Photo: Bloomberg TV screenshot
Bill Ackman, the CEO of $11 billion Pershing Square Capital Management, revealed last month that he has an enormous short position on Herbalife. According to Bloomberg News’ Duane Stanford, the activist investor first looked into shorting Herbalife 18 months ago after receiving a phone call from former Bloomberg News reporter turned researcher, Christine Richard.
Ackman began researching Herbalife after a call from Christine Richard, a former Bloomberg News reporter who by then was working for Indago Group, a New York-based boutique investigative research firm. Richard had just published “Confidence Game,” a book detailing how Ackman, warning of an impending bond-insurance market collapse in the runup to the recent recession, had shorted credit insurer MBIA Inc.
Richard declined to comment for the Bloomberg story.
During a three-hour long presentation at a Sohn Conference event, Ackman said the multi-level marketing company that sells weight loss and nutritional supplements is a pyramid scheme.
Pershing Square has been shorting Herbalife for about eight months. The hedge fund is shorting more than 20 million shares and has a price target of zero.
Since December 18, the trading session before Ackman confirmed his short position, shares of Herbalife are off 12%. At one point there were down more than 38%.
Ackman has not covered any of his short, according to Bloomberg.
That said, these things can take time. His MBIA short took six years to play out.