Bill Ackman Says There Is A New Whistleblow And Makes Controversial Statements

“While it is difficult to predict the impact of the public disclosure of product quality issues on Herbalife HLF, pyramid schemes are inherently confidence games,” writes Bill Ackman in a letter to Pershing Square investors.

One of Ackman’s biggest announcements comes at the end of his eight page note, when he claims the company has been contacted by another whistle blower.

Herbalife is not a failed investment Ackman emphasised. “In the short term, the market is an indicator of what the majority of participants who are invested in Herbalife believe. The facts and fundamentals will ultimately determine whether or not we are correct.”

The letter really heats up when Ackman defends himself from Carl Icahn and others who spoke out against him drawing media attention to Herbalife. “We expected our public advocacy would shine a light on the Company’s victimization of financially unsophisticated, typically low-income, Hispanic and other minorities.”

Related: Another Hedge Fund Manager Adds JC Penney

Controversy continued when Ackman seems to look forward to company leaders dying. “Last week, John Peterson, one of the top few distributors in the Herbalife system...reportedly committed suicide,” and continues, “Herbalife nearly collapsed when the Company’s founder Mark Hughes died from an overdose of anti-depressants and alcohol.”

Several paragraphs are devoted to product quality and whistleblower claims. Here are some highlights: “In June 2008,Barry Minkow, a convicted felon, publicly claimed that the lead content of Herbalife products was above safe levels.” On top of that, “Storage of the product at elevated temperatures may cause the product to no longer meet its label specifications, making it unsuitable for export into and consumption in many foreign markets.”

The note concludes with Pershing Square’s FDA action against the company. “Herbalife had between 14 and 21 times as many Adverse Event Reports made to the FDA that required hospitalization or emergency room treatment when compared with the competitors’ products.”

Shares of Herbalife are up almost two percent in the premarket on release of this letter to $64.72. Pershing Square is down almost 300 million dollars on this investment.