Ackman Critic John Hempton Admits Bad Call On Herbalife Ltd.

Ackman Critic John Hempton Admits Bad Call On Herbalife Ltd.

John Hempton of Bronte Capital Management recent admitted that Herbalife Ltd. (NYSE:HLF) stock has reacted ‘very badly’ thanks to recent regulatory news.

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In his March 2014 investor letter, John Hempton noted the stock’s fall cost his fund a ‘few percent’ of its portfolio last month.

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Wallowing in self-pity

Michelle Celarier of the New York Post, citing sources familiar with the hedgie, points out that John Hempton has been wallowing in self-pity. He reportedly feels humiliated by Ackman’s recent successes given that Hempton spent last year adamantly professing that the activist billionaire was wrong.

John Hempton was one of the first to loudly berate Ackman’s Herbalife Ltd. (NYSE:HLF) short.

John Hempton, the chief investment officer and founder of Bronte Capital, an Australian based global asset management firm, sang a different tune last year. He remarked: ”The shorts have now been categorically shown to be wrong”. He boasted that Herbalife Ltd. (NYSE:HLF) was his ‘best stock of the year’. The fund gained 37% in 2013.

In his interview to in January last year, John Hempton, remarked “multilevel marketing schemes are scum bags. This million in their chain and Bill Ackman is ripping them off. Tobacco kill twice as many people a year as Herbalife. Herbalife Ltd. (NYSE:HLF) has in its network. They kill 400,000 people in America. Hugely profitable. They are scum bags but return cash to shareholders for decades. If you have shorted them, you’ve been run over. Herbalife five years ago, add about 400 million shares, it now has 108 million shares. It buys back stock regularly. Pays a fairly hefty dividend. They are a scum bags but have a stock market scum bag”.

Herbalife fell due to regulatory news

John Hempton in his client letter in January this year remarked: “In 2013 overconfident shorts in several stocks were exposed. When the year began there were large short positions in Herbalife Ltd. (NYSE:HLF), Tesla, Netflix and a few other stocks where the shorts have now been categorically shown to be wrong. When short-sellers are wrong on a crowded trade in a bull market, they get cruelly and unusually punished”.

In his March 2014 investor letter which The New York Post got access, Hempton noted that Herbalife Ltd. (NYSE:HLF) stock has reacted ‘very badly’ to recent regulatory news and cost his fund a ‘few percent’ of its portfolio last month. He wrote: “We have a deep desire to make some serious money for client. We think it will happen but we can’t say when”.

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Mani is a Senior Financial Consultant. He has worked in Senior Management role in large banking, financial and information technology organizations. He has provided solutions for major banking and securities firms across the globe in the area of retail, corporate and investment banking. He holds MBA (Finance) and Professional Management Accounting Qualifications. His hobbies are tracking global financial developments and watching sports
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