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Over several months, sources had been telling Reuters reporters Chris Prentice and Jarrett Renshaw that Carl Icahn-controlled CVR Energy was betting big against a niche credit market set up by the U.S. Environmental Protection Agency to ensure biofuels such as ethanol were making it into the American gasoline supply.
The issue attracted national attention after Donald Trump became president and named billionaire Icahn, who had publicly acknowledged that he was opposed to the EPA system, as a special adviser on regulatory issues.
Proving these traders' claims was a challenge: the journalists needed to document and quantify what traders were saying.
Renshaw began combing a database of U.S. Securities and Exchange Commission filings, in which he found a key piece of data in CVR’s most recent quarterly and annual reports: the size and scope of Icahn’s short position buried in the explanatory notes, revealing that CVR had built up over the course of 2016 the equivalent of a huge short position on the credits, totaling $186 million.
Around the same time, several broker sources told Reuters that they helped CVR sell millions of credits, an unusual move by a refiner that typically must buy them. The selling of the credits helped bolster the company’s short position and added a critical element in understanding CVR’s market moves.
The reporters next went to experts to help them understand the filings. In so doing, they established not just that CVR stood to gain from the policy shift Icahn was proposing, but had positioned itself to reap tens of millions of dollars on the biofuels credit market if he succeeded.