Pershing Square’s Bill Ackman is “not trained in the fine art of surrender” and is “putting his investors financial lives at risk,” Bob Chapman of Chapman Capital says.
We are not sure why someone managing so little money gets so much press time, but here is Bob Chapman video and transcript below.
GrizzlyRock Value Partners was up 16.6% for the first quarter, compared to the S&P 500's 5.77% gain and the Russell 2000's 12.44% return. GrizzlyRock's long return was 22.3% gross, while its short return was -2.9% gross. Compared to the Russell 2000, the fund's long portfolio delivered alpha of 10.8%, while its short portfolio delivered alpha Read More
thank you for having me. let me get your reaction to the news we broke earlier before we do anything else and that’s word that soros’ firm has taken a new, large, long position in herbalife. well, i know nothing personally about the position he’s taken, the size of it or the timing, but i would say it would certainly fit a deep value investor’s profile of a stock to own and birds of a feather tend to flock together and icahn and soros having this position would make sense. we mentioned at the top long before there was icahn, long before there was loeb, there was bob chapman. you have been watching this company for some time. you have been an investor in it for some time. i read some news from several months ago where you had said that you had either closed out or hedged your position. where are you today? herbalife constitutes one of the largest positions that i hold in all the accounts. it is in some accounts it’s over 50% of the entire portfolio. i run a very concentrated book by nature. it’s a high volatility, high concentration style, and i have re-established my position in the low 40s and have left it on for the last 20-plus points. so you are back in a big way. i don’t see there’s any other position to have in this stock. it’s currently traded in only 15 multiple of $5 2013 earnings gets you to $75 per share. even low 60s it’s something you should own. what do you think bill ackman is doing these days or thinking about herbalife? he told cnbc just this morning, in fact, that he hasn’t covered a single share. your reaction to that? i am confident that as long as pershing square’s investors allow big ackman to spend millions of dollars of their money on their personal vendetta, that that guy will never walk into a trading room and voluntarily hand someone a buy order on herbalife. i believe he’s a guy that probably has a poster from the movie 300 hanging over his bed. he’s not trained in the fine art of surrender and when he’s putting his investors’ financial lives at risk, i think he’s just going to keep going forward. i mean, there is the chance, isn’t there, bob, that he ends up being right however dire that outcome may seem as we sit here today or far fetched that outcome mayseea? again, he’s made his bet principally on the fact that the ftc or the government is going to come in and shut this business down. however unlikely that may seem as i say at this particular point in time, it is possible, isn’t it? it’s possible. i suppose an alien spaceship might hand on cnbc headquarters tomorrow as well but let’s just go through the regulation issue. anyone who understands the legal threshold required for a company to be labeled as an illegal pyramid scheme would dismiss herbalife from that qualification. it’s a real company selling a real product to consumers. this is not something that the regulators are new to. the fdc and any state attorney general has for years been approached by distributors who for whatever reason failed to succeed in the business opportunity and have complained to them. they’ve looked at it, they’ve reviewed it. the consumer protection bureau under jessica rich probably gets daily phone calls from ackman about the latinos that are supposedly being taken advantage of, but the truth of the matter is that the fdc has not been asleep at the switch. they’ve halted 17 pyramid schemes in the last ten years and collected over $100 million in consumer suspended junts. so this is not fresh.