Friday, 25 July 2014
Last updated 4 hours ago
Feb 19 2013 | 9:31am ET
Two hedge funds have sold all or some of their Herbalife shares in the wake of a rally in the stock.
Third Point has sold off some of its 8% stake in the nutritional supplements company and Chapman Capital has abandoned the position entirely, according to published reports. Both hedge funds bought up Herbalife shares in the wake of Pershing Square Capital Management chief William Ackman's accusation that the company was a pyramid scheme; their sales coincide with Ackman nemesis Carl Icahn's purchase of a 13% stake in the company.
Announcing its long position in January, Third Point's Daniel Loeb called Ackman's thesis "preposterous."
Loeb has not abandoned that position, and still owns some Herbalife shares; it is not clear how much of his stake he has sold in recent weeks. Third Point was selling shares as recently as Friday, the New York Post reports.
But in his announcement, Loeb called Herbalife a "compelling long-term investment." Apparently, the post-Icahn purchase rally led Loeb to believe Herbalife was overextended in the short-term and a different proposition than the one he bought into.
Chapman Capital's Robert Chapman said as much in an interview with Bloomberg. Chapman, like Loeb, believes that Ackman is wrong, but argues that the continued scrutiny could pressure the stock in the coming months. Chapman is believed to have booked a tidy profit of as much as 60% on his Herbalife trade, ValueWalk reports.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…