According to a recent Form 4 filing with the SEC, billionaire and activist investor Carl Icahn bought another 33,515 shares of Herbalife Ltd. (NYSE:HLF) on February 26 at a price of $66.4 taking the total amount beneficially owned to 17,000,000 shares.
Icahn has kept his long position in Herbalife Ltd. (NYSE:HLF) mostly intact, while Soros Fund Management, another big investor in the company, is reported to have trimmed its holdings after the stock appreciated 60% from the fund’s entry point.
Carl Icahn on the other side of Ackman’s short bet on HLF
Bill Ackman has alleged that Herbalife Ltd. (NYSE:HLF) is a pyramid scheme and that its real value is likely zero. More seriously, he revealed to the world his short position, worth a billion dollars, effectively waving a red flag at bulls such as Soros, Dan Loeb, Perry Capital and Icahn, who piled into the stock and ranged themselves against Ackman.
The FTC responds to Senator Markey
Last month U.S. Senator Edward Markey, a Democrat from Maccachusetts, wrote to the SEC and the FTC, requesting them to clarify Herbalife’s business model, and alleging that some of his constituents had lost money in their role as a distributor for the company.
Friday, FTC Chair Edith Ramirez responded to Markey, saying that though rules did not permit her to disclose her or her Agency’s opinion on Herbalife, the FTC was taking his complaint seriously. “With respect to the allegations against Herbalife, Ltd., a number of statutory provisions and the Commission Rules of Practice prevent me from discussing what action, if any, the Commission may take in any particular situation,” she said in her letter. “I can assure you, however, that the information you provided and the concerns you expressed are being carefully considered,” she added.
Icahn could benefit from company’s move to squeeze the shorts
Last month Herbalife said it would issue convertible notes worth $1 billion and also expand its buyback scheme – moves that could help corner short positions.
Ackman’s short position has already made it the largest losing bet in the history of Pershing Square.
A view is now emerging that Herbalife Ltd. (NYSE:HLF) has sorted out most of the questions that had been raised about its sales practices and that, along with its cash on hand, made it a prime candidate for a buyout to take it private.
But Ackman is relentless…
Meanwhile, according to a report, at 2 p.m. on March 11 Ackman will present evidence that will allegedly show Herbalife Ltd. (NYSE:HLF) is transgressing Chinese law.
“Herbalife’s business in China operates much like the company’s business in the rest of the world — as a pyramid scheme,” Ackman’s Pershing Square said Friday in a statement.