Article Reviews, Trading

Fight in Herbalife (HLF) Among the Big Boys

Was reading a bit about the fight going on in Herbalife (HLF) among Bill Ackman, Carl Icahn, and Dan Loeb, pretty interesting.

Chronology from what I can make out

  • July 2011: Ackman received a tip from Christine Richard, a former Bloomberg News reporter who wrote a book on Ackman’s MBIA short around July 2011 that Herbalife is a pyramid scheme. Ackman did the research and concluded that they want to short it if there is a catalyst.
  • May 1, 2012: David Einhorn called into Herbalife’s earnings conference call with a question on May 1, 2012. That prompted Ackman to start shorting HLF thinking at Einhorn will announce a short on HLF. Einhorn did not, and remains mum on HLF.
  • December 20, 2012: Ackman presented a short case at the Ira Sohn conference with a 340-slide presentation (slides here), and announced that he was short 20 million shares.
  • January 9, 2013: Dan Loeb announced that he had purchased 8.9 million shares of HLF (8.24% stake).

Amidst it all, there is rampant speculation that Carl Icahn was long HLF. There is also a very interesting video of Carl Icahn and Bill Ackman bashing each other on CNBC here (worth watching for fun). You can also catch an interesting tidbit of how transferring shares during a merger is not a “sale” of shares, and legal agreements have to water tight to cover all possible scenarios (e.g. transfer, sale, disposal, etc.).

Anyway, HLF is still a developing situation, with what is likely Bill Ackman (short) vs. Dan Leob and Carl Icahn (longs). We’ll have to see how that pans out. If one can get this right, there is still a lot of money to be made here.




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