When Carl Icahn sells, it’s time to reconsider. And that’s exactly what investors are doing after word emerged that Icahn Enterprises (NASDAQ:IEP) sold off 4.1 million shares of common stock in CVR Energy (NYSE:CVI). The sale of this energy stock brought in a hefty slug of cash, but what’s behind the departure itself?
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Icahn didn’t depart CVR Energy altogether. Indeed, Icahn Enterprises still holds around 66.7 million shares, which is about two-thirds of the company. Icahn didn’t even manage to decimate his holdings, which would have taken about another 2.5 million shares sold to pull off that job. Instead, the move is likely connected to the Hindenburg Research report that put a short-sell recommendation on Icahn Enterprises. That report alone was enough to send Icahn shares plummeting—over 60% since Hindenburg’s report—and peel back several billion dollars from Icahn personally.
The idea that Icahn is using the CVR sale to backfill some of his losses makes some sense. After all, one recent report about CVR Energy noted a “bright future” ahead thanks to a combination of “…strong financials and business outlook…” It’s been keeping its capital expenditures low, paring down its debt load, and taking advantage of overall growth in demand for nitrogen supplies, among other things. It even boasts a dividend yield in excess of 5%.
A look at the last five trading days for CVR Energy stock shows a complex tale. First, it demonstrated some significant gains. Then it plateaued out until earlier today when news of the Icahn sale hit the market. That put CVR Energy stock in a slump that it’s still working to fully recover from.
