William Stiritz, the chairman and chief executive officer of Post Holdings, Inc (NYSE:POST) revealed that he owns 6,464,200 shares – a 6.38% stake – of Herbalife Ltd. (NYSE:HLF), the controversial multi level marketing company selling nutritional and weight management based on his 13D filing with the Securities and Exchange Commission (SEC).
Stiritz impressed with Herbalife’s business model
Stiritz indicated in his regulatory filing that he evaluated Herbalife Ltd. (NYSE:HLF) and concluded that it has a “sound business model, strong distribution system, and positive outlook for long-term growth opportunities.”
In addition, Stiritz also believed that the market capitalization of Herbalife Ltd. (NYSE:HLF) is currently “undervalued.” He indicated his intention to enter in a discussion with the management of the multi level marketing company to offer his advice and views to address variety of issues.
Stiritz said some of the issues he wants to discuss with Herbalife include ways to leverage its strong distribution system further, potential stock repurchase programs, potential strategies to confront speculative short positions that currently exist in the shares of the company, and addressing the negative publicity campaign.
Furthermore, Stiritz said he may from time to time acquire additional shares and/or other equity, debt, or other securities of Herbalife Ltd. (NYSE:HLF), dispose any or all of his shares, or any other securities of the company, and engage in hedging or similar transactions with respect to the shares.
Call options on Herbalife shares
Based on his regulatory filing, Stiritz bought call options of 1,000 Herbalife shares and call options of 120,000 shares from over the counter market, which expire on January 18, 2014, and January 17, 2015, respectively
Stiritz sold put options of 62,100 Herbalife shares through over the counter market, which expires on January 18, 2014. He also sold 12,200 shares put option with an expiration on January 17, 2005 through over the counter market.
Bill Ackman’s short position in Herbalife
Bill Ackman of Pershing Square Capital Management has the largest short position on Herbalife Ltd. (NYSE:HLF). He believes that the company is a pyramid scheme, and he is urging the FTC to investigate the business model of the company. Different civil rights organizations particularly from the Latina community are also urging regulators to probe the alleged “deceptive business practices and abuses” of Herbalife.
Early this month, Ackman reduced his risk exposure on its $1 billion short position on Herbalife Ltd by 40%, and instead bought put options.