If you're going to dance among the hedge fund elephants you better be nimble. That's the basic thinking of Allstartcharts.com and founder of Eagle Bay Capital J.C. Parets as he tries to make money for his clients by trading shares of Herbalife (HLF).
A quick refresher course on Herbalife might be in order. Last December billionaire investor Bill Ackman announced he was shorting the shares of nutritional supplement (?) company Herbalife. Ackman maintains the company is a pyramid scheme and believes the stock will go to zero. Putting his money where his mouth is, Ackman announced that he was short 20% of HLF's float and wouldn't cover a single share.
Ackman has plenty of enemies on Wall Street and they were quick to pounce. Among those enemies is billionaire Carl Ichan who famously went on CNBC and suggested Ackman was exposing himself to "the mother of all short squeezes." With Ackman sitting on so many shares on the short side, Icahn and other Wall Street "whales" pounced, buying up Herbalife shares and "squeezing" Herbalife higher while Ackman squirmed.
Whether or not Herbalife is corrupt is debatable. For Parets what matters is that all those buyers create an upward pressure on the shares. As a technical trader Parets is indifferent to the fundamentals. "They sell vitamins?" he scoffs in the attached video. "Who cares what it is. It's a stock."
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