Why Icahn Enterprises Soared Nearly 15% Monday

Upon news that a potential exhaustion lawsuit against the company has been dismissed, the units of the limited partnership in the main limited partnership Icahn Enterprises (NASDAQ: IEP) rose nearly 15% in price on Monday. This happened in a rather sleepy trading session for stocks, with S&P 500 the index increases by only 0.1%.

Have a good day at court

Before the market opened, Icahn Enterprises announced — no doubt with immense satisfaction — that a district court judge had dismissed the suit. In the lawsuit, the company’s chairman and namesake Carl Icahn was accused of defrauding its unitholders to obtain large amounts of personal loans.

The allegation came shortly after a report by short seller Hindenburg Research that said Icahn and the company’s management committed a series of violations.

The renowned activist investor, who owns 85 percent of Icahn Enterprises, was quoted by his company as saying after the verdict: “We are satisfied that the false claims of various unscrupulous characters working together in a coordinated and clandestine network have been debunked . “

The company and Icahn also took the opportunity to state that the veteran investor has no intention of selling Icahn Enterprises units. Following the release of a recent financial prospectus by the company, there was speculation that Icahn would raise money through unit sales.

Doubts will remain

Icahn Enterprises’ share price was hit hard after the Hindenburg Research report was disseminated to the market. This indicates that more than a few market players are taking the allegations seriously. While the court ruling is undeniably positive for the company, some of these doubts are likely to persist and limit the potential for future price rallies.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why Icahn Enterprises Soared Nearly 15% Monday was originally published by The Motley Fool