Icahn Enterprises LP stock held steady on Wednesday after the investment arm of billionaire activist investor Carl Icahn posted an unexpected fourth-quarter loss but revenue beat estimates.
The company said it was committed to a $1-per-unit dividend, which was cut in half in August after the stock fell when short-seller Hindenburg Research on May 2 published a scathing article about the company, accusing it of overvaluing values and paying dividends. Unsustainable, among other things.
The company incurred a net loss of $139 million, or 33 cents per unit, during the quarter, which is less than the loss of $255 million, or 74 cents per unit, recorded in the same period a year earlier. Revenue fell to $2.644 billion from $3.28 billion a year ago.
The FactSet consensus was for per-unit earnings of 21 cents and revenue of $2.358 billion.
Guidance net asset value was $4.76 billion at year-end, down approximately $411 million from the third quarter, in line with guidance. This is mostly due to short selling in investment funds used for hedging, and distribution to unit holders of the company.
Icahn reiterated the position he took last week on activist investing, which he said is “the best investment model out there.” While this investment method is certainly somewhat volatile, the returns cannot be matched over the long term.
The reason this works, he said, is that “unfortunately, to some extent, many public companies are not well managed. It is very difficult and expensive to fire an underperforming CEO and board.”
Icahn Enterprises currently has 25 board seats in its publicly announced investments, he added.
It encourages all of its companies to pursue startups and asset sales when they believe doing so will create value. It also urges them to improve leadership and help companies manage complex litigation.
“We have continued to choose our locations and find new and exciting opportunities for activists, including recently announced positions at American electric power company AEP,
And JetBlue Airways, JBLU,
Within our investment sector.
Read also: Carl Icahn has secured two seats on JetBlue's board days after revealing his stake in the airline
Icahn Enterprises, 84% owned by Icahn and his son Brett, showcases Icahn's personal portfolio of public and private companies, including oil refineries, auto parts makers, food packaging companies and real estate. Its unit holders are mostly individual investors.
Meanwhile, the company's bonds saw net buying on Wednesday, after the company stuck to its distribution policy.
Icahn Enterprises Net Customer Flow (Intraday).
Bond Click Media Services
The company has about $6 billion in outstanding dollar-denominated bonds, the bulk of which mature in 2027.
Icahn Corporation's outstanding debt (in US dollars) by year of maturity.
Bond Click Media Services
Prices have increased since the beginning of the year until now.
Year-to-date performance of Icahn Enterprises' active bonds.
Bond Click Media Services
stock IEP,
It is still down 64% over the past 12 months, following the short seller report. The S&P 500 SPX rose 27.5% in the same time frame.
