Shares of Herbalife slipped below $US50 on Wednesday morning.
That means hedge fund manager Bill Ackman, who runs Pershing Square, could be getting closer to breaking even on his infamous short.
It’s believed that Ackman shorted Herbalife in the mid-$40s. (In October 2013, he repositioned about 40% of his $US1 billion equity short position for put options in an effort to reduce risk.)
The stock has dipped as low as $US48.92 so far today. That’s also a 52-week low.
Shares of Herbalife are down about 26% since Ackman’s presentation two weeks ago.
For more than 18 months, Ackman has been on a crusade against Herbalife — a multi-level marketer that sells nutritional shakes and weight loss products.
In late December 2012, Ackman publicly declared via a 342-slide presentation that he was short $US1 billion worth of Herbalife. He believes the company is operating as a “pyramid scheme” that targets poor people. It’s his contention that regulators, specifically the Federal Trade Commission, will shut the company down. (Back in March, the FTC opened an investigation into the company.)
Since Ackman first revealed his short position, shares of Herbalife have surged. What’s more is a number of other fund managers, most notably his long-time rival Carl Icahn, have gone long the stock. Icahn, who seems to have made up with Ackman, said last month at a conference that he hasn’t sold a single share of Herbalife.
Two weeks ago, Ackman gave what he called “the most important presentation” of his career. It ended up being a disaster. As Ackman spoke, shares of Herbalife soared to end the day up 25%. Ackman later called it a “PR failure.”
He told the audience at the time not to pay attention to the day-to-day stock price. Perhaps he’s pleased with today’s price movement, though.
Since 2012, Ackman had racked up hundreds of millions in paper losses. Today has to be looking better for him.
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