UPDATE: Herbalife is halted for the following news:
- HERBALIFE COMPLETES RE-AUDIT FOR FISCAL '10 '11, '12
- HERBALIFE NO MATERIAL CHANGES TO 2010, 2011 OR 2012 FINL
Which opens the doors for the substantial buyback they have planned. We suspect one can hear a pin drop in Pershing Square's headquarters.
Today, the Company filed an amended 10-K/A for the fiscal year ended December 31, 2012, following the completed re-audit of the Company's 2010, 2011 and 2012 financial statements. Additionally, the Company today filed amended 10-Q/As for each of these quarters of 2013 following the completion of SAS 100 reviews of those periods by PwC. With these amended filings, the Company is now up to date with its SEC periodic filings.
There were no material changes to the Company's audited 2010, 2011 or 2012 financial statements included in the amended 10-K/A or to the Company's first, second or third quarter 2013 financial statements included in the amended 10-Q/As as compared with the Company's previously filed financial statements for and as of each of such periods(1).
As previously announced, the change in the Company's independent auditors to PwC, and the corresponding need to perform re-audits, was the result of the resignation of Herbalife's former independent auditor, KPMG LLP ("KPMG") due to the impairment of KPMG's independence resulting from its now former partner's unlawful activities. As previously publicly stated by KPMG, their resignation was not related to Herbalife's financial statements, its accounting practices, the integrity of Herbalife's management, or any other reason.
Herbalife has re-opened up 9% over $75 on very heavy volume - It seems Ackman's "end of the earth" bet may take a little longer...
This week marks the one-year anniversary of Bill Ackman’s 342-page slide presentation at the Ira Sohn Conference in NYC. At that time he publicly disclosed his $1 billion short bet against Herbalife (HLF), accusing the company of being a pyramid scheme and claiming its stock was destined to fall to zero once regulators stepped in. As everyone knows, HLF shares plummeted, losing nearly half their value in the three days after the presentation. The market’s initial response did not last, and HLF is up about 160% since its 12/21/12 low of $26.06 (vs S&P 500 +24%). Pershing Square’s public campaign has taken many forms, as Barclays outlines below...
...including additional 300+ page conference presentations, the sending of a long letter to HLF’s new auditor PWC, and repeated lobbying efforts directed towards U.S. regulators, elected officials and community activists. Subsequent presentations by Ackman have had little impact on the stock price, and no formal regulatory action (or indication of such) has taken place.
More recently, press reports suggest that HLF decided to get more aggressive in late Sept. after shares topped $70, hiring a well-connected strategic advisor (which specializes in shareholder activism) to approach Pershing Square investors and highlight the risks associated with the fund’s outsized exposure to the HFL short, a position which has trended quite negatively since inflecting in April.
Numerous major investors, such as Carl Icahn, Dan Loeb, George Soros, Kyle Bass and Stan Druckenmiller, have publically disagreed with Ackman and invested heavily in HLF. Bill Stiritz, a well-regarded private investor in consumer businesses, has also announced a substantial investment. We summarize their stakes below.
We also note that we have not identified further venues for Mr. Ackman to speak and that the next Ira Sohn Conference in NYC will not be held until May 2014.