Icahn Enterprises itself is a company that controls business shares in the energy, automotive, food, and real estate sectors. Hindenburg said the company had excessive leverage and was trading at a very high price compared to its net asset value.

Not only that, Hindenburg also believes that the company is attractive to retail investors because other unit holders receive cash dividends. In fact, Hindenburg believes that the high dividend yield is not supported by the company’s cash flow and investment performance.

Hindenburg criticized Icahn for failing to disclose how much he borrowed, interest rates or the loan maintenance-to-value ratio associated with margin loans. They also question how the company values ​​its investments.

Responding to these allegations, in a statement Icahn said the report submitted by Hindenburg was intended solely to generate profits at the expense of Icahn Enterprises’ long-term stakeholders.

Icahn himself begins reporting on margin loans secured against his stake in the company in 2021, by which time he owns about 65% of the pledged stock. According to the company’s 2022 annual report, it increased the number last year, and as of February has more than 181 million shares worth US$9.2 billion or equivalent to Rp.138 trillion supporting the loan.

As for before the decrease in the value of this share, the size of the shares Carl Icahn for Icahn Enterprises is valued at US$ 15.7 billion or the equivalent of Rp. 235.5 trillion. In fact, previously Icahn had increased his ownership in the company by taking dividends in the form of additional units.

As a side note, Icahn is the latest billionaire to be targeted by Hindenburg this year, after chasing India’s Gautam Adani and Block Inc’s Jack Dorsey. He owns more than 85% of the Icahn Enterprises unit through various entities, which makes up the bulk of his wealth.

(eds/eds)