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In Hilarious Twist Herbalife Strikes Back At Bill Ackman, Tells His Investors To Pull Their Money

Tyler Durden's picture





 

It would be tragic if it wasn't so hilarious. Nearly a year after we first suggested that Herbalife is the long of 2013, as a result of the epic short squeeze potential resulting from the Ackman announcement of his mega short,(promptly followed by the traditional Whitney Tilson piggyback) which it has been, rising from $25 to an all time high of $77.39 days ago, Herbalife has had enough of the so-called retail expert's (coughJCPcough) repeated allegations of fraud, and after taking a well-deserved victory lap costing Ackman hundreds of millions, has decided to hit him where it truly hurts - his clients. Bloomberg reports that Herbalife is approaching investors in Ackman’s hedge fund, suggesting they pull their money from the $12 billion firm.

Herbalife’s argument: Ackman’s bet, which has lost as much as $500 million, is risky and irresponsible, said the people, asking not to be named because the campaign is private." This is sheer brilliance on behalf of HLF, and one can't wait to see just how successful the Moelis-run campaign concludes, because if there is one thing massively overinflated Wall Street egos (in this case belonging to epically overvalued "investment managers" - just ask Icahn) can't stand, it is a drain of AUM. It would also mark a historic first time that a company marked for a shorting death strikes back at the hedge fund itself.

More from Bloomberg:

Moelis & Co., an investment bank working for Herbalife, arranged a meeting with Cliffwater LLC, which advises clients on hedge-fund investments, and Herbalife executives, according to two people with knowledge of the gathering. Moelis also reached out to New Jersey’s $76.7 billion pension fund, which has $207 million invested with Ackman, said the people. Executives of the New Jersey fund haven’t met with the Herbalife camp.

 

“Herbalife and Ackman have been fighting in one theater, and now the warfare has moved into an additional theater,” said John Coffee, professor of securities law at Columbia University in New York. “All’s fair in love and activism,” he said, adding that the tactic of putting pressure on activist investors through their clients is a new one.

 

Ackman, using chart-filled presentations with more than 300 pages, has waged a public campaign accusing Herbalife of generating most of its revenue from recruiting new distributors, rather than through sales to consumers. He’s urging U.S. regulators, elected officials and community activists to help shut it down. Even after the shares surged, the hedge-fund manager said in a November interview on Bloomberg Television that he “will take this to the end of the earth.”

He sure will. And speaking of Ackman's presentation, this is what Whitney Tilson said about it last year, when he piggybacked on the losing trade:

Merry Christmas to all!

 

Pershing Square’s analysis of Herbalife is the most remarkable piece of investment analysis I have ever seen. Simply astonishing. And kudos to Pershing Square for making all of it public – not just the 300+ page slide presentation, but all the supporting materials. For the many young people on this email list who are looking for a job in this industry, study this carefully – if you can do analysis even a tiny fraction this comprehensive, there will always be a job for you...

Yup - with Whitney Tilson... where you may have to pay an "inverse Christmas Bonus" to keep your job.

The stated, politically-correct reason for the intervention is clear:

Herbalife and Moelis are trying to persuade Pershing Square investors and advisers such as Cliffwater that Ackman is acting irresponsibly and made the wager a personal issue, said this person. They argue that, by putting almost 10 percent of client assets into a short position against Herbalife, he was taking too much risk, the person said.

Still, none of this will compare to the sheer, epic humor that will result if and when Carl Icahn joins in, say, by telling every Pershing Square investor he would match every dollar pulled out with 50 cents of his own money. After all, for the 70+ year old billionaire it's all a game at this point...

 


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Mon, 12/09/2013 - 09:21 | Link to Comment buzzsaw99
buzzsaw99's picture

The Icahnator, impervious to ack ack attack.

Mon, 12/09/2013 - 09:24 | Link to Comment ghengis86
ghengis86's picture

...he cannot be reasoned with...

Mon, 12/09/2013 - 09:32 | Link to Comment slotmouth
slotmouth's picture

This story invokes the image of a Ackman rattling a chain link fence while a nuclear blast obliterates Pershing Square.

Mon, 12/09/2013 - 09:48 | Link to Comment ghengis86
ghengis86's picture

I thought it closer to Ichann licking Bill's face while he's chained to a terrible short position.

Mon, 12/09/2013 - 09:48 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Cannot be bargained with...

Mon, 12/09/2013 - 10:46 | Link to Comment Imminent Crucible
Imminent Crucible's picture

I think Herbalife just made a huge mistake.  This kind of unprecedented attack by a company on a hedge fund lends more credence, not less, to Ackman's charges.

It appears that they desperately want to make Ackman go away.  What are they hiding?  A hideous disfiguring pox on all their houses.

Mon, 12/09/2013 - 11:22 | Link to Comment DonutBoy
DonutBoy's picture

Is it more fair if Ackman can encourage investors to dump HLF while HLF cannot encourage investors to dump Pershing Square?

Mon, 12/09/2013 - 12:27 | Link to Comment Imminent Crucible
Imminent Crucible's picture

When did the capital markets start being based on "fair"?  If you like your HLF, you can keep your HLF. Period.

Mon, 12/09/2013 - 12:36 | Link to Comment Bananamerican
Bananamerican's picture

what's an "Herbalife"?

Mon, 12/09/2013 - 09:21 | Link to Comment krispkritter
krispkritter's picture

Hey Ackman! Get a (Herbal)life!  (flips Bird) Signed, H

Mon, 12/09/2013 - 10:04 | Link to Comment ZH Snob
ZH Snob's picture

some guy tried to sell me Herbalife.  told him I wasn't interested, that his product delivered no life at all.

Mon, 12/09/2013 - 12:32 | Link to Comment Imminent Crucible
Imminent Crucible's picture

...but, but, but...HerbaLife's weight loss formula contains "calcium, green tea leaves extract, dried ginger root extract, dried theobroma extract, dried yerba mate extract, astragalus, celery, fennel, hawthorne berry, licorice, marshmallow, parsley, suma, dried cinnamon extract and alfalfa."   How could you not lose weight taking all that?

On the other hand, the only thing in there that's demonstrated any efficacy in weight loss is the green tea, and you can drink all the green tea you want for a fraction of the cost of that Totally Out Of Control stuff.

Mon, 12/09/2013 - 09:21 | Link to Comment 1835jackson
1835jackson's picture

Pride cometh before a fall. 

Mon, 12/09/2013 - 09:23 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

It certainly looks like Herbalife is doing ok. I know a couple of buddies who made some serious cash selling those shakes. Two of them even won sweet vacation packages. I personally gave it up after selling full time as a junior distributor. One thing they don't tell you is that although it's a very rewarding career, it's far from easy. Getting the first client was a mission and after the first five sales I just found that I couln't get any traction. Herbalife is an excellent product though and I strongly urge anyone considering the distributor program to give it a go.

Mon, 12/09/2013 - 09:29 | Link to Comment negative rates
negative rates's picture

The rain in Spain falls plainly in Maine.

Mon, 12/09/2013 - 10:46 | Link to Comment Luckhasit
Luckhasit's picture

I don't know what raises my ire more.  MDB, Herbalife, or smucks that peddle that multi level marketing platform crap.  Rather than selling your own crap your selling theirs.  So whose making the real money then? Oh yea, the Fed.  I need that job but being on ZH, i don't think I'm dumb enough.

Mon, 12/09/2013 - 12:52 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

It's official - HLF isn't a chain or ponzi... it's a cult, baby!

 

Mon, 12/09/2013 - 10:49 | Link to Comment long-shorty
long-shorty's picture

I still love you, MDB.

Unfortunately, ZH has this new guy, Fonestar, and at first I thought he was serious, but now I wonder if he is just a sarco-trolling, less humorous, Bitcoin-centric pale version of MDB. At any rate, even if he is serious, you should let him write BTC articles for the "Accredited Times." That is really an appropriate venue for his keen insight.

Mon, 12/09/2013 - 14:10 | Link to Comment Ljoot
Ljoot's picture

Anyone else have the idea that born patriot is MDB?

 

Mon, 12/09/2013 - 09:23 | Link to Comment mrdenis
mrdenis's picture

I always thought Christmas was a giving time of the year ............

Mon, 12/09/2013 - 09:25 | Link to Comment firstdivision
firstdivision's picture

One ponzi calling out the other ponzi.  Herbalife is only getting a boost as Ichan and friends are using their wealth to boost sales, ergo share prices.  When they pull out, it'll fall back down to the mid-30's.

Mon, 12/09/2013 - 10:10 | Link to Comment Hooter Shaker
Hooter Shaker's picture

More proof the market is broke.   The "watch" was taken apart years ago and parts flew everywhere.  These guys are just trying to sell the "parts" for scrap.  

Mon, 12/09/2013 - 09:27 | Link to Comment Global Hunter
Global Hunter's picture

men fighting like scheming women is the new normal.  faggots all of them

Mon, 12/09/2013 - 09:29 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

girly-boys

Mon, 12/09/2013 - 09:31 | Link to Comment TahoeBilly2012
TahoeBilly2012's picture

In all honesty, I am taking "T-Bomb 2's" from dont know their name and my nuts are hard all day. My hair is turning my lighter blonde less gray. (This is s serious testimonial!)

Mon, 12/09/2013 - 12:39 | Link to Comment Imminent Crucible
Imminent Crucible's picture

That doesn't sound good. Testicular cancer is a terrible thing. BTW, my dad's hair turned from white back to gray shortly before he died. Not joking. 

 

Mon, 12/09/2013 - 09:40 | Link to Comment enloe creek
enloe creek's picture

wjere does all the extra skin go when the nuts get hard

Mon, 12/09/2013 - 09:45 | Link to Comment Winston Churchill
Winston Churchill's picture

Roids like a truck driver.

Mon, 12/09/2013 - 09:52 | Link to Comment adr
adr's picture

One man does a thourough and correct analysis of a bogus company, proves for the world to see that it is nothing but a multi-billion dollar scam. The other just says, "I believe in this company" and puts his money in. The guy that offers no evidence that Herbalife makes one actual dollar in profit wins.

It is pure insanity. But that's Wall Street. A meaningless multi layered con game made real because it gets played with real money.

People are now aware the stock market was created to skim cash from the Goy. That it why the taper matters. Without the Fed, Wall Street has no new cash to play with. With no new cash, the ponzi fails.

Mon, 12/09/2013 - 10:29 | Link to Comment frankTHE COIN
frankTHE COIN's picture

True. This relatively new Strategy of announcing that you have a Short position is suicide. It is common on the floor of the Nymex, Cme etc., that if you are going to short a commodity with ( for ex. ) 2000 lots, you would break that order up and send it to 4 different brokers from different firms to fill it. It was your goal not to let anyone in the Pit Know your position. If they knew it, they would shoot against your position and force the market against you. Two big examples of this in Natural Gas was Centaurus vs Mother Rock and then Amaranth. Billions were lost in weeks.

Mon, 12/09/2013 - 11:30 | Link to Comment Trampy
Trampy's picture

True. This relatively new Strategy of announcing that you have a Short position is suicide. It is common on the floor of the Nymex, Cme etc., that if you are going to short a commodity with ( for ex. ) 2000 lots, you would break that order up and send it to 4 different brokers from different firms to fill it. It was your goal not to let anyone in the Pit Know your position. If they knew it, they would shoot against your position and force the market against you. Two big examples of this in Natural Gas was Centaurus vs Mother Rock and then Amaranth. Billions were lost in weeks.

New?  You must be new to financial markets.  Futures markets are very different from equities in common stocks because of gearing and expirations.

If you get your education from TV and movies, see The Big Short about Michael Eisman: http://money.cnn.com/2010/10/15/news/eisman_education_lawsuit.fortune/index.htm

And Jim Chanos is still kicking: http://www.smh.com.au/money/investing/the-dark-art-of-short-selling-20131014-2vhe3.html

When I was trading stocks there was a short "advisory" called something like stockmelon but the heavy hitter who since closed up shop was Arias Ansensio: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=2&ved=0CDQQFjAB&url=http%3A%2F%2Fcases.laws.com%2Flouisiana-ansenio-arias-and-lorena-arias-vs-stolthaven-new-orleans-llc-abc-insurance-company-stolt-nielsen-transportation-group-inc-a-k-a-stolt-neilsen-sa-def-insurance-company-certified-coating-inc-ghi-insurance-company-kenneth-r-hebert-et-al.pdf&ei=fN-lUreRC8zNswbDtIDoBA&usg=AFQjCNH7YDSgx2ftEA2lbLT0WHrP_OBu3Q&bvm=bv.57752919,d.Yms

http://books.google.com/books?id=rTPkmNLs870C&pg=PA32&lpg=PA32&dq=ansenio+short&source=bl&ots=4gQdAWUkZr&sig=1Ox6peilG4PM8gWWB5XgUe8qDhY&hl=en&sa=X&ei=fN-lUreRC8zNswbDtIDoBA&ved=0CDwQ6AEwAw

Timothy Sykes is another one left for the reader. 

Mon, 12/09/2013 - 11:50 | Link to Comment frankTHE COIN
frankTHE COIN's picture

Stocks and Futures are close enough that the same Principle applies. If you are Short, and announce it, you will lose ALL of your money. Because All the other traders have a vested interest in pushing your position against you and in turn enriching all the other Traders doing the pushing.
Einhorn has side stepped this on many occasion, and got caught on a few others.
The relatively new part is speaking at a high powered investor conference and announcing that you are short.

Mon, 12/09/2013 - 12:25 | Link to Comment Trampy
Trampy's picture

Stocks and Futures are close enough that the same Principle applies. If you are Short, and announce it, you will lose ALL of your money. Because All the other traders have a vested interest in pushing your position against you and in turn enriching all the other Traders doing the pushing.
Einhorn has side stepped this on many occasion, and got caught on a few others.
The relatively new part is speaking at a high powered investor conference and announcing that you are short.

Oy Vey. There are plenty of children here who didn't experience the Y2K NASDAQ bubble which was very fertile ground for Manuel Ansenio, who gave plenty of newspaper interviews and filed complaints with the SEC about faked financials.

The only new part is the post-2008 QE4EVA ... to markets dominated by large bank prop trading ... applied to markets with relatively new rise of huge index funds where even RU stocks are played en masse ... piled on top of the Reg. FTD effort to rein in naked shorting.

The 1990s are truly ancient history if you're only 20-something.

Mon, 12/09/2013 - 13:23 | Link to Comment frankTHE COIN
frankTHE COIN's picture

I shorted The market Big Time in 2000. I was a little early, but I did very well. I think you and I are missing each others point.
When Ackman announced his Short, it was easy to see that if the price went against him , the Float was constrained and it would become an incredible Short squeeze. Not quite the Volkswagen squeeze, but one that would draw traders to gang up and buy the stock against you.
Manuel Ansenio would often publish that he was Short a company but in fact he was'nt.

Mon, 12/09/2013 - 12:06 | Link to Comment Trampy
Trampy's picture

oops.  It was MANUEL ANSENIO of Ansenio & Co.  who dominated the late 1990s as a big short who published all his research.

The wrong first name and link to the Arias Ansenio lawsuit was my mistake.

Mon, 12/09/2013 - 12:24 | Link to Comment frankTHE COIN
frankTHE COIN's picture

You left out the Feshbach Brothers.

Mon, 12/09/2013 - 10:45 | Link to Comment GoldenTool
GoldenTool's picture

Truth is treason.  The penalty is... harsh.

 

"Pietas sit merces"

Mon, 12/09/2013 - 09:55 | Link to Comment Never One Roach
Never One Roach's picture

Snake Oil mixed with some Ancient Indian Beads is what I rub on my sore back, arm, etc and that seems to work miracles.

Why switch?

Mon, 12/09/2013 - 10:07 | Link to Comment orangegeek
orangegeek's picture

who gives a fuck about these turds

 

hope they die painfully

Mon, 12/09/2013 - 10:28 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

HerbalStrife - because there never are enough scams to satisfy the rapacity of the gullible....

Mon, 12/09/2013 - 10:58 | Link to Comment Disenchanted
Disenchanted's picture

Has Carl tweeted anything on this yet? /s

Mon, 12/09/2013 - 11:03 | Link to Comment Sardonicus
Sardonicus's picture

Isn't there an inverse-ackmann etf yet?

Mon, 12/09/2013 - 11:12 | Link to Comment Downtoolong
Downtoolong's picture

it's all a game at this point...

Exactly. Just another example of the new normal facade.

On the other hand, if those gamers at Herbalife ever get smart enough to market their products as enemas, I'll be all-in long too.

Mon, 12/09/2013 - 11:40 | Link to Comment bwh1214
bwh1214's picture

His problem was/is a hubris. Kinda like what I see in the bitcoin believers on here.

Mon, 12/09/2013 - 12:20 | Link to Comment w00dmann
w00dmann's picture

I followed the link to the ZH 2012 article and read about them wondering if a short squeeze might be imminent, but nowhere can I find ZH boldly claiming (or even suggesting) HLF is "the long of 2013".  Could someone please correct me on this? 

Mon, 12/09/2013 - 14:17 | Link to Comment formadesika3
formadesika3's picture

Suggestion is a great wiggle word. It was humerus ("Titney Wilson"), what more do you want from ZH?

Mon, 12/09/2013 - 12:25 | Link to Comment The Invisible Foot
The Invisible Foot's picture

It's always been a fucking game. That's why it's called "Game Theory".

Mon, 12/09/2013 - 14:12 | Link to Comment ToNYC
ToNYC's picture

Game Theory works when the opponent is cooperating with some rules you believe are shared, then the asymmetrical edge cuts; it just is.... when non-cooperating games are in full effect, and share the space.... out of control.

Mon, 12/09/2013 - 12:37 | Link to Comment ToNYC
ToNYC's picture

The herbalife is the opportunity to beggar thy neighbor into being your customer, when you have no other investment but talking about doing it to lots more like yourself. Talk is cheap, and worth the capacity to project fantasies like a being mini-mart in every other house on the block, with no credit availability from the source.

Mon, 12/09/2013 - 13:29 | Link to Comment starman
starman's picture

Wackman ...........

Mon, 12/09/2013 - 13:50 | Link to Comment highwaytoserfdom
highwaytoserfdom's picture

Carl  where are the TWA assets to strip?    This is a classic  the three stooges story?  I know who Currley and Moe are but I guess that leaves the company or share holders as Larry..

http://upload.wikimedia.org/wikipedia/commons/7/78/DisorderinCourtTITLE.jpg

Mon, 12/09/2013 - 14:10 | Link to Comment conspicio
conspicio's picture

Plot twist: Unknown to the other, Icahn is actually Ackman's HLF upline...

Do NOT follow this link or you will be banned from the site!