Wall Street tycoons fight over Herbalife
Killer Companies looks at the companies killing it and the ones getting killed in the market now. Today: Icahn and Ackman battle for a nutrition company.
Billionaire Carl Icahn recently upped the ante in the high-stakes battle over Herbalife (HLF), adding to his position in the multi-level marketer of nutritional supplements and personal grooming products.
In exchange, the Cayman Islands company will add two members of Icahn’s choosing to its board. The activist investor owns about 13.6% of Herbalife and can raise his stake to as high as 25%. But another top investor is betting against Herbalife, and their fight is the subject of today's KIller Companies video report.
Icahn first disclosed his investment in Herbalife on Feb. 14 after rival hedge fund manager Bill Ackman called the company a Ponzi scheme and announced a $1 billion short position in the stock, which will pay off if the shares tank. There is no love lost between Icahn and Ackman, and the two got in a screaming match over Herbalife on CNBC.
The company has repeatedly denied the Ponzi scheme charge. Another hedge-fund owner, Daniel Loeb, also owns the shares, and he has denounced Packman’s Herbalife claims as baseless. However, in one of the many strange twists to this story, CNBC recently reported that Loeb has sold some of his Herbalife holdings, although it is unclear how much.
Leaving aside the particulars of the current fight, investors need to realize that there has been controversy around Herbalife for years.
For more on that, and why Herbalife shares are up more than 20% this year, watch the full video report.
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