Jim Cramer's Best Blogs
Feb 16, 2013 | 10:24 AM EST
Looks Like Ackman Has Lost This Battle Posted at 7:00 a.m. EDT on Friday, Feb. 15 OK, let's say you are the U.S. government. You are the Federal Trade Commission. You are the Securities and Exchange Commission. You are the Justice Department. Are you going to, based on a hedge fund manager's say-so, shut down a company because this person says it is a criminal enterprise? Or are you going to take a look at the records of Dan Loeb and Carl Icahn and say, "You know what? They've done a lot of work. Let's just let the market decide whether Herbalife (HLF - Get Report) lives or dies. It ain't dead yet, and these two investors say Herbalife is fine, and everyone recognizes these investors as being shrewd, with staffs that far exceed the ken of the government, and they own about 20% of the darned thing. So who are we to put it out of business?" Does anyone really want an Arthur Andersen on their hands, that infamous Justice Department case in which a stroke of a pen wiped out tens of thousands of jobs? Furthermore, is Bill Ackman a good stand-in for the government? Is it worth backing a hedge fund manager who has decided to wipe out a company? Is that a stand for the ages? Does that get you votes? Hence, the odd state of a company that someone needs out of business, while two others just need to sit down and talk about how $5 billion can be found to take the company private. And all it has to be is talk. Icahn and Loeb know two things. One: Herbalife has a pristine balance sheet that has been very successful at generating worldwide profit. If it wanted to do so, it could move offshore -- move to Mexico -- and become a huge player in a growth economy. Two: The issue with shorting is that stocks can go to infinity. They stop at zero but they can go to infinity.
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