Bond god Jeffrey Gundlach said on CNBC’s “Halftime Report” with Scott Wapner that he wouldn’t announce any short positions because it invites your rivals to bet against you.
“I’ve learned from watching CNBC that announcing your shorts isn’t the best idea because it sometimes invites competition,” Gundlach, who runs DoubleLine Capital, said.
It’s pretty clear that he’s talking about Pershing Square Capital Management’s founder Bill Ackman here.
Back in December, Ackman publicly declared that he’s shorting $US1 billion worth of Herbalife, a multi-level marketing firm that sells nutrition products.
As part of his thesis, Ackman said believes Herbalife is a “pyramid scheme” that targets lower income people, particularly those from the Hispanic population. Ackman thinks that regulators, particularly the FTC, will be persuaded to investigate and shut down Herbalife.
Some of Ackman’s competitors seized this as an opportunity to bet against him.
Daniel Loeb of Third Point LLC, who used to be Ackman’s friend, snapped up a sizeable position calling Ackman’s thesis “preposterous.” He later exited that position for a nice profit.
Then, Ackman’s arch nemesis Carl Icahn amassed a huge position. He said that he thinks Ackman will be the victim of the “mother of all short squeezes.”
Since revealing his short, Herbalife’s shares have rallied more than 43%.
Still, Gundlach noted on CNBC that Herbalife’s stock chart right now is “an invitation of a short.”