On Tuesday, Carl Icahn, a corporate activist and billionaire, experienced a significant decrease in his net worth of more than $10 billion, following accusations by short-seller Hindenburg Research that his investment company, Icahn Enterprises L.P., was using a “ponzi-like” economic structure.
This accusation caused the publicly traded limited partnership to fall by a record-breaking 20%, erasing $3.1 billion from Icahn’s fortune. In addition, Hindenburg revealed details about Icahn’s margin loan, which was collateralized by his stake in the company, resulting in another $7.3 billion being removed from the Bloomberg Billionaires Index’s net worth calculation.
As a result, Icahn’s net worth experienced an unprecedented decline of 41% to $14.6 billion, dropping him from the 58th-richest person in the world to the 119th. The bulk of Icahn’s fortune is composed of his ownership of more than 85% of Icahn Enterprises’ units through various entities.
This year, Hindenburg has targeted several billionaires, including Gautam Adani of India and Block Inc.’s Jack Dorsey, and Icahn is the latest addition to this list.

Icahn Enterprises has investments in funds managed by Icahn and controlling stakes in businesses in various sectors, such as energy, automotive, and food. Hindenburg claimed that the company was over-leveraged and traded at an extreme premium to its net asset value, while also questioning the valuation of some of its investments.
According to a statement released by Icahn in response to Hindenburg Research’s accusations, he believes the report was “self-serving” and aimed solely at generating profits from Hindenburg’s short position.
According to Hindenburg, Icahn chose to receive his dividends in the form of additional units, which helped maintain the value of his stake in Icahn Enterprises at $15.7 billion, even after the company’s significant decline.
In contrast, other unit holders received their dividends in cash, making the company more appealing to retail investors. Hindenburg suggested that Icahn only had the option to take his payment in units because the company consistently had negative cash flows.
Carl Icahn Suffers $10 Billion Wealth Loss
Starting in 2021, Icahn disclosed a margin loan that was secured by his stake in the company. He pledged approximately 65% of his shares as collateral for the loan. The company’s annual report in February 2022 revealed that Icahn had over 181 million shares worth $9.2 billion supporting the loan.
A margin loan is backed by the value of the underlying shares, and lenders may request additional collateral or repayment if the stock’s value decreases. If a borrower fails to repay the loan, lenders can sell the shares.
Hindenburg criticized Icahn for failing to disclose how much he had borrowed, the interest rate, or the loan-to-value maintenance ratio associated with the margin loan.
However, Icahn Enterprises’ annual report stated that Icahn and his affiliates had sufficient additional assets to cover any loan obligations without using the depositary units as collateral. It also mentioned that he had no intention of allowing foreclosure on the collateral and was current on all principal and interest payments related to the loans.

Carl Icahn’s investment funds, which he uses for activist investments, represent his second-largest asset. He and his son Brett are the only investors in these funds, which amounted to $4.9 billion at the end of last year.
Hindenburg Research has estimated that the fund’s performance this year could be down by approximately 17%, based on its calculations of the performance of both its long and short positions.
This year, Hindenburg’s criticisms of Adani’s and Dorsey’s companies have led to significant drops in their net worth, amounting to $58 billion and $500 million, respectively.
In conclusion, Icahn dismissed Hindenburg’s accusations as self-serving, and he has been taking dividends in the form of additional units, which helped maintain the value of his stake at $15.7 billion. Additionally, Icahn has a margin loan collateralized by his stake in the company, but Hindenburg criticized him for not disclosing key details about the loan.