Herbalife Analyst Thanks 'Short Sellers' For Boosting Stock

Dec 18 2013 | 11:10am ET

One of Herbalife's biggest boosters took a few bows yesterday, offering thanks—if not by name—to Pershing Square Capital Management's William Ackman.

Tim Ramey, an analyst at D.A. Davidson, said that Herbalife is better off for the attention of short-sellers like Ackman, who has called the nutritional supplements company a pyramid scheme and made a $1 billion short bet against it.

"We'd like to thank Mom, Jesus and the short sellers," Ramey wrote. "By throwing down the gauntlet to the degree that they did—daring PwC to render a clean audit—they elevated the level of scrutiny to a level heretofore unheard of."

Herbalife shares soared this week after PricewaterhouseCoopers, its new auditor, released its review of the company's books for 2010, 2011 and 2012, in which it made "no material changes." And Ramey said he expects the stock to go even higher.

"In our opinion, this has paved the way for Herbalife to have a growth stock valuation. We believe the amount of world-class research conducted by the long-holders of Herbalife has scrubbed the model."

Pershing Square was already sitting on a $500 million paper loss on its Herbalife short before the reaudit results, but Ackman isn't giving up, insisting Monday that "Herbalife is a pyramid scheme that will be shut down by regulators."

"Remember, Enron also had audited financial statements," he told Bloomberg News.


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