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Herbalife Ltd. Message Board

  • mrelmerthefuddman mrelmerthefuddman Feb 28, 2013 12:40 AM Flag

    Icahns objective

    If sticking it to Ackman is an objective of Icahn, which it clearly is, the only way he can do it is to force Ackman to cover. Simply raising the share price to 70 or 80 wont do it cause Ackman is no dummy, his position is most certainly hedged. Icahn can squeeze out the retail shorts but that's not enough since Ackman could still prevail in his short position and come out a big winner. Icahn wants to deny him that opportunity and do serious damage to his credibility in the process. Icahn will need to orchestrate some kind of buy out to achieve his objective. The only defense for Ackman is to swallow his pride and cover. His personality may not allow him.

    As much as I think the company is a complete piece of garbage doomed to self destruct under the weight of all the fecal matter piled on top of it, gotta be long here. HLF investing = Plug your nose and buy.

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    • Your comments:
      "raising the share price to 70 or 80 wont do it cause Ackman is no dummy, his position is most certainly hedged. Icahn can squeeze out the retail shorts but that's not enough since Ackman could still prevail in his short position and come out a big winner"

      are those of someone who has no idea what the world of aggressive hedge fund investing are about. If Ackman is hedged (a point I've made) it is not anywhere near the 70 to 80 per share you suggest. Were HLF to run to those levels and Ackman had no hedges, it would reduce his fund capital by roughly 1/3. Assuming he has zero leverage (very unlikely if he has any options hedges), that would result in massive redemptions and certainly wipe out his personal fortune.

      See what Carl, the company and the 12 of 15 largest holders adding share last quarter are playing for?

      Additionally, Ackman is likely at least somewhat hedged, but a $1/share higher from here is very expensive for him to put on from here on up -- think in terms of share count x $1 for every move higher (unless his say offset calls are very short term implying he would be planning to cover in quietly as the shares move up and or already has done so with a bunch).

      • 1 Reply to squeezetracker
      • squeeze,

        I believe in Ackmans interview with CNBC his said his short position was not hedged and when they asked when enough was enough or when he would cover his short, his answer was ZERO.

        Ackman has put himself in a dangerous position which is why many say there is the potential for the mother of all short squeezes.

        With that being said he could have put some protection in place since then, if he did, they would also effect his credibility. Lose lose for him if you ask me.

    • Sitcking it to Ackman is not an objective of Icahn, just a bonus. Icahn like to make money, he likes the creative side of the deal. He is from the old school, financing LBOs and takeovers. Ackman is the new
      school that uses OPM to take 20% of market gains. Icahn is the true artist. Hurting Ackman is just a bonus. Icahn will engineer a buyout in the $80+ range and cost Ackman $1B in losses. That's all. Nobody is going broke, but one of them will be proven right and the other publicly humiliated for it.

      • 2 Replies to ramsr14u
      • Ackman does not have sufficient capital to suffer another $1B of losses... that number will decimate his own net worth and his fund.

      • I don't see $80 but I do see a number north of $50.

        Carl needs cooperation out of management and those guys are for making a buck as well plus if Carl is part of the group which I expect he will want to pay just enough to get the company and not a penny more.

        By doing this he does to Ackman what he wants which puts him in his place and he gets to make the real killing when the company gets brought public again in a couple years just like before.

 
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