This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Herbalife & Ackman: What's Next?

NEW YORK ( TheStreet) -- The Bill Ackman saga that is his short position in nutritional products company Herbalife (HLF - Get Report) only becomes more complicated and dramatic now that George Soros, a friend of Ackman, has taken a big stake in Herbalife.

While Soros' stake in the company is unknown (the SEC only requires notification within 10 days of purchase if someone owns 5% of more of a company, otherwise the information will come out in 13F filings), it's clear that the legendary investor, famous for breaking the Bank of England in the 1980's, is betting against Ackman. In the past, Ackman has said in the past he believes Herbalife is a pyramid scheme, and the country would be better off if Herbalife went out of business.

News of the Soros investment sent the stock higher Wednesday, gaining 9.1% to close at $65.50. Shares are up 98.85% year-to-date, vastly outperforming the S&P 500 and the other major indices.

It's well known by now that Ackman is in a huge battle with Herbalife, as another activist investor, Carl Icahn, has continued buying shares in the company, saying he believes Ackman is wrong and that the multi-level marketing company is indeed a good business. Several months ago, Icahn, who has a 16.5% stake in Herbalife, and Ackman famously went on CNBC together, and had an epic war of words discussing not only Herbalife, but also their disdain for each other. In the past, Icahn has said a short-squeeze on Ackman would be just a kicker to Icahn making money in Hebralife. "If Ackman gets squeezed, I'm not going to feel sorry," Icahn said during the infamous CNBC interview. "The fact that I don't like Ackman, you could say, is the strawberry on top of the ice cream."

With Ackman reportedly down $300 million on his Herbalife short, according to the NY Post, Ackman is pulling out all the stops. Ackman's Pershing Square Capital Management is reportedly going to file a complaint with the SEC regarding the recent trading in Herbalife.

While the details of the complaint are not known, Ackman could be accusing investors like Soros of stock manipulation by trying to force a short squeeze. The rumor of Soros' involvement has helped the stock price to climb and could be interpreted by Ackman and other shorts as collusion.

Further complicating matters for Ackman is that Herbalife, which he contends frauds its sellers, is actually reporting strong results. Earlier this week, the Los Angeles-based Herbalife beat second-quarter expectations, earning $1.34 per share on $1.22 billion in revenue, a rise of 18% year-over-year. Analysts were expecting $1.18 per share on $1.16 billion in sales.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
HLF $43.76 4.50%
AAPL $123.56 -0.55%
FB $83.39 0.46%
GOOG $550.19 -0.90%
TSLA $184.02 -3.40%

Markets

DOW 17,685.94 +7.71 0.04%
S&P 500 2,058.20 +2.05 0.10%
NASDAQ 4,878.41 +15.0480 0.31%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs