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  • September 2023 (Revised January 2024)
  • Case
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Icahn Enterprises: Ponzi Scheme or Sound Investment

By: Aiyesha Dey, Jonas Heese and James Weber
  • Format:Print
  • | Language:English
  • | Pages:26
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Abstract

Icahn Enterprises, a publicly traded limited partnership founded and operated by famed activist investor Carl Icahn, had earned above market returns for over a decade. Between 2018 and early 2023, it had a compound annual return of 31%. Icahn invested in undervalued companies and then publicly pressured boards of directors to make changes to increase the share price.
Hindenburg Research (Hindenburg), an activist short-selling investment firm founded by Nathan Anderson, took short positions in companies it felt were overvalued, published research reports to drive down the stock price, and then profit from the decline.
In May 2023, Hindenburg published a report claiming that Icahn Enterprises stock price was overvalued by 75%, that its 15% dividend yield was not sustainable, and that it sustained itself through a Ponzi-like economic model by issuing new stock to new investors so it could pay dividends to existing investors.
Would Icahn Enterprises continue to outperform the market or was it a Ponzi disaster waiting to happen?

Keywords

Stock Shares; Investment Return; Business Model; Valuation; Financial Services Industry

Citation

Dey, Aiyesha, Jonas Heese, and James Weber. "Icahn Enterprises: Ponzi Scheme or Sound Investment." Harvard Business School Case 124-013, September 2023. (Revised January 2024.)
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About The Authors

Aiyesha Dey

Accounting and Management
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Jonas Heese

Accounting and Management
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Related Work

    • September 2023
    • Faculty Research

    Icahn Enterprises: Ponzi Scheme or Sound Investment

    By: Aiyesha Dey, Jonas Heese and James Weber
    • January 2024
    • Faculty Research

    Icahn Enterprises: Ponzi Scheme or Sound Investment

    By: Aiyesha Dey and Jonas Heese
    • September 2023 (Revised January 2024)
    • Faculty Research

    Icahn Enterprises: Ponzi Scheme or Sound Investment

    By: Aiyesha Dey, Jonas Heese and James Weber
Related Work
  • Icahn Enterprises: Ponzi Scheme or Sound Investment By: Aiyesha Dey, Jonas Heese and James Weber
  • Icahn Enterprises: Ponzi Scheme or Sound Investment By: Aiyesha Dey and Jonas Heese
  • Icahn Enterprises: Ponzi Scheme or Sound Investment By: Aiyesha Dey, Jonas Heese and James Weber
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