Saturday, 31 January 2015
Last updated 1 day ago
Feb 7 2013 | 10:20am ET
Two weeks after the battle royale between William Ackman and Carl Icahn, and almost two months into the former's battle with nutritional supplements company Herbalife, the younger hedge fund manager seems to have the upper hand over the older.
Herbalife shares are down 20% since Ackman and Icahn had it out on CNBC, ostensibly over the former's attack on the company, although that was not always clear during the exchange. And Icahn's prediction that Ackman could face the "mother of all short squeezes" on Herbalife may have already failed to come true.
That's because Pershing Square, which has bet $1 billion against Herbalife, has already suffered a short-squeeze and survived, CNBC reports. After the company's stocks took a nosedive in the wake of Ackman's announcement, they then surged for three weeks until Jan. 15, putting Pershing Square into the red as Third Point's Daniel Loeb announced he was betting on Herbalife.
Since then, Herbalife shares have fallen and the costs of borrowing its stock have dropped sharply, putting Ackman back into the black. But CNBC notes that another short squeeze could be on the horizon, with the Thomson Reuters StarMine volatility indicator predicting another over the next 30 days.
Pershing Square may be well-positioned to withstand it, however: It is believed to have begun shorting the stock near its recent highs, and it is believed to have used primarily cash on hand to build the short position, rather than leverage, removing one risk of a margin call.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…