Herbalife Urges Ackman Investors to Exit Hedge Fund

REPLAY VIDEO
Your next video will start in
Pause
  • Info

  • Comments

  • VIDEO TEXT

Dec. 9 (Bloomberg) -- Bloomberg Contributing Editor Fabio Savoldelli discusses Herbalife’s tactic of attempting to encourage investors to pull their money from Bill Ackman’s hedge fund on Bloomberg Television’s “Market Makers.”

This is a company that is under attack for waiting for audited financials.

There is an insider trading issue.

You have no time to respond to reporters.

You of no time to respond to bill lachman.

You have time to fly to new jersey and have a closed-door meeting to talk about his lack of ethics and the fact that he is out of control?

This does not sit well with me.

In general, this is a publicly traded company.

Their earnings have slid down to single digits.

They should have better things to do than harass -- at the end of the day, it is one investor.

It does not make a lot of sense for them as a company.

They have a real credibility issue that they are not addressing.

Publicly or privately.

As a defense, usually the defense is twofold.

One is structural.

You raised her notices and tighten up or.

One is to go after the guy who is attacking you.

Usually, he is incompetent.

You do not vote display.

There is no slate tebow.

You're not allowing that to proceed.

Going out and bad mouthing him -- he compounded and it will be a long conversation.

Isn't it fair to say, good or bad, there is no one like bill lachman?

His investors know his style.

He is met with skepticism at the onset.

Look at what he did.

Do you think it is a huge shock to his investors?

I would be the first to say, is this a trade or a crusade?

It seems like a crusade, and that is risky.

The investors know what they're getting into.

The truth is, david einhorn -- they are up 20%. ackman will come in in low double digits.

I do not know his december results.

That is an underperformance.

Yes, he will expect to get some pressure.

He thinks outside the box in an area where everyone is in.

What does that make you think, though?

He is putting a massive investment in one place.

There is risk associated with that.

When you look at what herbalife should be up to, should they be talking to bills investors or answering to their own?

They should be answering to their own.

Bill, in october, did a smart move.

He took a large percentage of the stock and put it into a long-term put option.

The recent short squeeze -- the expected short squeeze did not do him any harm at all.

It does not really matter.

It is a lower valuation difference.

He has changed his structure and importantly, i think the fundamental question is is this a pyramid scheme?

That is the question that he is a asking of that company.

He sent a 52 page letter saying that you should think about giving this a clean opinion.

He says he will sue you.

This is not a hedge fund war.

He says he is not war with anybody.

A move like this on herbalife part, this feels like a war.

I heard that he said if you stop, we will stop.

It does not feel like an investment.

Not like the company that is doing the best that they can.

It feels like they are at war.

Usually you will get one hedge funds trying to out jump another hedge fund.

To get a company involved in this way, in a closed-door meeting, that is the whole . line.

Is this make you think you do not want to be involved with herbalife at all?

There are more factors involved with how the stock is trading.

Couldn't one make the argument that you should get out of this thing?

It makes it much more volatile.

There are challenges in any activist investor situation.

Icon owns about -- he would love to sell that to ackman.

That will not happen.

He has to figure out how to get out of this position with the profits bahia scott.

It has become a very personal information -- situation.

For ackman, to be honest, when you see what he says about immigrant laborers and taking advantage of people who do not know enough, he feels the government role is to step in and stop what he sees as an abuse.

A regulatory short is a dicey way to run your business.

You could be waiting forever.

You cannot wait on the government.

You could get carried out by your investors.

Even if he is fundamentally right, if you have carl icahn, you might want to get out.

That is right.

It is a binary result.

All of this arguing about investors staying -- they are missing the point.

It is a binary result.

They're going to shut the thing down and say it is a pyramid scheme.

Or that it is a lucrative activity.

It is high drama.

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

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change