I never paid much attention to Herbalife. What little I did see of it came off like a small-time get-rich-quick scheme. I was surprised to see what their revenues actually were and that they did it without really any retail presence at all. Pretty damning work by Ackman. The "pop and drop" approach breakdown was a convincing argument against the long term sustainability.

I'd like Ackman more if he was just an activist. He did some pretty good work here, but now he's got to swing his money against Icahn who essentially wants to white knight for HLF. That's rough sailing for the short term. The dick waving part I don't get and pretty horrible for his fund.

Still, he's put a major thorn in the side of HLF that they can't really pull out. In the US and every other market they have (or want) this is going to show up. Anyone smart enough to at least pull up Wikipedia as they're being recruited has a chance to see it. Then you've got regulators who almost have to get involved, and how long before a 60 Minutes does their own expose on this? They don't have much else backing their business model. It's already a battleground stock so I can't go anywhere near it. The press corps and regulators really dropping the ball.

I think Ackmann is right and definitely rooting for him, but Icahn is the one who ends up winning here..

Icahn is clearly senile. In both of his interviews on CNBC he could barely answer the questions in a coherent way

this. he's senile and seems imo to be totally full of ****. every time he claimed it wasn't personal in that interview its seemed more and more obvious that it's indeed completely personal. only way he wins is if it comes down to him simply having way more money than ackman imo.

I don't know how anyone could cheer for Ackman here, dude is obviously unethical if not a downright cheat like Ichan claims he is. The whole presentation was a pump and dump attempt and he is pissed that Ichan called him on it. Ichan's nailed it, he is just some pussy ass Ivy Leaguer that can't hack the world outside of the classroom because he is a prick and, frankly after blowing up a fund, an obvious loser and bad investor. I don't feel bad for him the smart money smells the blood in the water and they are coming for his head. Pussies get ****ed.

did you read the presentation?

If it was just a pump and dump attempt, why didn't he dump?

Because he can't just dump that kind of posistion without taking a ****ing bath. Ichan et al. know this that is why they are hunting him. He has an uncle point and at some point it's probably going to get hit and he is going to blowout another fund and Ichan and Loeb are going to play in his blood.

Surely he could have covered some of his short for a profit after the initial beating hlf took, but he claims to still have his full short position. You claim it was pure pump and dump, but then say that he can't dump his position. Do you just think he was too stupid to realize the dump would be near impossible, or just didn't realize the other hedge fund guys would go to bat for hlf?

I'm also curious if you read the presentation. I definitely think he believes it, and I tend to believe it too. HLF's response was pretty much a joke. They announce a date to publicly answer questions, and I believe even billed it as a point-by-point rebuttal, and then answered absolutely nothing. Maybe Icahn et al convinced them to hold off answering anything until they could set up the perfect short squeeze scenario, or maybe they just don't have good answers.

Regardless of whether Ackman is right about the company, the longs definitely have the noose tightening around his neck, and it seems only some regulators stepping in can save him now.

The presentation was very well put together. The research is thorough and detailed. Overall he makes a very compelling case for shorting HLF.

The problem I have is these high profile guys playing this stuff out in public. I think that is what pissed Icahn off so he gave Ackman a taste of his own medicine. Basically Icahn is saying "my reputation is bigger and better than your reputation" and the turnaround in the stock is proof of it. I doubt Icahn is in this for the long haul but time will tell.

The same thing has been said about MLM for over 20 years maybe longer. There is nothing really new or unexpected. The only thing new is some guy took out a large short position then decided to try and use public airways and possibly the FTC to try to drop the stock. I am with Icahn not because he was fair in the interview, but Ackman was unfair in the way he did this short. People should and most are teached that all MLMs are bad at a young age like don't touch a hot stove. Just search Cramer on youtube to see how stories change.

No.

Would there have been any outrage whatsoever if he had laid out his reasons for a long position in public?

I guess I don't really see why such presentations are frowned upon as long as the information presented is accurate and not misleading.

Ackman spent 7 figures researching HLF. He felt compelled to go public with the findings, as HLF is robbing people. He couldn't keep quiet. Of course, he is also trying to make money from this. The two are not mutually exclusive.

He doesn't have a problem with MLM; he has a problem with pyramid schemes.

This.

If investing in a company and explaining why you think it is a good investment is acceptable then so too should shorting a company and explaining your rational for that position.

If anything Icahn is the one playing games.

Ackman researches an investment thesis, comes to a conclusion, enters the position then explains why he did so.

Icahn from what I can tell has been the one in the media trying to pump the stock up by talking it up without giving specifics and simply hinting at the prospects of him taking it private...something I highly doubt he intends to actually do.

DKay - I posted this above, but did you read Chapman's long thesis for HLF?

I walked away reading Ackman's presentation thinking it was a very solid short thesis as well, but as now has been repeated many times (and succinctly laid out by Chapman) a lot of the thesis hinges on regulatory action not only in the US, but in the many other countries HLF does business. I'm not too familiar with the MLM business, but from an investor standpoint I'd have to side with Loeb/Chapman/Icahn.

Related aside - has anyone read the book about Ackman's 6-year short on MBIA?

http://www.amazon.com/Confidence-Gam.../dp/1118010418

I finished it a couple weeks ago - not sure I would recommend it (it has its moments but is also fairly boring at points) - the one thing you do takeaway from the book is that Ackman, despite being super annoying in a lot of ways, is extremely persistent and sharp... buying CDS as a way to bet against MBIA for 6 years is not the same as the type of short position he has in HLF (in my limited understanding)... but will be interesting to see how this plays out, I wouldn't count out Ackman yet, but if I had to guess right now, it does seem he has made a disastrous bet imo...

Ackman disclosed his short position to the entire public and that's when Icahn saw an opportunity to squeeze him out of his position, and 20% short is HUGE for a company this size.
Either way Ackman is ******ed for disclosing his position and also very stupid for not covering into that 3-4day FLUSH. Thjey call it a FLUSH for a reason.... and that's why Icahn is the guru he is today.

I thought it was funny on friday watching the stock sell off like 2 points while icahn was on cnbc. The timing mightve been a coincidence since it sold off all day but humorous nonetheless.

Ackman's Pershing Square Takes $1.2 Billion Hit

http://online.wsj.com/article/SB1000...616491516.html

Does anyone know what puts Ackman ended up buying when he closed out part of his short position?

Yes.

he suffers from the typical smart guy problem. He made a smart sounding argument, but forgot to simply check sites like ebay to see how much discounted herbalife product is sold. Not alot of people seem to sell their products that they cannot sell, on ebay. So apparantly herbalife is doing something right.

I think multilevel marketing works when a service or community aspect is combined with some potential to make money. Same thing with that company that bershire bought, the pampered shef or something. Their marketing is a bit misleading, but if they combine the social aspect with the potential to make some money then its not a complete scam imo.

With herbalife it is that you help other people to keep fit. And you can make a bit of money of that.

If they would only sell a product you can get elsewhere for cheaper, without some added service, then it is a scam.
Risking as much as ackman does on shorting seems kind of stupid anyway. Especially if you forget to check how much product is sold for a discount on ebay, because the people down the marketing chain cannot sell it.

There's no doubt that Herbalife is a crappy business, and there's likely noone that's going to make a tender offer.

However, I'm not sure I see governments shutting the company down on pyramid-scheme charges, given the long history it has.

Second, I'm sure it's going to implode at some point, given it's overpriced products with no unique research behind it, however chances are it's going to be far too slow to make a pure short +ev.

I think there's a good possibility he's made a solid choice with buying puts though. Far less risk, and kills the incentive for Icahn and investors to speculate in a short squeeze.

Atm, it's 1-0 for Icahn. Season 2 will be interesting.

It has a great business it's just not product based. The business is that it markets itself to idiots, preys on them, and profits. Ackman ****ed up bad on this one because the feds had already investigated them multiple times. They're scummy but they have good enough lawyers to be legal. There was never any chance that the FTC would shut down a multibillion dollar company just because Bill Ackman wanted them to.

Now the current valuation is just stupid... but it's mostly there because there is a ton of buying pressure looking to force Ackman out and sell the pop after he has to close.

http://www.zerohedge.com/news/2013-1...icahns-no-sale

Not a good week for Ackman. A Belgium court also ruled that Herbalife is not a pyramid scheme earlier as well.