When Carl Icahn buys Herbalife Ltd. (NYSE:HLF), one can pin it on his personal dislike for Bill Ackman, his love for buying just every company that catches his fancy and well his slightly eccentric nature. But when George Soros buys Herbalife, that is a whole different story. We earlier reported that Soros has taken a significant position in the nutritional supplements company, the question is why.
Does Soros also hate Ackman
While it is certain that Bill Ackman is not the favorite person of George Soros, it is also not likely that he initiated a position based only on some personal agenda. Soros has pulled money from Pershing Square Capital Management over the past few months, which shows that Soros is not enamored by Ackman’s investing style. However around the same time that he was pulling money from PSCM, he bought up a major position in J.C. Penney Company, Inc. (NYSE:JCP), which is one of Ackman’s struggling long positions.
The 8% position that Soros took in JCP showed that he was confident in the direction in which the retailer was going, where Bill Ackman sits as a director on the board.
So Soros likes herbal supplements now?
Also unlikely. Soros is just making a trade like Dan Loeb did earlier and could do it again whenever he finds the time to. As much as conservative investors talk about long term holdings and putting your faith in great companies, the fact is that the thrill of making quick profits is just too much. And Herbalife Ltd. (NYSE:HLF) is soaring these days—amid handsome earnings and all the attention, stock has reached $65, up 12% in the last two days.
Soros must have entered the hot battle before earnings and has already made a decent sized profit here. If Herbalife is indeed among Soros’ top three holdings now then he is making even bigger money here. Moreover as shares keep touching new highs, the pressure on Ackman’s short on 22 million shares of Herbalife Ltd. (NYSE:HLF) multiplies. There is also the imminent short squeeze that everybody keeps talking about. So far Ackman has not covered a single share of his short bet and he is a pretty resilient investor, so it is improbable that he will back down just because every other hedge fund thinks the stock is hot now.
Chapman getting hyperactive on Herbalife
Other than the big ones who keep juggling Herbalife Ltd. (NYSE:HLF), there are also some others who have small positions but get a lot of media coverage. Robert Chapman has been in and out of Herbalife a dozen times now. The latest from him is that he thinks Herbalife will trade at $300, no kidding, and here we were all thinking that nobody is as optimistic about the company as D.A. Davidson’s Timothy Ramey.
Tiger cub Patrick McCormack’s Tiger Consumer owns 2.5 million shares of Herbalife and must have a netted a bulky profit here. D.E Shaw also held 1.5 million shares according to Q1 filing.
By the way, Soros’ rumored purchases of Herbalife Ltd. (NYSE:HLF) are so far only reports from CNBC; they have not been confirmed by Soros Fund Management. So it is likely that I wrote this whole thing for nothing.
UPDATE: 2:50PM EST: Sam Forgione and Katya Wachtel of Reuters confirm that George Soros has taken a stake in Herbalife
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