Icahn Enterprises: Longstanding NAV Premium

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IEP trades at a premium to its NAV, even the NAV that the company proposes.The dividend getting cut may actually be relatively welcome news to a value investor assuming that this is a good moment to ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIcahn Enterprises: Longstanding NAV Premium\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-10 01:07 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4735529-icahn-enterprises-longstanding-nav-premium><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>IEP trades at a premium to its NAV, even the NAV that the company proposes.The dividend getting cut may actually be relatively welcome news to a value investor assuming that this is a good moment to ...</p>\n\n<a href=\"https://seekingalpha.com/article/4735529-icahn-enterprises-longstanding-nav-premium\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4590","symbol_name":"PTP","start_time":0,"source_url":"https://seekingalpha.com/article/4735529-icahn-enterprises-longstanding-nav-premium","article_id":"2482847848","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1196257142/image_1196257142.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2482847848","pubTimestamp":1731172031,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"IEP trades at a premium to its NAV, even the NAV that the company proposes.The dividend getting cut may actually be relatively welcome news to a value investor assuming that this is a good moment to c","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4590":"PTP","IEP":"伊坎企业","BK4206":"工业集团企业"},"translate_title":"伊坎企业：长期资产净值溢价","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"IEP":0.9},"content_text":"IEP trades at a premium to its NAV, even the NAV that the company proposes.The dividend getting cut may actually be relatively welcome news to a value investor assuming that this is a good moment to consolidate ownership of CVI.However, a value investor should not be able to get past the premium to NAV that has existed on the instrument for a while, likely because of the large dividend.   grandriver/iStock via Getty Images  Icahn Enterprises (NASDAQ:IEP) just slashed its distribution, that once offered shareholders an exceptionally ample yield while also being the means for Icahn to consolidate his control of the holding, as he receives the distribution in the form of IEP units. While there is no doubt that the cut would be a disappointment to investors who were hoping to get payback and then yield on the considerable dividend that the company paid, and the decline in share price as a consequence is not a surprise, we think that the dividend discussion takes away from the continued reality that being a holding vehicle, ultimately dominated by stock holdings established for the most part of their speculative quality as Icahn plays the markets, it has a bigger problem which is that it has been and continues to be overvalued. In our more recent article on IEP, we mentioned that the Hindenburg short report from May 2023 wasn't really saying anything that wasn't obvious, and ultimately up to investors to recognise whenever investing in a holding vehicle. The primary thing that we focused on from their report was the fact that the multiples given to the businesses within IEP were generous. They were within reason we believe but certainly on the generous side. Still then, the unit traded at a premium to NAV. Even now, after the distribution cut, they still trade at a premium to NAV. There was never any good reason to own IEP for the public markets retail investor who is interested in good value. IEP Quick Breakdown First of all, they are cutting the distribution because the holding wants to hold onto cash in order to make a play at CVR Energy (CVI), which is Icahn's refinery play that he has taken control of through IEP in 2012 over some details around the RFS. That no longer incrementally interesting to our knowledge. From a value investor's point of view, the idea to tender for the shares of CVI and average down seems reasonable. Its price has declined on account of its own distribution coming down, and crack spreads have been down for a while now with run cuts being necessary on account of weak demand for petroleum products. It's relatively inexpensive on an EV/EBITDA basis based on the Seeking Alpha peer figures, although it also is slightly lower complexity than some peers and therefore also lower optionality. On cursory glance we'd generally be more interested in Valero (VLO) which is higher complexity at least and lower headline multiple.   Value Spread for CVI, major holding (Seeking Alpha) With the Trump victory likely to result in favouring domestic industrial demand, CVI's refineries should get a bonus from seeing domestic demand for industrial petroleum products hopefully rise as Trump's administration and strong mandate should also mean policies that press on the gas in terms of economic output. This would mean rising crack spreads on product price appreciation, and if Trump can somehow leverage the US' hard and soft power, as well as its own oil reserves, a lower crude price would also contribute to a higher crack spread from the input side. This could be a turnaround moment for a rather depressed stock. Data by YCharts Bottom Line The obsession with the IEP dividend is irrational. Miller-Modigliani and common sense tells us that it does nothing to create real value, although outside of the theory its value could be in that it signals the ability to pay a tangible cash flow as a testament to the reality of a business' cash economics. Of course, in this case it would not have that value, since IEP is clearly not meant for cash generation and anyone with a cursory understanding of the business can see that as it's a holding company focused significantly on the investment portfolio and on PE-style ideas outside of the public market and other derivative bets that the company might be making at a given time. The only more tangible cash generation source would be CVI, in which IEP has a long-term position, can can be studied and invested in on its own. Moreover, we know that Icahn himself doesn't even take a dividend he just gets more units to consolidate his ownership, which is entirely reasonable and logical for him to do and has every right to do so. As IEP tenders for more presumably undervalued shares of CVI, even if it means cutting the distribution, a value investor in IEP would be happy. The only issue is that there are no value investors who would pick up IEP in our opinion, since before and still now the company is trading for a considerable premium on NAV, whether you take their figures or ours. NAV Premium (VTS) Maybe there is something in the investment business that might payoff big time, like an options or short position, that isn't being reflected in the NAV calculation, but a derivative bet like that may not actually work out and the premium to NAV is to extreme to be fairly accounting for something like that. Icahn's skills are not worth that much, particularly when other vehicles piloted by legendary investors in the past did not receive the same treatment by markets.  Maybe they get some considerable performance on the private portfolio, but surely not enough to make up for the difference in NAVs particularly in the current private market where transactions are not even clearing much. No appeal here today and hasn't been appealing in a real way for a long time for the intelligent investor. Maybe someone got away with a good return playing musical chairs, collecting a strong dividend just long enough to escape before considerable capital depreciation, but that would never have been our game.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2482847848"}