Icahn Mocks Ackmans Obsession After Raising Herbalife Stake

Icahn Mocks Ackmans Obsession After Raising Herbalife Stake

Icahn Mocks Ackmans Obsession After Raising Herbalife Stake

Herbalife Ltd. backer Carl Icahn waited until after Fridays market close to contradict fellow billionaire Bill Ackman, spending the day adding 2.3 million shares to his stake in the nutrition company as its stock tumbled.

In this latest tussle between the outspoken New York activist investors, the only clear outcome is that Icahn now owns even more of Herbalife: 21 percentage. Ackman had said Friday that Icahn was looking to sell his stake , not add to it.

Meanwhile, Ackmans hedge fund, Pershing Square Capital Management, is approaching the four-year anniversary of its$ 1 billion-bet that Herbalife is a pyramid strategy destined to collapse.

Bill Ackman tried to play us this morning, and Carl Icahn played Bill Ackman this afternoon, told Tim Ramey, an analyst at Pivotal Research Group and a longtime defender of Herbalife. Its so beautifully played on Icahns part.

Icahn has been publicly assailing Ackmans attempted evisceration of Herbalife — on stages, television, in documentaries and online — since a January 2013 CNBC phone-in fight. That July, Icahn told a seminar he decided to look into Herbalife because he wasnt a great fan of Ackman.

A year later at the same Delivering Alpha event in New York, both billionaires took the stage together and said their conflict was over. Days afterward, Ackman delivered an emotional, virtually four-hour anti-Herbalife presentation that backfired — lifting the shares 25 percent.

Public Short

Ackman has waged a public short campaign against Herbalife since December 2012, saying it should be shut down. Along with setting up a$ 1 billion wager against the stock, he hired researchers to look into the companys business practices and gave public presentations stimulating his occurrence, while prodding regulators to conduct their own review.

Icahn took the other side of the trading in early 2013, snapping up 18 percentage of the companys shares and defending its multilevel marketing model — in which products are sold both to consumers and new distributors. Herbalife subsequently let Icahn name five board members as its largest investor.

Herbalife surged as much as 8.3 percent to $65.54 in late trading Friday, after Icahn posted a statement about his position in the company on his website. The shares fell 2.3 percentage to $60.50 in regular trading in New York, trimming an earlier loss of as much as 7.8 percent.

Shares Tumble

Ackman sent Herbalife shares tumbling where reference is said Icahn was looking to ditch his considers. In an interview with CNBC, Ackman said investment bank Jefferies Group LLC approached him about buying a portion of Icahns Herbalife shares earlier this month.

He said he considered buying some of Icahns stock if it would help get Icahn entirely out of his position. Ackman afterward confirmed to Bloomberg News that he didnt buy any of Icahns stock and would have rapidly sold the shares if he had.

Completely contrary to what Bill Ackman stated on television today, I have never given Jefferies an order to sell any of our Herbalife shares, Icahn said in his statement, in which he disclosed adding 2.3 million shares. I continue to believe in Herbalife: Its a great model that creates a great number of jobs for people.

Ackmans Malady

Icahns statement — which critics noted didnt directly address whether Jefferies had softly shopped the stake for buyer interest — went on to lambaste Ackmans fixation on the company.

Ackman may be a smart guy, but he has clearly succumbed to the same dangerous( and sometimes fatal) malady that afflicts many investors – hes developed a very bad case of Herbalife obsession, he said. Obsessions concerning the value of stocks are the undoing of many investors because they often blind you to the facts, and it becomes impossible to insure the wood for the trees.

Ackman maintained his gamble against Herbalife even after the maker of weight-loss shakes and supplements reached a $200 million settlement with the U.S. Federal Trade Commission last month. He said that the terms of the agreement — which Herbalife hailed as an acknowledgment that its business model was voice — would cripple the company and cause it to collapse.

Internal Thinking

Icahns response to the FTC agreement noted that he was allowed to raise his stake to as much as 35 percentage — something Ackman has hitherto opined wouldnt happen.

It astonishes me that a guy who hasnt any knowledge of my internal investment believing believes he is in a position to go on television to tell the world what I AM thinking! Amazing! Icahn said in Fridays statement.

He has no right to do so, and even worse, Im sure his unsubstantiated, obsessive remarks, especially about Herbalife, have cost investors a great deal of money over the last few years.

Multilevel Sales

Meanwhile, Herbalife, the is the subject of this billionaire combat, has repeatedly denied Ackmans accusations. The company declined to respond to Ackmans commentaries on Friday, though Chairman and CEO Michael O. Johnson speedily welcomed Icahns announcement.

We appreciate the support of all of our investors and are particularly grateful to Carl Icahn and the sentence he shares, and continues to show in our business, as demonstrated by todays significant increase in his stake in the company.

The dispute over Herbalifes business centered on whether there was legitimate demand for its products by actual clients or whether its marketings went largely from contractors who bought the products in hopes of making money by reselling them.

The FTCs findingsbacked up many of Ackmans claims, saying that the business was driven more by member recruitment than by retail sales and that a large number of its distributors lost fund. The bureau is forcing changes that could make it more difficult for distributors to profit. Herbalife will now “re going to have to” depend on retail sales, which are to be verified by receipts, instead of bulk buys by members.

Still, Herbalife has remained upbeat about its prospects. Earlier this month, the company posted second-quarter results that topped analysts calculates and said it expects to overhaul its business practices globally in response to the settlement. While the terms of the bargain affect merely its U.S. operations, the company said it is very likely to roll out some aspects of the agreement worldwide.

Carl is the confidence behind Herbalife, Ackman told Bloomberg before Icahns statement. Once hes out, the confidence is go and the company collapses.

So what happens when trading resumes Monday, after the confidence behind Herbalife — an 80 -year-old worth $19 billion — has bet another $137 million on its future?

Read more: www.bloomberg.com

Icahn Mocks Ackmans Obsession After Raising Herbalife Stake
Icahn Mocks Ackmans Obsession After Raising Herbalife Stake
Icahn Mocks Ackmans Obsession After Raising Herbalife Stake
Icahn Mocks Ackmans Obsession After Raising Herbalife Stake
Icahn Mocks Ackmans Obsession After Raising Herbalife Stake

Icahn Mocks Ackmans Obsession After Raising Herbalife Stake

Icahn Mocks Ackmans Obsession After Raising Herbalife Stake

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