Herbalife Counterattacks to Sway Ackman Investors

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Dec. 9 (Bloomberg) -- Bob Rice, general managing partner with Tangent Capital Partners LLC, discusses the battle between Bill Ackman and Herbalife with Deirdre Bolton on Bloomberg Television's "Money Moves." (Source: Bloomberg)

Investors suggesting they pull money out of the $12 billion firm.

It looks like a completely new tactic.

We will bring in tangent capital partners, an expert on the strategy.

What does this say?

Is this changing the strategy a bit?

It will make these flights so much more entertaining than the used to be.

It used to be a big fight and one particular area, but now the battlefield is expanding broadly . to understand the real drama here, you have to remember how they are attacking this.

These are not just general activist strategies, the idea is to go short and big and then make the big announcement.

This is what i have done, this company is a fraud.

Saying essentially that herbalife is a pyramid scheme.

Saying that is it dangerous charge.

The stock should fall like a stone and he will make a fortune on the short decision, which is the idea.

Because the short decision, as you have instructed us before , there is unlimited loss potential.

This is a particularly dangerous way of playing the activist game.

He has unlimited loss potential with other small guys, like carl icahn and george soros, saying -- wait a minute, that i will have to buy back the stock, so he is kind of inviting other long investors to put him into a short squeeze, which makes him very dangerous, but now there is a third level.

You were kind enough to provide us with a chart so that we could play the home game.

These are some pretty big names here.

You see what happens, when ackman first made the big announcement, the stock did in fact to drop dramatically.

Carl icahn said he was not so sure about this, he came in and the stock recovered, but later on as they looked at this and said that they could force the sky to sell by jumping in, this shows you how much risk there is in this tactic.

That is important to understand.

This new tactic, i think, could be fairly effective.

Herbalife is now going to the investors and saying -- do you see how dangerous the bet is that your client has made?

Does that sound like a good fiduciary bet to you?

They are essentially targeting the consultants, basically with bigger pensions plans and other institutional investors.

Remember, these big plans have a very keen year for the words fiduciary duty.

Want to instill panic?


They are going to the consultants who advise these guys, like the new jersey state pension plan fund, saying that this is not consistent with fiduciary duty to make that's of this nature, what do you think?

This counterattack, this brand- new idea that we have never really seen before, combined with the idea of bringing in a high profile person that people feel very good about adding to the board at the same time -- i must say the company is doing a wonderful job at fighting back on this.

Probably creating a new kind of playbook for current and future activists.

I think that for the targets of these activist investors, the ones who are going short and

This text has been automatically generated. It may not be 100% accurate.


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