Busy Week For Herbalife: Ackman vs. Icahn Continues, FTC Probe
Shares of Herbalife (NYSE: HLF) have been quite volatile this week amidst the Bill Ackman attack, the Civil Investigative Demand from the Federal Trade Commission (FTC), and the company's decision to move the Shareholders meeting.
Bill Ackman, the founder and CEO of Pershing Square Capital Management LP, held a presentation on Tuesday focusing on weaknesses in Herbalife and the company's Chinese operations. Ackman, who has criticized Herbalife for some time now, published a report on the nutrition company's pyramid scheme business model in 2012. Pershing Square Capital Market has sold short Herbalife shares since May of 2012.
On Tuesday, Ackman highlighted that while Herbalife has said that his claims "are provably false," he noted that "none of our allegations have been proven false." Pershing's founder and CEO also reiterated that Herbalife pays recruiting awards and extended his focus to Chinese operations.
Shares of the nutrition company edged slightly lower at the beginning of the presentation, with the price quiet down approximately two percent. Nearing 3:00 p.m. (EST), Herbalife spiked three percent from $64.42 to $66.36. Shares lost 1.16 percent for Tuesday, closing at $65.39.
Following the Ackman presentation, Herbalife responded noting that the company remains confident in trading. Shares of Herbalife jumped 4.5 percent on Wednesday prior to the halt. Despite growing support and a seemingly strong trading day for the company, shares plunged over 18 percent (down 13 percent for the day) following the announcement of the Civil Investigative Demand from the FTC. On Wednesday, shares of Herbalife lost 7.37 percent, closing at $60.57 but traded as low as $54.59.
On Thursday, Herbalife announced that it has rescheduled the Annual General Meeting of Shareholders from April 24, 2014 to April 29, 2014 at 10:30 a.m. (PDT). The company noted that it would like to continue discussions with Carl Icahn regarding the possibility of adding Icahn nominees to the company's Board of directors. Shares continued to trend lower and closed at $57.31, down 5.688 percent.
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