Bill Ackman Explains Herbalife's Looming Investor Disappointment And His 100% Confidence

Herbalife Ltd. (NYSE: HLF) is all set to declare its first-quarter results on Tuesday. Long-time Herbalife bear and Pershing Square Capital founder Bill Ackman was on CNBC Monday to discuss why Herbalife will post disappointing results and why his thesis on the company will eventually prove correct.

'Interesting' Outlook

"I think what you will see is continued deterioration of fundamental performance of the business," Ackman said. "And so, the government may do nothing, but I think the business goes away anyway.

"It's a more dramatic event, of course, if the government steps in and shuts down the company, but all of this scrutiny does a couple of things."

He explained, "One is [it will] force them to reform some of the most egregious practices, but they haven't got far enough. This is a scheme that relies on deception; it's harder to deceive if it's incredibly public. And I think they are having more difficulty recruiting distributors. So, tomorrow I think it will be quite interesting. I am looking forward to the earnings."

Thesis Confidence

Ackman was asked if he would go after another company the same way he did with Herbalife. He replied, "I would say it may be leaning in the 'probably not' camp, just as a fiduciary for my investors.

"But I have never done better research on a company I would say in my career, in terms of the quality of the work the firm has done, quality of the work that we have done. I am 100 percent confident in my thesis."

Shorting: Not An Attractive Option

Ackman also remarked that "when you short something, the company hates you, the management hates you, the shareholder hates you."

He concluded, "They do everything they can to smear your reputation. It's not a attractive way to make money."