Market Overview

Herbalife Tumbles on Ackman Short

Shares of Herbalife (NYSE: HLF) dropped abruptly on Wednesday, triggering a circuit breaker halt after hedge fund manager Bill Ackman of Pershing Square Capital was said to be short shares of the company.

Ackman will give a presentation at a special Ira Sohn investment conference tomorrow. Previously, it was known only that Ackman would present a “previously undisclosed investment idea.” Now, it seems likely that it will be to state his case as to why he is short shares of Herbalife.

(Shares of J.C. Penney (NYSE: JCP) -- a company Ackman holds a large stake of -- tumbled on the report; they were up earlier in the session, perhaps on hopes that Ackman would defend the company once again at Ira Sohn.)

Herbalife has been a noteworthy stock for all of 2012. In May, during the company's second quarter earnings call, Greenlight Capital's David Einhorn asked the company's management a number of questions.

Those questions led to a sharp drop in shares of Herbalife, a drop that has not been retraced. Many investors speculated that Herbalife was being sold short by Einhorn, who made his fortune by successfully shorting stocks like Lehman Brothers and Allied Capital, although Einhorn never admitted to having bet against the stock.

In an interesting twist, it appears that Ackman was the hedge fund manager shorting the company.

Traders and investors involved in Herbalife should pay attention to Ackman's presentation tomorrow.

Posted-In: Bill Ackman David EinhornHedge Funds Intraday Update Movers Trading Ideas General Best of Benzinga

 

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