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Carl Icahn Scores $1.3 Billion Windfall on Bet Against...

Business Maverick

Business Maverick

Carl Icahn Scores $1.3 Billion Windfall on Bet Against Shopping Malls

By Bloomberg
11 Aug 2020 0

Investor Carl Icahn’s bet on the downfall of brick-and-mortar retailers produced a $1.3-billion gain during the first half of the year.

The profit came from a short position on commercial mortgage-backed securities, Icahn Enterprises LP said Monday in a regulatory filing. Icahn’s publicly traded holding company has committed capital to his proprietary investment funds and thus reports on their returns quarterly.

Icahn, 84, began making the bet, frequently called the “mall short,” in mid-2019 by purchasing credit default insurance using CMBX 6, an index highly exposed to shopping mall loans. The likelihood of defaults soared in March as the Covid-19 pandemic led to store closures and prompted more consumers to shop online, accelerating a trend already well underway.

A representative for Icahn Enterprises declined to comment.

Icahn has shied away from specifying the exact size of the position, though he told Bloomberg in April, “We have billions and billions on the short side of this.” As of July 3, traders had wagered a net $8.3 billion on the BBB- slice of CMBX 6 and an additional $2.2 billion on the junk-rated portion of the index, according to the International Swaps & Derivatives Association.

Icahn’s investment unit generated an 11.7% gain during the second quarter and a loss of 7.9% in the six months, according to the filing. Icahn’s six-year bet on Hertz Global Holdings Inc. came to an end with a loss of almost $1.6 billion when the rental-car company filed for bankruptcy protection in May.

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