Jim Chanos Is Believed To Be Short Herbalife Alongside Bill Ackman

Jim Chanos Is Believed To Be Short Herbalife Alongside Bill Ackman

Herbalife Ltd. (NYSE:HLF) shares have been fighting an ongoing battle with activist investor Bill Ackman since last month, and one by one hedge fund managers have been lining up on one extreme or another.

Of course Ackman has been very vocal about his short of the stock, and Whitney Tilson disclosed his short position on the company last month. Dan Loeb came to the defense of Herbalife earlier this month. Now it appears  Jim Chanos, who some consider to be the greatest short-seller in the world, has taken a short position on the stock.

Reuter cites an anonymous source who said Chanos is believed to have been holding a short position on Herbalife “for a while.” Reuters asked him specifically about Herbalife in an interview earlier this week. No doubt he has been watching the back and forth between Herbalife and Ackman and how Herbalife Ltd. (NYSE:HLF) may be considering legal action against Ackman because of his vocal short of its stock.

Michael Mauboussin: Here’s what active managers can do

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkThe debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More

Reuters asked Chanos if he would make a public comment on the company, and his response was, “All I’m going to say is we’ve studied the industry very carefully…we’ll leave it at that.”

Chanos did not have anything direct to say about Herbalife Ltd. (NYSE:HLF) except that there are “so many competing venues for weight loss” that don’t carry the multi-level marketing business model which Herbalife does. He did say that what really matters about Herbalife is how much of the product is sold through distributors to other customers. Ackman claims that distributors are the only ones buying Herbalife stock, but there is have no way to know for sure if he is correct.