By Jon Najarian
When I first learned of Bill Ackman's thesis and subsequent short position in Herbalife (HLF), I thought I smelled a rat. I say that not because I dislike the mega-successful hedge-fund manager, but because of how he chose to divulge his short position and how he took on his short exposure. I thought shorting a hard-to-borrow stock rather than buying puts was his first monumental mistake.
You will recall that Ackman announced this short in a special presentation at the Ira Sohn research conference. I thought it odd, even suspicious, that he announced this massive short position just two days before the December option expiration. It smacked of an attempt to panic investors to dump their long positions and create a feeding frenzy for the shorts.
Looking back, it worked--but only temporarily. Ackman cried fire in a crowded theater and panicked investors, who immediately hit the exits. HLF plummeted from $44 to $24.24 in just four sessions (Dec. 18-24, 2012), but here isRead More »from Icahn Is Eating Ackman’s Lunch and Teaching Him How To Trade