Buried in the unflattering
Vanity Fair profile of Daniel Loebis a sad anecdote about the demise of the friendship between the sharp-tongued activist investor and Bill Ackman.
Late last year, Ackman, who runs Pershing Square Capital, publicly said that he’s shorting $US1 billion worth of Herbalife, a multi-level marketing company that sells nutritional supplements.
It’s Ackman’s belief that Herbalife is a “pyramid scheme” that targets lower income individuals, especially from the Hispanic speaking population.
Shortly after Ackman’s presentation, Loeb snapped up an 8.2% stake in the company. He also called Ackman’s pyramid scheme accusation “preposterous.”
Loeb also gave Herbalife a stock a price target of $55 to $US68 a share in a letter to investors.
He exited the position sometime in the first quarter of this year for a nice profit. Herbalife’s stock was trading below Loeb’s price target, though. The highest the stock hit during that time frame was $US46.19 a share.
That didn’t seem to sit well with Ackman who confronted Loeb about the trade at Vanity Fair’s Oscar party on February 24th.
In February both Loeb and Ackman attended Vanity Fair’s Oscar party in Los Angeles. A person there reported that Ackman went up to Loeb, said hello, then added about Herbalife, “Look, you really shouldn’t have done that,” to which Loeb replied, “Why? Why shouldn’t I have done that?” Ackman said, “It was really wrong.” Loeb replied, “No, why? I made $US50 million. What’s wrong with that?” The two men no longer speak.
Ackman told Andrew Ross Sorkin in an NYTimes Q&A earlier this month that Loeb neither is nor has been “a close friend of mine.”