Conglomerate Icahn Enterprises (NASDAQ:IEP) — named after its founder, the activist investor Carl Icahn — again found itself treading in red ink. Sparking the negativity was a change in leadership. And since a short-seller report last year, IEP stock has struggled for traction.
According to a Seeking Alpha report, Icahn named Andrew Teno its new CEO, replacing David Willetts. In a corporate statement earlier Wednesday, Willetts will be the head executive of Pep Boys, one of Icahn’s portfolio companies. On the other end, Teno has worked at Icahn Capital as a portfolio manager since October 2020.
Unfortunately, the market did not respond positively to the leadership change, with IEP stock initially losing 9% before paring back a modest amount of the loss in the early afternoon hours.
Still, the conglomerate put a positive spin on the shift at the top. “Andrew has had an impressive record of stock picking and position stewardship within our Investment segment. I am confident in his ability to help lead IEP into the next phase of its evolution,” stated Carl Icahn, who serves as chairman of the holding company.
IEP Stock Continues to Attract the Bears
Ever since Hindenburg Research — a short-selling specialist — targeted Icahn Enterprises for overvaluing its holdings last year, IEP stock has never been the same. Prior to the report’s publication, IEP traded for around $50 per share. In the immediate aftermath, the price dipped to around $30. Following speculative contrarian trading, from August through late December of last year, IEP printed a decidedly negative trendline.
In the scathing report, Hindenburg accused Icahn Enterprises of relying on a “Ponzi-like” structure to pay dividends. Following the expose, Carl Icahn remarked that the report was “self-serving.” In addition, he stated that the purpose of the attack was to generate profits at the expense of IEP’s long-term shareholders.
Nevertheless, the freefall of IEP stock wiped $2.9 billion off the conglomerate founder’s net worth. Per a Forbes report, the initial downwave left Icahn’s net worth at an estimated $14.7 billion.
Even though the Hindenburg report represents old news, bears continue to be active against IEP stock. According to Fintel’s options flow screener — which exclusively monitors for big block transactions — a high volume of sold calls with an expiration date of this Friday materialized.
At face value, sold calls represent wagers that the underlying security will not rise above the listed strike price of the contract.
Why It Matters
Currently, no analyst actively covers IEP stock. However, Jefferies’ Daniel Fannon issued a “buy” rating with a $26 target in November. At the time, the target appeared feasible, given rising sentiment. However, Wednesday’s price action casts a shadow over the optimistic narrative.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
