Soros Fund Management Exits Big Bet on Herbalife

Nov 16 2015 | 9:52pm ET

By Svea Herbst-Bayliss (Reuters) - Soros Fund Management, one of the hedge funds industry's most closely watched investors, exited its bet on Herbalife, the nutrition company that rival investor William Ackman has called a fraud.

Soros, which has been betting on Herbalife for roughly two years, said in a regulatory filing that it liquidated its position by selling nearly 2 million shares during the third quarter. Soros oversees the private fortune of investor and philanthropist George Soros and his family.

While Soros himself is no longer making investment calls, the firm's involvement in Herbalife nonetheless drew battle lines between the hedge fund industry's elder statesmen and one of its new stars.

Soros and Carl Icahn supported the nutrition and weight loss company, while Ackman has accused Herbalife of running a pyramid scheme in which members are paid more for recruiting new members than for selling the product. Herbalife denies the allegations.

Nearly a year ago, during the fourth quarter of 2014, Soros added to its Herbalife position, owning 3.4 million shares at the end of December. Fund managers are required tell the government what they owned 45 days after the end of the quarter.

For Soros and other holders, the bet on Herbalife has likely been a profitable one; the shares having climbed 43 percent in the last 52 weeks alone.

Balyasny Asset Management, Angelo Gordon & Company and Partner Fund Management have also exited their positions, along with AHL Partners and Grantham, Mayo, Van Otterloo & Company, regulatory filings show.

Although the filings are backward looking and do not show what funds own at this point, they are still widely watched as the battle over the future of Herbalife heats up.

Ackman, who announced a $1 billion short position against the company nearly three years ago and promised to take his bet "to the end of the earth," has lost money on this bet again this year as the stock has climbed 46.5 percent since January. Ackman's fund has lost more than 20 percent this year after having gained 40 percent last year.

To be sure, Herbalife had supporters as well - during the third quarter, funds including AJO, Serengeti Asset Management and Route One Investment Company added to their positions.

Icahn kept his position steady at 17 million shares.

In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...