George Soros is betting with Carl Icahn on Herbalife against Bill Ackman. Who's right?
Billionaire investor George Soros is weighing in on the Herbalife debate. He is reported to have taken a “large, long position” on the nutrition-supplement company.
That’s more bad news for Bill Ackman, who made a $1 billion bet against the company.
Ackman, the head of the $13 billion Pershing Square hedge fund, has been short Herbalife since last year. It’s estimated he began selling shares in the middle of 2012 at around $50 per share.
Ackman wasn’t the only person who doubted Herbalife’s business. On May 1, 2012, Greenlight Capital’s David Einhorn questioned the company during its earnings conference call, sending shares tumbling from over $70 to $46 in a matter of a couple of days.
That’s why when Ackman referred to Herbalife as a pyramid scheme in a December 2012 presentation, it looked like he may have been in good company. Sure, Daniel Loeb’s Third Point and Carl Icahn were on the other side of that trade, with Icahn owning 16.5% of the company. And, this led Ackman and Icahn to have a very public spat over their respective trades on Herbalife.
But, when you’re right, you’re right. Right?
Well, not exactly. Herbalife was up over 86% in 2013. And that was before news of Soros’ stake.
Thus far, Ackman isn’t giving up. Just this morning, he told CNBC’s Maneet Ahuja that despite the run up in the stock, “I haven’t covered a single share” of Herbalife.
(Read more: Ackman to CNBC: I haven't covered Herbalife short)
So, which side should you take: Ackman’s or Soros’?
Talking Numbers asks that question to CNBC contributor Steve Cortes, Founder of Veracruz TJM. He looks at the fundamentals of Herbalife while Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, looks at the company’s charts.
Watch the video above to see Cortes and Ross analyze Herbalife and determine who may be on the right side of this deal.
- Private Equity & Hedge Funds
- Bill Ackman
- George Soros
- Carl Icahn