Billionaire hedge fund manager Bill Ackman is known, among other things, for his $US1 billion bet against weight loss and nutritional supplement marketer Herbalife.
But it sounds like we won’t be seeing more monumental shorts from Ackman anytime soon.
“It’s not worth the brain damage,” he said in an interview with Bloomberg TV’s Stephanie Ruhle on Monday. “I would have to think very, very hard before another public short.”
Short sellers bet against a company’s performance, and profit when its stock falls — but that can also give them a bad reputation.
“People are immediately sceptical of your motives, and so on and so forth, because you have an opportunity for profit if the business fails,” he said.
Ackman has run a public crusade against Herbalife for more than two years and is betting its stock will ultimately go to $US0. He thinks that company’s poor fundamentals will bring it down “before the regulators do,” and said he would see the bet through.
Ackman has been accused of manipulating Herbalife’s stock, and the Justice Department and FBI are reportedly digging around, interviewing employees of his Pershing Square hedge fund. (The SEC and FTC also have ongoing investigations into some of Ackman’s other investments.)
Ackman told Ruhle that while shortselling is inherently good for markets and for outing fraud, it’s not a productive use of time.
“You do all the work. You suffer all the spotlight, and the criticism and some amount of reputational damage from inaccurate articles in the press,” he said.
“Is it worth that investment in exchange to make a profit? There are easier ways to make money.”
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