HLF Update: 'Ackman-Gap' Filled

Tyler Durden's picture

As Herbalife's CEO denigrates Bill Ackman's "insulting to real Americans" presentation, it appears the short-squeeze-a-palooza progresses. While this is far short of Volkswagen-esque explosives, the 'Ackman-Gap' has been filled (trading up to its 50DMA) and from here on out, based on the build in short-interest we have seen, young William is going further under-water (and along with him Mr. Tilson). Of course, following Mr. Loeb's stake yesterday, we suspect all it takes now is for another major hedge fund name coming out with a 13-G exposing a position big enough to require the already hard-to-borrow (and extremely high cost of borrow) shorts to have their borrow bought in from under them to really set this 'game' on fire.

The 'shorting' began around the mid-$40s...


And that gap has been entirely filled...

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John Law Lives's picture

There's nothing quite like seeing fair and open price discovery at work in an efficient marketplace...

/sarc off and puke in mouth now spit out

Texas Ginslinger's picture

This is an interesting fight to watch.

Only one winner in this game.

Will be interesting to see which side the 3rd money player joins.

Clash of the titans.....

May the biggest war chest win...

Vegamma's picture

I'm properly diversified by investing in hedge funds on both sides of this battle. So my expected return is -10% (I lose 20% of the ups to performance fees and still capture all the downside). This will come in handy as a tax loss, especially with higher marginal rates this year.

AccreditedEYE's picture

Great call by ZH to buy the Tilson low. If you listened, you minted $. The Tilson indicator is almost as reliable as the Fed printing $.

Mark Carney's picture

Until that one time where you bet against him and you lose your golden shirt.


Tread carefully, its the same and until its not.

Ruffcut's picture

Herbie Greenberger is bareassed on this too.

ShitBC channel says "distributors don't make money if they don't sell product". SHit, I don't know of any distributor who makes money without selling product. What a bunch of dumbfucks.

Cunt Ninny Bull SHit channel.

Super Marco's picture

Keep in mind the SEC is now up HLF's ass. If they consider it to be a pyramid scheme then it'll hit zero. Read the Ackman report. Seems he could be right. 

Texas Ginslinger's picture

MLM's are not pyramid schemes, no matter how much they look & smell like one.

Too many of them have been around too long to be labeled as such.

If the SEC does anything here, I would be very surprised.

However, the SEC has a new chief and this may be a way to flex some muscle.


adr's picture

Hoe exactly are MLMs not pyramid schemes. You do know that MLM stand for Multi Level Marketing.

A few guys changed what people called their scams, and now it's a legitimate business model? "Distributors" are forced to purchase product from Herbalife corporate. Since Herbalife essentially owns every "distributor" they can forward book profit, making the claim that the "distributors" will purchase the inventory. Herbalife records all inventory as booked sales, voila $2.4 billion in "sales".

The company is a scam and needs to be shut down. Herbalife directors are laughing all the way to the bank, printing money as these assholes fight over who is right about a company that has the value of a single grain of sand on the beach. Not to mention that the original CEO was arrested for running the original Herbalife pyramid scheme before the company found a massive cash injection and went public. Herbalife's first tonic was proven to be poisonous by multiple labs.


Charles Ponzi would be so proud that his business model has been adopted as the end all be all for making money in 21st century America.

jcaz's picture

Bottom line will be the comment the CEO made, claiming "90% of sales are to non-members"-  if he can't back that up with actual proof,  there she blows.....

Dumb move by the guy-  Herbalife has been notoriously clever at never putting an actual number to that percentage-   don't ya hate it when the boss blows your scam?

Titus's picture

A friend and a girlfriend just got into herbalife, they became distributers for self-consumption purchases and together dropped over a grand on the shit in december (before prices rose in their location - international). Does anyone buy the shit to sell? I think most buy it simply to consume, which means the sales are going directly to the members. 

Does it really matter one way or the other if the shit is being consumed? Can distributors return it?

Richard Chesler's picture

In Obama's bananamerica, what could be more profitable than selling to the ignorant?


Squid Vicious's picture

Between JCP and HLF, looks like Ackman's gonna need another career... can he do stand-up?

ATM's picture

Don't be so ready to trash JCP. My wife and two daughters have actually started shopping there. They claim "it's not ghetto crap" anymore.

They are early adopters. I actually felt like buying some of that crap stock when I heard that but didn't. So that's your green light to go triple your money! 

EclecticParrot's picture


Well, it's surreal to see the endless parade of hedgie and mutual fund pontificators on CNBS, desperately clinging to notions outdated since at least the mid-80s -- namely that stocks move based on ‘fundamentals’ ,  ‘themes’ or ‘stories.’  The monthly moves in AAPL, e.g., equate to market cap shifts greater than the sum of entire sectors of our economy (industrials, utilities,etc.), and can’t possibly be justified by changing forecasts for 2-yr phone sales or competive landscapes. 

Clearly, this is all a game of algo and HFT-driven origins, so I always assumed the persistence of story-driven explanations on “Fast Money” and other such shows was purely a nod to network sponsors (brokers, insurance companies) who wanted Joe Investor to think the world was understandable, and that investing was nothing more than marginally educated common sense, for which talk of pivot points, VWAP (Veers Where Algo’s Prefer, or Volcker Was a Pussy, take your pick) and “buy-the-new-low” algos would make them leery and shift even more money into cash equivalents. 

Thus, the presence of these talking head ‘gurus’ was part of the scheme (i.e., I’ll come on and tell interesting stories about how growth in India and China will propel my picks and gather more money for the fund, while my colleagues program alligator sawtooth VWAP-reverting quasi-sign wave “fuck the shorts” algos in the basement).  However, with this dork cockily telling the world  “I’m short as shit this stock for charitable purposes”, allowing every clever Wall St. nerd to easily steal his cookies, one wonders – is he living in a fantasy world, driving around in an AMC Gremlin, smoking funny cigarettes rolled tightly in pages of Graham and Dodd ? ?


JSD's picture

It's almost worth paying Tilson to remain active in the market and prevent him from blowing up his funds, which as sure as you were born, he will do, so that others can make $$ off of his horrendous track record.  If only there were a charting platform with a built-in 'Tilson Oscillator'...

Threethreethree's picture

SEC to Fed: It's a Ponzi scheme, should we shut it down?

Fed to Goldman Sachs; It's a ponzi scheme, Ackman is right. what should we do?

Goldman to fed: "Ackman has a billion bucks short?"

Goldman to MM team: "Buy, buy, buy"

Goldman to fed: Let it ride, you can't shut down Ponzi schemes. The whole damned country is a Ponzi scheme".

Fed: Yes sir.

Ackman to gun: Bang

Agent P's picture

"I drink your healthshake!"

Threethreethree's picture

I have to say when I read the original article by Tyler, I thought he was indeed on to something. He certainly was.

Ackman counterred the conf call this morning shortly after it finished.

He sounds desperate.

This could get interesting.

I can't wait for TD to comment on this again.