Ackman Profits—So Far—On Herbalife

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.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR