Why do people think Ackman can cover his short position?
Why is it that most people don't understand how hard it is to cover a large short position. If Ackman wanted to keep this under $60 it would take him 5 or more months to cover. It is just not that simple.
I'm sure he has been buying some offset longs to cover and he's likely long some calls to hedge -- if not, he is Effd.
The bad part is that retail shorts think Ackman is the man and follow him without hedges. Trish Regan and all his pals at cnbc think he is terrific too... but notice how cnbc is suddenly silent on Ackman? He's hosed on both these companies and kaminsky and Cramer are probably telling the staff to stop siding with Ackman who may be facing huge redemptions (forcing position liquidations and maybe find liquidations since Ackman's capital is the first to get smoked with the leveraged losses.
Not to mention the 10+ millions shares shorted with him. They will compete for the same dwindling pool of float. Before the FTC could even get off their behind, Herbalife might already in the closing stages of a deal. This is no MBIA.
He can't cover! the margin calls will force him to go around looking for shares to buy and cover. and There aren't anymore shares to buy back if the stock holder not willing to sell. Do you remember the London whale trade from JPM? Same thing. When the market isn't liquid, it's impossible to buy back shares, and Ackman will get wipe out and HLF will sky rocket.