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Home / US / Bill Ackman gives up Herbalife Fight and ends the five-year saga

Bill Ackman gives up Herbalife Fight and ends the five-year saga



One of the longest and most colorful battles in Wall Street history is over.

Bill Ackman almost got his position in Herbalife Ltd. and ended a short sale campaign that lasted more than five years, after a person who is familiar with the matter. The move follows a steady rise in the stock of a company that he repeatedly described as an illegal pyramid scheme and vowed to destroy.

Ackman had already signaled that he is withdrawing from his fight against Herbalife, the weight loss shakes and vitamins. The 51

-year-old billionaire said in November that his fund, Pershing Square Capital Management, had shifted his short position to place options – a move that limited the downside risk. He has since sold all of these stocks effectively, said the person who did not want to be identified because the matter is private.

A representative from Pershing Square declined to comment.

With a short bet, an investor must cover the position when the stock goes up. Meanwhile options expire without an additional hit. Both types of investment could have made money if Herbalife shares had fallen sharply.

That did not happen.

Herbalife has more than doubled since the day Ackman announced its position on December 12, 2012.

Repurchase Plan

The stock rose trading by another 11 percent on Wednesday in New York, reaching a record $ 95.93. The lead followed the announcement of several strategic initiatives to increase shareholder value, including the potential repurchase of shares worth up to $ 650 million.

The Los Angeles-based company also announced it would change its name to Herbalife Nutrition Inc. that may give the store a health-conscious halo. The management has repeatedly denied the allegations of the pyramid scheme.

Ackman had accused Herbalife of being an illegal operation based on an army of external distributors to recruit members of fast-moving people. He launched the campaign with a $ 1 billion bet against the company in 2012 and spent millions to investigate the business. He once delivered an emotional, almost four-hour anti-Herbalife presentation that backfired – raising shares that day by 25 percent.

But the crusade had its successes. Ackman's complaints triggered an investigation by the US Federal Trade Commission in 2014, and Herbalife eventually reached an agreement with the agency for $ 200 million. Under the agreement, the company had to curb its business practices – a move Ackman said would paralyze him. In the end, the settlement never came.

The short position also brought Ackman into conflict with another multi-billion dollar investor, Carl Icahn, who became the company's largest holder. Icahn has defended Herbalife's multi-level marketing model and publicly attacked Ackman – on stage, on television, in documentaries and online – since a first CNBC phone battle between the two billionaires.

CNBC was the first to report that Ackman had sold his position in Herbalife.


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