Herbalife Wants Ackman's Clients To Dump Pershing Square

Herbalife Ltd HLF works behind the scenes to sink Bill Ackman's Pershing Square fund.

Herbalife Ltd. HLF)" class="ticker" target="_blank"> ( HLF) has apparently been taking cues from Bill Ackman’s attack. However, the company is being a lot sneakier about what it’s up to. Katherine Burton, Duane D. Stanford and Pierre Paulden of Bloomberg Businessweek report that Herbalife has been approaching investors who have money in Ackman’s Pershing Square fund and urging them to pull their money out. Instead of announcing the strategy publicly like Ackman did, the company is working behind the scenes.

herbalife

Herbalife turns the tables on Bill Ackman

They cite sources familiar with Herbalife’s strategy. The company is reportedly arguing that Ackman’s best against it is irresponsible and risky. The activist investor has lost up to $500 million in his short of Herbalife Ltd. HLF)" class="ticker" target="_blank"> ( HLF). Herbalife also claims that Ackman made his short bet a personal issue and that by placing nearly 10% of Pershing Square’s assets into his short position, he was putting too much risk into the fund.

Moelis & Co., which is an investment bank which works with Herbalife, reportedly set up a meeting with Cliffwater LLC, a firm which provides advice to clients about their investments into hedge funds. Herbalife executives were said to have been invited to that meeting as well. According to the report, Moelis also contacted New Jersey’s pension fund, which currently has $207 million invested in Ackman’s Pershing Square fund. At this point, however, the $76.7 billion pension fund has apparently not met with Herbalife.

Ackman complains to Moelis

Herbalife was said to have hired Moelis last year to help it “strategically position” itself. The company reportedly decided to start contacting Pershing Square investors over the last couple of months. Bill Ackman apparently called Moelis to complain after he learned of Herbalife’s decision to start contacting his clients.

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