NEW YORK (TheStreet) -- Shares of Herbalife (HLF) - Get Report were higher in pre-market trading on Monday as billionaire investor Carl Icahn upped his stake in the Grand Cayman-based nutrition company by 2.3 million shares after Friday's closing bell.
Herbalife stock had fallen Friday after activist investor Bill Ackman said Icahn was looking to sell his approximately 18% stake in the company. The CEO of Pershing Square has publicly referred to Herbalife as a pyramid scheme and currently holds a $1 billion short position in Herbalife.
Additionally, a private investor is now asserting that Herbalife may have misled investors and the SEC about the impact of last month's ruling from the FTC. The FTC issued new rules for the company requiring Herbalife to restructure its business so distributors are rewarded for making sales, rather than for recruitment for sales agents, Reuters reports.
The company also paid the FTC a $200 million fine.
Matthew Handley, an investor based in Lakewood Ranch, FL, alleges Herbalife made "purposefully deceptive statements" in its Aug. 3 quarterly earnings conference call and filings with the SEC. Handley pointed specifically to the company's statements about the fine's financial impact on the company.
Experts said corporate filings are typically more technical than the positive outlook companies give during conference calls, according to Reuters. However, the experts noted there is a difference between a change in tone and supplying false information.
Herbalife has until next year to comply with FTC's restructuring requirements.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
TheStreet Ratings team rates Herbalife as a Hold with a ratings score of C. The primary factors that have impacted the team's rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and good cash flow from operations. However, as a counter to these strengths, it also finds weaknesses including deteriorating net income and generally higher debt management risk.
You can view the full analysis from the report here: HLF