Icahn Enterprises, his publicly traded restricted partnership that operates as a holding firm, fell by 20% — probably the most on document — erasing $3.1 billion from his fortune. Hindenburg additionally detailed the investor’s margin mortgage collateralized by his stake within the firm, which was not beforehand accounted for by the Bloomberg Billionaires Index. That lopped off one other $7.3 billion from the web value calculation.

All instructed, Icahn’s fortune sank by an unprecedented 41% to $14.6 billion, in keeping with the wealth index, dropping him from the world’s 58th-richest particular person to the 119th.

Icahn, 87, is the newest billionaire to be focused by Hindenburg this yr after the New York-based short-seller went after India’s Gautam Adani and Block Inc.’s Jack Dorsey. He owns greater than 85% of Icahn Enterprises’s models by means of numerous entities, making up the majority of his fortune.

Hindenburg mentioned the corporate, with investments in funds managed by Icahn and controlling stakes in companies within the vitality, automotive, meals and different sectors, was over-leveraged and traded at an excessive premium to its web asset worth. Hindenburg additionally questioned how the corporate valued a few of its investments.

In a press release, Icahn referred to as the report “self-serving” and “meant solely to generate earnings on Hindenburg’s brief place.”

Icahn has boosted his holding in Icahn Enterprises by taking dividends within the type of extra models. Earlier than Tuesday’s decline, his stake was value $15.7 billion in contrast with $8.4 billion in 2017, at the same time as the worth of its shares declined 4.9%.

Different unit holders obtained their dividends in money, making the corporate engaging to retail buyers, Hindenburg mentioned. That was solely doable due to Icahn ’s determination to take his fee in models, because the firm was constantly working with adverse money flows, the short-seller mentioned.

Icahn started reporting a margin mortgage collatralized by his stake within the firm starting in 2021, at a time when he had about 65% of his shares pledged. He boosted the quantity final yr, and as of February had greater than 181 million shares value $9.2 billion backing the mortgage, in keeping with the corporate’s 2022 annual report. 

Margin loans contain lending that’s collateralized by the worth of the underlying shares. If the worth of the inventory decline, lenders can request extra collateral or for the mortgage to be repaid, and have the flexibility to grab and promote the shares if a borrower fails to take action. 

Hindenburg criticized Icahn for failing to reveal how a lot he’d borrowed, the rate of interest or the loan-to-value upkeep ratio related to the margin mortgage.

In its annual report, Icahn Enterprises mentioned, “Mr. Icahn has suggested that he and his associates have adequate extra property to fulfill any obligations pursuant to those loans with out recourse to the depositary models, he has no want or intention to permit foreclosures on such collateral, and that he’s present on all principal and curiosity funds with respect to the loans.”

Icahn’s second-largest asset is his stake in his funding funds, which he makes use of to make activist bets. Icahn Enterprises, Carl Icahn and his son Brett are the one buyers within the funds. 

On the finish of final yr Icahn had $4.9 billion invested. Hindenburg calculated that the fund might be down about 17% this yr, primarily based on an estimate of the efficiency of its lengthy and brief positions. 

Hindenburg’s assaults on the businesses of Adani and Dorsey brought on drops of their fortunes this yr of $58 billion and $500 million, respectively.