On February 25, we took a look at the feud between Carl Icahn and Bill Ackman on Herbalife (NYSE: HLF ) in the article Carl Icahn Vs. Bill Ackman: Who Has it Right? To summarize, Bill Ackman, who is the founder and CEO of Pershing Square Capital Management, publicly stated that he had a $1 billion short position in Herbalife and made accusations that the company operated as a pyramid scheme.
Herbalife shares were hit hard on this news, until Carl Icahn came to its defense and stated that he did not like how Ackman handled the situation nor did he believe that Herbalife was a scheme of any sort. Icahn amassed a long position of over 14 million shares and investors were left with the decision to buy, short, or avoid the battleground entirely.
After thorough research and analysis, I saw no indications of a pyramid scheme, but more of a program that people joined to gain access to discounts on the company's nutritional products. At the time, Herbalife actually stated that 73% of its independent distributors only signed up to receive discounts and 71% of them never recruited other distributors. The company also said that 88% of its distributors had not received payments in 2012. In my opinion, these are clear indicators that the company does not operate or attempt to portray a pyramid scheme in any way.
Since the article on February 25, Herbalife has risen 93.99% from $35.63 to $69.12. It is up 114.66% year-to-date, making it one of the best performing stocks in the market. Even with this run, the stock trades at just 15.27 times earnings and 12.21 times forward earnings. I do not think the stock is anywhere close to slowing down.
Your posting of facts vs the short rants that make no sense kept me concentrating on this campaign. Thanks for that a very profitable run. And it is not over yet. I am looking for a re-entry point. Thanks.
You have indeed outlined the salient points in the "short history " of HLF. I would like to also add that Bob Chapman was the first "Hedgie " that had the guts to make a long call against Ackman then Loeb. Loeb left in the 40 area. I am not sure about Chapman. Carl came and really put the bite on Ackman's reckless trade . In any way you look at it Ackman is unique and he did this in a very unique manner. I thank him for both his JCP and HLF investments. It would appear to be a personal record setting year. You and a few others have played a magnificent role in gut checking the short interest on this board and I do thank you. I know you have made some very good trades on this stock and I wish you continued success,