The battle for Herbalife has begun
Activist investor Dan Loeb buys a major stake and locks horns with Bill Ackman, who says the company is a scam.
Loeb, best known for his bet on Yahoo (YHOO) and Greek bonds, Wednesday reported that his Third Point hedge fund owns 8.9 million shares of Herbalife, according to a filing with the Securities & Exchange Commission. Contrast that with Ackman's Pershing Square, which has a short position of more than 20 million shares in the seller of nutritional supplements and personal care products. The SEC has also opened an investigation into the company, according to the Wall Street Journal.
Herbalife declined to comment on Loeb and the SEC probe. Executives are scheduled to make a presentation to Wall Street analysts Thursday to refute Ackman's charges, which the company described as "a malicious attack on Herbalife's business model based largely on outdated, distorted and inaccurate information." Third Point couldn't be reached.
"The goal of our December 20th presentation was to shine a spotlight on the company so that the world better understands the facts about Herbalife," Ackman said in a statement. "The outcome of this investment is not about Pershing Square or anyone else who is long or short the stock. To the extent another investor, long or short, brings additional sunlight to the situation, we welcome them."
Herbalife, based in the Cayman Islands, has been dogged by controversy for years. Founder Mark Hughes died in 2000 following an accidental overdose of alcohol and anti-depressants. His estate has been involved in numerous legal battles since then. Nobel Prize winner Louis Ignarro came under fire from Bloomberg News in 2004 for touting an Herbalife supplement in a scientific journal without disclosing his financial ties to the company. David Einhorn, another short seller, spooked the stock market last May when he raised questions about the company's finances.
Most Wall Street analysts remain bullish on Herbalife. The average 52-week price target on the stock is $71.43, more than 80% higher than where it currently trades. Herbalife, however, remains risky. Investors were rattled last month after Herbalife said it hadn't used $950 million of the $1 billion it had authorized to buy back shares because of "trading restrictions," as Reuters noted.
--Jonathan Berr does not own shares of the listed stocks. Updated at 2:08 pm to add comments from Ackman and at 3:59 p.m. to add report of SEC probe. Follow him on Twitter @jdberr
More on Money Now
- Al Gore's now richer than Mitt Romney
- Priciest ever Super Bowl ads sell out
- Apple working on a cheaper iPhone
Why would you support a company that doesn't pay U.S. taxes? There are a lot more products
available that are made by United States companies that support the United States.
Oh, do not be upset with this. It is all over. It is obvious that we pay one way or the other. Say, 59 million tracked as actual. It is the way, now. Go ahead and pay for this...it will break itself soon enough
You have what you asked for and this has been going on since years.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages finished the session on a lower note as the S&P 500 lost 0.4% while the Nasdaq shed 0.1%. The Russell 2000, which paced the retreat on Tuesday and Wednesday, added 0.2%, trimming its December loss to 3.5%.
After spending the first half of the session in a steady retreat, the S&P 500 found technical support in the 1772 area. Upon reaching that level, the index reversed sharply, and marched back to its flat line. There was no particular catalyst ... More
More Market News
With the universe of this category in its seasonal sweet spot, these picks have tailwinds propelling them into the new year.