The drama between Herbalife and Bill Ackman continues today with another shot from Ackman. His firm, Pershing Square Capital Management, issued a statement accusing the company of falsely saying they had canceled a meeting with its representatives. The firm also provided an updated disclosure about the options it currently owns on Herbalife.
Ackman versus Herbalife… yet again
On Wednesday, Ackman spoke on CNBC, saying that he thinks they’re doing “God’s work” and referencing Bernie Madoff in his comments about Herbalife. Then the nutritional supplements company fired back hours later, accusing the activist investor of trying to boost the value of his options trades. Herbalife also said representatives for Ackman’s firm had canceled a scheduled meeting with them last month. Ackman basically said today that Herbalife was just blowing smoke.
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“Rather than speaking to its deteriorating business fundamentals, Herbalife appears to be attempting to distract investors from the facts by claiming – falsely – that we cancelled a meeting,” Ackman said in a statement.
Pershing Square said in order to clear up details about the December meeting that had been scheduled with Herbalife Compliance Officer Pamela Jones Harbour, they’re releasing all of the correspondence between her and Pershing General Counsel David Klafter. They said Klafter sent a lengthy letter to Harbour on Nov. 6 explaining what the firm calls “serious compliance issues” at Herbalife and suggesting that they meet in person to talk about the problems.
After several conversations and emails, they scheduled a meeting on Dec. 17, but 10 days before that, Klafter emailed Harbour to postpone the meeting “because of other pressing year-end priorities.” Those priorities included Pershing Square’s release of a new Herbalife video. The firm added that Klafter still intends to meet with Harbour at some point.
On Dec. 17, Ackman’s firm released a video that showed a number of top Herbalife executives and senior distributor at a meeting. The video reportedly showed them talking about “the fraud and deception in Herbalife’s business model,” the press release states.
When Herbalife responded to Ackman’s comments on CNBC in its statement last night, the company referenced his put options and said he was off on “yet another tirade of misrepresentations” because those options were expiring next week.
However, Pershing Square said today that 97% of the Herbalife put options it owns have been extended and now have expiration dates into 2016. The firm also stated that its January put options have a $65 per share strike price and that it could extend, sell or exercise those put options depending on various factors.
Ackman also essentially called out Herbalife for not directly taking on his comments regarding the earnings miss he expects.
“Yesterday, on CNBC, I said that Herbalife will miss earnings for the fourth quarter of 2014 and will lower its earnings guidance for 2015,” Ackman said in a statement. “If these assertions are incorrect, as Herbalife states, then the company should correct the record by reaffirming both Q4 and 2015 earnings guidance.”
We can probably expect Herbalife to return fire yet again. Fox Business Network’s Charles Gasparino said today the company is already planning its next counterattack.
Shares of Herbalife rose by as much as 5% during regular trading hours today.