Why Icahn Enterprises Shares Were Clobbered

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.

Craving more input? Start by adding Icahn Enterprises to your free and personalized Watchlist so you can keep up on the latest news with the company. 

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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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