Carl Icahn has been on the other side of this equation many times in the past.
He built his estimated $13.6 billion fortune -- a week ago that number was much higher -- by launching hostile takeovers and being one of Wall Street's most revered (and feared) activist investors. But now his publicly-traded holding company, Icahn Enterprises (IEP), is facing an attack from short-sellers Hindenburg Research that has the shark playing defense.
DON'T MISS: Carl Icahn's Troubles Are Multiplying After Revealing New Issues at Icahn Enterprises
On Thursday, Hindenburg Research followed up its short seller report on Icahn Enterprises by disclosing that it has initiated a short position in the company's bonds a day after IEP disclosed that it has authorized a $500 million buyback for its bonds along with a $500 million stock buyback program.
"We strongly suspect -- based on our analysis that we had not previously published -- that Carl Icahn has borrowed billions, and reinvested some, or all the proceeds, into his own investment funds.
"These funds subsequently generated significant losses, which could pose an overleveraging risk for both Carl Icahn himself, and IEP unitholders," Hindenburg's report said.
Hindenburg points out that Icahn owns about 84% of IEP and that he has pledged 65% of his personal holding (55% of the company) "for loans of unspecified size and unspecified terms, for unspecified purposes."
This week, Icahn responded directly to Hindenburg's report saying that "Hindenburg Research, founded by Nathan Anderson, would be more aptly named Blitzkrieg research given its tactics of wantonly destroying property and harming innocent civilians."
IEP has plenty of liquidity, according to Icahn, with $1.9 billion in cash and another $4 billion in additional liquidity.
Icahn Enterprises shares are down nearly 40% since Hindenburg released its original report last week.
