When Words Matter by TheSkeptic21, Bored With The Noise
I’ve said before that the SEC has defiled Ackman’s short thesis. I’ve also said that the Bostick case was crushing Ackman’s thesis; more recently I noted that the Bostick case actually eviscerated Ackman’s thesis. You can easily go back and revisit the judge’s opinion on Bostick. To do that though, you’ll either have to query court records or look to documents I uploaded to SCRIBD because you won’t find these records on Pershing’s anti-Herbalife website (although it’s been 10 months since the ruling). Conveniently Pershing Square Capital has failed to upload the Bostick ruling or the Awad ruling to the Herbalife case law section of the site’s “resource library”. Even if you search the site for the word “bostick” you’ll get “no results found”. That’s all a bit of back story though and isn’t really the matter at hand, because the FTC and the SEC may have just picked up shovels and started helping Bill Ackman shovel dirt on the casket of Pershing Square.
In Herbalife’s 10-K filed yesterday, the company (which first disclosed a CID it received from the FTC two years ago), made a pretty significant change to the language of the “NOTES TO CONSOLIDATED FINANCIAL STATEMENT” section. After having stuck to the same disclosure for two years, the company decided to modify their disclosure language with respect to the FTC, possibly indicating that resolution of the matter is near. In the 10-K Herbalife stated:
Value Partners Asia ex-Japan Equity Fund has delivered a 60.7% return since its inception three years ago. In comparison, the MSCI All Counties Asia (ex-Japan) index has returned just 34% over the same period. The fund, which targets what it calls the best-in-class companies in "growth-like" areas of the market, such as information technology and Read More
“The Company is currently in discussions with the FTC regarding a potential resolution of these matters. The possible range of outcomes include the filing by the FTC of a contested civil complaint, further discussions leading to a settlement which could include a monetary payment and other relief or the closure of these matters without action.”*
*For ease of comparison there is an embedded blackline of the section below (10-K vs. Q3)
This modification follows closely on the heels of a Wall Street Journal article that reported the DOJ probes of Ackman and Herbalife had both fizzled. It’s only one tiny word, but it’s noteworthy that Herbalife has also removed the “recently” qualifier from the DOJ’s information request they previously disclosed, further supporting the Wall Street Journal’s report that the DOJ matter is done.
Make of it what you will, but I have to believe resolution is imminent.
UPDATE: Pershing Square tells ValueWalk that no Wells notice has been received.
See the documents below.
Herbalife’s 2015 10K Filing vs Q3
Pershing Square Capital Response from SEC GC
SEC Herbalife Response