Showing 1 of 2

Subscribe to our newsletter

“Big Mouth Bill” Ackman Shorts Herbalife NYSE:HLF, Trading Halted

Hedge fund manager “Big Mouth Bill” Ackman, Pershing Square Capital Management, said in a TV interview Wednesday that he now has a Short position in nutrition and weight loss product maker Herbalife Inc. calling the company a “a Pyramid Scheme,” according to a report in The WS-J.

As with most of these types of dog and pony shows, Ackman shorts the company first, then cries fraud, chases regulators to investigate, while the whole time the fund manager in question uses the short term fall in the stock to attempt to lure investors to his fund. Fund managers with little or no trading abilities resort to such stunts to keep afloat.

Currently the world is full of this type of behavior, if someone wants to short a stock they should be free to do so, but the public unproven accusations as the driver for a fall should be stopped, or at very least the accuser be held accountable.

But that is not the case and people like Ackman are free to cost shareholders money without recourse.

Trading in shares of Herbalife was halted temporarily as the price dove. Stock tapped a 52 wk low at 35.95.

Late Wednesday Mr. Ackman told a conference audience his reasons for shorting Herbalife stock.

In May of this year, another wannabe fund manager David Einhorn of Greenlight Capital, sought answers to questions about the way distributors account for the products that Herbalife ships to them.

Herbalife countered with a $428-M share buyback, but that did not stop the stock’s fall.

The Securities and Exchange Commission asked Herbalife for answers to the same questions in August.

So far no wrong doing has been proven and the company will be forced to battle what may turn out to be fictitious allegations.

As far as the chart goes we are looking to go lower today, then we need to hear from the company.

What the company needs to do is:

Immediately take legal action
Move to buyback shares
Rally the larger shareholders to buy stock on market

LTN Analysis: Overall Short Intermediate Long
Bearish (-0.39) Neutral (-0.23) Very Bearish (-0.51) Bearish (-0.42)