US brief vendor Hindenburg Analysis has unveiled a place towards Icahn Enterprises, the publicly listed fund run by activist Carl Icahn, knocking its share worth and establishing a battle between two of Wall Road’s most feared and outspoken traders.

Hindenburg mentioned in a report on Tuesday that it believed Icahn Enterprises was overvalued and held a few of its non-public belongings at an inflated price. Shares in Icahn’s group fell greater than 20 per cent after the report’s launch, slicing its market capitalisation to $14bn.

Icahn Enterprises, which is majority owned by Icahn, is the third high-profile firm focused by Hindenburg this yr. The brief vendor and its founder Nathan Anderson had been on the centre of a global media storm in January after Hindenburg alleged company fraud at Indian conglomerate Adani Group, which the corporate has denied.

Icahn, a legendary investor identified for putting concern in company executives, has redefined how public firms are run and is at current embroiled in a bitter battle with genome sequencing firm Illumina.

On the centre of Hindenburg’s thesis on Icahn Enterprises is the dividend the automobile pays out to its shareholders, which it says has contributed to an “excessive” premium to its internet asset worth.

The brief vendor highlights that related autos, resembling these arrange by Invoice Ackman’s Pershing Sq. Capital Administration and Daniel Loeb’s Third Level, commerce at a reduction to their NAV.

Icahn Enterprises mentioned that it operates “from a place of power,” citing about $2bn of money and money equivalents on its steadiness sheet.

“We consider the self-serving brief vendor report printed by Hindenburg Analysis at the moment was meant solely to generate income on Hindenburg’s brief place on the expense of IEP’s long-term unit holders,” Carl Icahn mentioned in an announcement. “We stand by our public disclosures and we consider that IEP’s efficiency will converse for itself over the long run because it all the time has.” IEP is Icahn Enterprises’ inventory image.

Icahn Enterprises pays shareholders an $8 per share annual dividend however Icahn controls about 85 per cent of the corporate and takes his cost within the type of newly issued inventory. The remaining traders take their dividend cost in money, which Hindenburg alleges is being funded by the corporate promoting inventory.

“In short, Icahn has been utilizing cash taken in from new traders to pay out dividends to outdated traders,” Hindenburg states in its report.

The Monetary Occasions final yr highlighted that Icahn’s inventory dividend funds had triggered its excellent shares to blow up lately. The NAV of Icahn Enterprises has declined greater than two-thirds over the previous decade owing to the inventory dilution and funding losses from market hedges Icahn maintained throughout a bull market.

“I don’t need to take the money out. I like to make use of the money to be my military, so to talk,” Icahn instructed the FT in February 2022.

Hindenburg additionally famous Icahn had taken a mortgage towards 181.4mn shares, or nearly all of his Icahn Enterprises holdings, which the enterprise had disclosed in its annual report.

Icahn mentioned in a securities submitting in February that he had “enough further belongings to fulfill any obligations pursuant to those loans with out recourse to the depositary models”.