Herbalife Ltd. (HLF): Bill Ackman’s Worst Bet Ever

CREW Herbalife Ltd. HLF Bill Ackman speaking

When Bill Ackman announced his $1 billion short of Herbalife Ltd. (NYSE:HLF), he may have felt like he was sitting on a gold mine. But as it turns out, that short has done nothing but hurt his Pershing Square fund. In fact, The Wall Street Journal reports that investor documents indicate his bet against Herbalife is his worst one in the ten years Pershing Square has been in business.

Ackman’s bet against Herbalife lost 49%

The publication reports that Ackman’s bet against Herbalife Ltd. (NYSE:HLF) has lost 49%. In spite of that though, he’s sticking with his bearish view of the nutritional supplements company. He’s been saying that Herbalife is a pyramid scheme for more than a year now, although the company denies the allegation. Ackman’s most recent tactic has been to profile Herbalife distributors in an attempt to explain why he thinks it is a pyramid scheme.

Shares of Herbalife Ltd. (NYSE:HLF) soared approximately 140% last year as numerous big name investors like George Soros, Carl Icahn and others sunk large investments into the company and thus, a bet against Ackman.

Herbalife bet worse than J.C. Penney

According to the Wall Street Journal, Ackman’s bet against Herbalife Ltd. (NYSE:HLF) was even worse than his bet in favor of aging retailer J.C. Penney Company, Inc. (NYSE:JCP). That position lost about 41%, according to a recent presentation from Ackman. His Pershing Square fund sold out of the retailer last year.

Ackman repositioned his bet against Herbalife Ltd (NYSE:HLF) late last year, so at this point, we don’t know the exact dollar amount he’s lost on that bet.

Ackman more than makes up for losses

Of course Ackman has had his share of wins as well, as his fund more than made up for his few bad bets with plenty of good ones. The publication reports that Pershing Square sold its most profitable position ever this month, which was General Growth Properties Inc (NYSE:GGP). According to Ackman, his firm’s investment into the mall operator rose 256%. Pershing Square first bought General Growth in November 2008 when it was struggling to make bond payments and a few months before it declared bankruptcy.

Ackman’s firm also cashed in big time last month when Suntory Holdings announced it would buy BEAM Inc (NYSE:BEAM). Pershing Square was Beam’s biggest shareholder. Since Pershing Square began in 2004, it has posted an average annualized return of 19.2%. Last year, the firm posted 9.7% returns.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at Mjones@valuewalk.com.

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