Friday saw Icahn Enterprises experiencing a large sell-off in its shares following its decision to halve its quarterly dividend, which now stands at $1 per depositary unit. This represents a 12% yield annually, compared to the $2 given in the previous quarter. After the news was announced, the stock dropped a staggering 30%. This has come in the wake of Hindenburg Research's campaign and their alleged accusation of "inflated" valuations. The stock has fallen 44% since the second quarter and 54% so far in the year.
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Hindenburg expressed skepticism over IEP's dividend yield, characterizing it as "unsupported" by the company's cash flow and investment performance. In response, Icahn, age 87, stated in a Friday statement that the board of directors will assess the future distributions on a quarterly basis according to the prevailing economic conditions, business performance, and other variables. IEP reported a net loss of $269 million in Q2, more than doubling from the previous year's Q2 loss of $128 million. Icahn attributed the weak outcome to the short selling of his controlling companies and investments as well as the Hindenburg report. In light of Hindenburg's criticism, federal regulators requisitioned information concerning IEP's corporate governance, security offerings, dividends, valuation, due diligence, and other relevant documents. Icahn is prominently known for his hostile takeover of Trans World Airlines and more recent activist investing endeavors with McDonald's and Illumina.
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