The following is from an email which Whitney Tilson sent to investors.

Whitney Tilson on 3G Capital eyes next targets; at Coke, newest flavor is austerity; 15 insane (but true) reasons the Herbalife fraud should be shut down today; activist shorts; what happened when Marissa Mayer tried to be Steve Jobs.

1) The annual Boys & Girls Harbor Investment conference is coming up on Thursday, Feb. 12th and the speaker lineup is the best ever:

William A. Ackman

Founder & CEO, Pershing Square Capital Management, L.P.

Ray Dalio

Founder, Chairman & Co-Chief Investment Officer, Bridgewater Associates

Stephen J. Errico

Managing Partner, Locust Wood Capital Advisers, LLC

Martin E. Franklin

Founder and Executive Chairman, Jarden Corporation

Joshua Kaufman

Managing Member, Brenner West Capital Partners

Larry Robbins

Founder, Portfolio Manager, CEO, Glenview Capital Management

Todd Sullivan

Founder and Managing Member, Rand Strategic Partners

Ronald A. Weibye

Managing Partner and Chief Investment Officer, Aperio Capital Management, LLC

To register, go to: https://www.theharbor.org/hic (it’s $1,500, $1,300 of which is tax deductible).

2) I’ve said it before and I’ll say it again: these Brazilian guys are the best operating managers in the world. Here’s a front-page story in today’s WSJ about them:

Whitney Tilson Celebrates Herbalife Ltd. (HLF) Decline

Brazilian investment firm 3G Capital Partners LP has used relentless ambition and big-name connections to become one of the world’s biggest acquirers of companies, including H.J. Heinz Co. and Tim Hortons Inc.

Now the firm is setting its sights on potential new targets that could give it control of even more of the world’s best-known consumer brands. In the past several weeks, investors have pledged about $5 billion to a new takeover fund being formed by 3G, according to people familiar with the matter.

3G hasn’t publicly disclosed the amount raised or what it plans to do with the money, but 3G usually seeks only what it needs in equity for individual deals, using borrowed money to at least quadruple the firm’s buying power.

In a sign of the investment firm’s aspirations, executives are discussing the possibility of trying to buy a food or beverage company such as Campbell Soup Co. , worth about $14 billion, or even PepsiCo Inc., which has a stock-market value of $140 billion, say people familiar with the situation.

People close to 3G, led by former professional tennis player Jorge Paulo Lemann, caution that no decisions have been made. 3G often studies targets for years before making a move.

And because a PepsiCo deal could be four times as large as Heinz and Tim Hortons combined, 3G might pursue only pieces of PepsiCo or try to join forces with Anheuser-Busch InBev NV, these people said. Mr. Lemann, his two partners and a group of Belgian families own a controlling stake in the beer maker. PepsiCo, Campbell and AB InBev declined to comment.

Some analysts have speculated that 3G also might be interested in Kellogg Co. and Kraft Foods Group Inc., each with more than $20 billion in stock-market value. Kraft’s board of directors replaced the packaged-food giant’s chief executive last month, signaling impatience with a turnaround there, while Kellogg cut the size of payouts to some executives if the cereal maker is sold.

3) Contrast these guys with Coke, which has said it will take FIVE YEARS to cut costs – the Brazilians would get the same amount done in ONE!

Coca-Cola Co. ads starring Santa Claus have been playing on TV, but the mood inside the world’s biggest beverage company is far from merry.

Atlanta-based Coke plans to ax at least 1,000 to 2,000 jobs globally in the coming weeks, the biggest thinning of its ranks in 15 years. It is also introducing stricter budgeting, telling executives to swap limousines for taxis, and dropped its lavish Christmas party for Wall Street analysts.

The moves are part of a $3 billion cost-cutting plan Coke announced in October after warning it would miss profit targets this year and next as consumers drink less soda, for decades its cash cow. The austerity push is a culture shock for a company that traditionally has grown, not shrunk, its way to prosperity.

Investors aren’t convinced Coke can pull it off and question if the cuts are sufficient. The company says the restructuring won’t be finished until 2019. Since Coke announced the plan Oct. 21, its share price has fallen 2.2%.

4) Quoth the Raven with a good summary of why regulators should shut down HLF immediately (this is one of my few remaining short positions). The stock has been in a freefall recently – QTR’s guess is that it’s because Bill Stiritz is blowing it out. I think he’s right.

Summary

  • These are 15 reasons that the Herbalife fraud should have already been stopped – if not shut down immediately, placed under injunction until FTC investigation concludes.
  • Herbalife insider caught on video calling the company “an eventual deception” and “inauthentic”.
  • First hand primary source evidence points to Herbalife being the largest fraud since Madoff/Enron.
  • Questionable death in Mexico surrounded by 7-8 year old questions about the lead content in Herbalife’s product.
  • Herbalife Board Member Pedro Cardoso is wanted for fraud in Brazil. Enough is enough – shut it down.

5) Speaking of activism on the short side, attached is the Year in Review by a new service I subscribe to called Activist Shorts which (surprise!) tracks all public/activist short campaigns. Here’s the summary:

Attached is our 2014 Annual Report. In it, you’ll find the winners of our end-of-the-year awards, our top 10 campaigns to watch for 2015, and direct quotes from activist short-sellers on the best shorts for 2015.

Our end-of-the-year awards are:

2014 Fraud Call of the Year: Gotham City Research targeting Let’s Gowex SA

2014 Valuation Call of the Year: Citron Research targeting Plug Power, Inc.

2014 Short-Seller of the Year: Gotham City Research

Our top 10 campaigns to watch for 2015 are topped by Globalstar (GSAT), Ametek (AME), and Nu Skin (NUS).

We also spoke with several major activist short-sellers on their favorite shorts and areas of focus. One of them told us, “We have identified an identity theft security company that we believe to be a worthless fraud.” Many found the biotech sector to be the most attractive sector to short. Quoted short-sellers include Manuel Asensio, Carson Block and Sahm Adrangi.

To learn more, please open the attached report.

It’s a very useful service – even if you don’t short, you’d better know what short sellers are saying about a company you own or are doing research on.

If you want to sign up for a free 30-day trial, just email the founder, Adam Kommel at [email protected]. And if you mention my name when you subscribe, we’ll both get an extra free month.

 

Investment Firm 3G Capital Eyes Next Targets

With New $5 Billion From Investors, Brazil’s Buyout Kings Start to Shop Around

Brazilian investment firm 3G Capital paid $3.3 billion for Burger King’s parent company in 2010, and that company acquired Tim Hortons for $12 billion in 2014. Investors who were part of the firm’s Burger King buyout have gained at least four times their original investment.

By Anupreeta Das, Luciana Magalhaes and Liz Hoffman

Jan. 6, 2015 10:37 p.m. ET

Brazilian investment firm 3G Capital Partners LP has used relentless ambition and big-name connections to become one of the world’s biggest acquirers of companies, including H.J. Heinz Co. and Tim Hortons Inc.

Now the

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