What happened
Icahn Enterprises LP (IEP 0.90%) is having another rough trading session in the wake of Hindenburg Research's searing short report released yesterday. Specifically, the depository units of the master limited partnership (MLP) were down by 19.6% as of 12:32 p.m. ET Wednesday afternoon.
IEP's units have so far lost 41.2% of their value this week. That equates to an approximately $6 billion dent in the diversified holding company's market capitalization.
NASDAQ: IEP
Key Data Points
So what
This pronounced drop in IEP's value over the past two days isn't surprising in light of Hindenburg's contention that the company might be overvalued by more than 75%. The short-selling firm also contends that IEP's massive dividend yield, which has been the main reason for owning its units over the past decade, may have to be either dramatically reduced or eliminated altogether due to a perceived lack of liquidity.
Although IEP's chairman of the board and majority stakeholder Carl Icahn did respond via a press release yesterday, he didn't offer any detailed counterarguments. As some of these allegations directly speak to IEP's core valuation and its all-important dividend policy, investors appear to have been hoping for a far more thorough response from the iconic corporate raider and activist investor.
Now what
Is IEP worth the risk? At current levels, the MLP offers a monstrous 24.7% dividend yield. That's a rather tempting reason to consider buying IEP in the wake of this enormous two-day decline.
Having said that, it might be best to hear what management has to say during its upcoming 2023 first-quarter earnings call -- now scheduled for May 10 -- before hitting the buy button.
