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Carl Icahn, Bill Ackman And Herbalife: Is The Endgame In Sight?

Carl Icahn, Bill Ackman And Herbalife: Is The Endgame In Sight?

The latest round of the billionaire battle over Herbalife Ltd. (NYSE: HLF) goes to Bill Ackman, and it leaves Carl Icahn in a tough spot. Herbalife shares are down by more than 10 percent on Wednesday after the company reported an EPS beat of $1.21 on mostly in-line revenue of $1.12 billion.

However, the company also announced the departure of CEO Michael Johnson. Johnson and Herbalife have been under constant fire from Ackman since he took a highly-publicized $1 billion short position in the stock back in 2012. Ackman has argued that Herbalife’s business model is nothing more than a predatory pyramid scheme.

Earlier this year, the Federal Trade Commission fined the company $200 million for deceiving customers.

Given the management turnover and the company’s weakening performance in the China market, Icahn may soon be forced to decide between two difficult options: 1) throw in the towel and sell his stake or 2) push to take the company private.

Back in August, Icahn denied claims by Ackman that Icahn had been seeking buyers for his Herbalife stake. Instead of selling, Icahn claimed he had actually been buying shares. However, if Icahn was at least mulling a sale in August, the latest numbers from the company may have him considering the option once again.

Herbalife short seller Bob Chapman believes Icahn will choose the other route. Chapman told CNBC’s Scott Wapner that he has covered his Herbalife short and taken a small long position in anticipation of a possible takeover bid from Icahn.

Ackman has yet to comment on Herbalife following its earning report.

The stock traded recently at $52.88, down 10.5 percent on the day.

Posted-In: Bill Ackman Carl IcahnNews Hedge Funds Legal Movers General Best of Benzinga


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