Activist investor Ackman remains convinced Herbalife will fail

Reuters

By Tommy Wilkes

OXFORD, England Oct 29 (Reuters) - Billionaire investorWilliam Ackman is still convinced that U.S. nutrition companyHerbalife will fail as he sits on hundreds of millions inunrealized losses, nearly one year after predicting thecompany's stock price would go to zero.

Speaking some 3,000 miles from his home base in New York,Ackman offered a retrospective on his investing career but tookpains to address the one bet that is looming large over his $11billion portfolio - his short position on Herbalife.

Despite the stock price up 106 percent this year andHerbalife's earnings strong, Ackman still stuck by his thesisthat the company is an illegal pyramid scheme that is certain tofail.

"This business will be shut down," the Pershing SquareCapital Management founder told an audience at the Said BusinessSchool in the English university city of Oxford, without givingany precise details on how or when.

Herbalife has repeatedly denied Ackman's claims.

With his bet against Herbalife, Ackman has stirred strongemotions among the well-heeled investors of the U.S. hedge fundindustry: fellow activist investor Carl Icahn, who said he findsAckman too arrogant for his tastes, bought 16 percent ofHerbalife stock, and so far his gamble is the one paying off.

However, speaking on Tuesday, Ackman was keen to stress thathe had learned from past investment mistakes, including thelosses crystallised less than two months ago when he pulled theplug on another failing investment, in JC Penney.

"When you do an extreme makeover it requires perfect boardalignment and backing of the CEO," he said, referring toboardroom divisions at the retailer, which lost a big chunk ofits customers as it shifted to a new sales strategy that Ackmanhad backed. "The vision was right; the execution wasn't."

Still, this month has been a strong one for Ackman's hedgefund, people familiar with his portfolio said, noting PershingSquare is up in the high single digits.

A big winner for Ackman has been Canadian Pacific Railway, whose share price has rallied this year after Ackman wona proxy fight and installed a new CEO last year.

Ackman, who is worth $1.2 billion according to Forbes, hasracked up an impressive track record and his main fund hasaveraged more than 20 percent per annum in gains since launchingin 2004.

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