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.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note