William “Bill” Stiritz — Herbalife’s largest shareholder — has gotten absolutely annihilated on his stake in the nutritional company.
According to our estimates, he’s lost around $US218.8 million on his investment so far.
Herbalife — a multilevel marketing firm that sells nutrition products like weight-loss shakes and vitamins — has been at the center of a hedge fund war for over two years.
Activist investor Bill Ackman, the CEO of Pershing Square Capital, publicly announced in December 2012 that he was shorting the company to $US0.
Ackman’s thesis is that the company operates as a “pyramid scheme” that targets poor people. He believes regulators, specifically the Federal Trade Commission, will ultimately shut the company down. (The FTC opened an investigation in March 2014).
After Ackman made his short public, a number of hedge fund managers, most notably Carl Icahn, piled on by going long the stock. In the months that followed Ackman’s initial presentation, share of Herbalife skyrocketed and Ackman rocked up millions in paper losses.
Ackman is now back in the money on his position as the stock has declined in recent months.
Those who were long are feeling the pain now.
Stiritz, 79, has racked up hundreds of millions in paper losses, according to our calculations.
On Sept. 3, 2013, Stiritz disclosed a huge long Herbalife position. At the time, Stiritz owned 5,382,362 shares, or a 5.22% stake. We estimated then that Stiritz’s Herbalife stake was worth about $US322 million or so. The stock closed at $US59.90 the day he disclosed that position.
On Nov. 18, 2013, (when Herbalife was at $US67.20) and again on Jan. 29, 2014, (when Herbalife was at $US62.82), Stiritz added to his position. He last held 7,484,804 shares, or an 8.15% stake, data compiled by Bloomberg shows.
Since he first reported the position, shares of Herbalife have slumped more than 46%. The stock was last trading down 2.5% on Tuesday morning at $US32.12 per share.
Using the closing price of the days when he disclosed his stakes, we’ve calculated that Stiritz has lost an estimated $US218.8 million on his Herbalife investment so far.
The second-largest shareholder is Herbalife’s CEO Michael Johnson and he owns just over 1.38 million shares.
We don’t know Stiritz’s personal net worth. He’s not mentioned on the billionaires’ lists from either Forbes or Bloomberg.
Stiritz is Post Holdings’ largest individual shareholder with approximately 369,662 shares, Bloomberg data shows. His Post stake is worth just over $US15.1 million based on yesterday’s closing price.