Why Icahn Enterprises Shares Were Clobbered

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Icahn Enterprises (NASDAQ: IEP  ) , a property management and investment company founded by investment mogul Carl Icahn, shed as much as 13% after announcing a public share offering at a price significantly below yesterday's close.

So what: Icahn Enterprises registered a public offering of 3,174,604 shares of Icahn Enterprises at a price of just $63 as compared to its closing price on Thursday of $71.49. The overallotment also allows the underwriters to purchase an additional 476,191 shares at that price if they choose to. With roughly 104.9 million shares outstanding, a 3% boost to Icahn Enterprises' share count, which ultimately will raise about $200 million, is slicing close to $950 million off its market cap.

Now what: I wasn't a big fan of Icahn Enterprises before the offering, with the share price having doubled in just a matter of weeks since the year began. The huge disparity between the offer price and the closing price yesterday indicates to me that this was, more than likely, an emotion-driven rally, and Icahn Enterprises could have further to fall.

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  • Report this Comment On March 01, 2013, at 3:09 PM, foolishfollies wrote:

    So it is the opinion of the fool blogger on this article that Icahn Enterprises should be trading at a single digit P/E when practically everything Icahn has been touching lately has been turning to gold? With a few notable exceptions of course like Federal Mogul.

  • Report this Comment On March 01, 2013, at 3:27 PM, foolishfollies wrote:

    Earning are reported next Monday so as a long on this stock I am hoping we will get some of it back:-)

  • Report this Comment On March 02, 2013, at 6:19 PM, JimieA wrote:

    IEP did raise its' dividend to $4 per share at $63 that is a 6.4% yield. Which provides a decent floor on the stock.

    That could be the prime reason for the rally, not "emotion-driven"

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9/30/2016 10:55 AM
IEP $50.21 Up +0.35 +0.69%
Icahn Enterprises CAPS Rating: ***