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Billionaire investor Carl Icahn has something up his sleeve when it comes to Herbalife. And he really doesn't like Bill Ackman.
The most recent combatant to enter the fray in the battle over L.A.-headquartered diet and supplements maker Herbalife is billionaire investor Carl Icahn. He is apparently opposing hedge fund manager Bill Ackman, who — claiming that Herbalife is a pyramid scheme — has amassed a $1 billion-plus bet against the company's stock. Icahn might be allied with Dan Loeb, another hedge funder who has taken the other side of Ackman's bet, to the tune of hundreds of millions.
Icahn called Bloomberg TV Thursday and in no uncertain terms made it clear that he basically hates Bill Ackman's guts (the two have locked horns in the past), but he refused to confirm that he's joined Loeb in going long on Herbalife. Although you can read between the lines:
[I]t's no secret I don't like Ackman. I have no respect for him and I don't like him and that's not a secret. But that doesn’t mean that I'm going to go in and buy stock in a company necessarily just to get him. Frankly, I don't like the way he did this anyway. If you're short, you go short and hey, if it goes down, you make money. You don't go out and get a roomful of people to badmouth the company. If you want to be in that business, why don't you go out and join the SEC.
A worker cleans the logo on the Herbalife sign as finishing touches are put on the company's building in Torrance, Calif. The company has defended itself against charges that it's a pyramid scheme.
Hedge fund manager Bill Ackman, who runs Pershing Square Capital Management, has taken a $1-billion-plus short position against L.A.-headquartered Herbalife, the diet and nutritional supplements company.
Ackman says Herbalife is operating a pyramid scheme: its business depends on signing up new suckers, not on actually selling products. He's pledged to drive the company, in the language of finance, "to zero."
Ackman's fellow hedge fund manager Dan Loeb is taking the other side of that bet. He's buying up Herbalife shares, whose value was depressed last year following a three-hour presentation (complete with 343 PowerPoint slides) by Ackman.
Ackman is short. Loeb is long. And Herbalife is stuck in the middle.
Hedge fund manager Bill Ackerman says Herbalife is a pyramid scheme and has bet $1 billion on its fall. Hedge fund manager Dan Loeb begs to differ and has bet $350 million that the stock will rise in value.
Herbalife is under a lot of pressure at the moment. The L.A.-headquartered nutritional supplements maker has been accused of being a pyramid scheme by hedge fund manager Bill Ackman.
He's betting more than $1 billion that the company won't be around for much longer. Other hedge fund guys, like Dan Loeb, are taking the other side of that bet, countering Ackman's short position by buying up Herbalife stock and betting on its continued success.
Herbalife is doing a webcast for investors and analysts in New York this morning. This is the first time the company will be explicitly responding to Ackman's pyramid scheme charge, which he laid out late last year. I'm liveblogging the webcast so check back for updates. (All times are West Coast, by the way, as I'm in Los Angeles).
CEO Michael Johnson is up. He's proud. Talking products and public health. Confident about the future. Call's news of recent weeks "misinformation." He says it's created "confusion and doubt" and is here is present the facts and mentions Pershing Square, Ackman's hedge fund, for the first time. And he says half a dozen Herbalife executives are going to speak today. So this could go for a while. One photo is worth "at least 100 PowerPoint slides" he says — a joke about Ackman's 343 slide takedown of the company.
The Los Angeles Times building. Parent company Tribune Co. could begin the process of emerging from bankruptcy this week.
UPDATE: Judge Kevin Carey has issued his opinion. Oaktree, Angelo Gordon & Co., and JPMorgan Chase will now be able move toward assuming full ownership of Tribune's assets, under an accepted plan of reorganization. But Aurelius will fight on. This is from the Chicago Tribune:
Even if Tribune Co. emerges from bankruptcy in short order, the legacy of the Zell deal is likely to live on in the courts for years to come. Under the plan Carey approved, a group of junior creditors led by New York hedge fund Aurelius Capital Management will receive payments of $431 million to settle legal claims related to the buyout, including charges that the deal left the company insolvent from the start.
I reached out to Aurelius' Mark Brodsky for comment, but I haven't heard anything yet.
The lengthy bankruptcy of the Tribune Co. — it filed in December of 2008 — could be drawing to a close. There have been reports all this week that Judge Kevin Carey will okay a restructuring plan that will end a drawn-out battle between the senior and junior creditors of the company that owns the Los Angeles Times.
Yahoo!'s Santa Monica location. Activist shareholder Dan Loeb has fired another salvo in his ongoing battle to change the company's management.
Dan Loeb, the swashbuckling hedge funder who's trying to remake Yahoo's board of directors and, while he's at it, get Yahoo to jettison its CEO, has just upped the ante yet again. And he's done it, in typical Dan Loeb fashion, with an ancient means of communication. No, I don't mean a stone tablet or dispatch carried by Pheidippidian messenger over great distance. I mean a letter. Printed on paper and delivered, the letter itself says, by "Federal Express and Hand Delivery."
You half expect Loeb to revive the Pony Express at this point! This is all starting to feel like a novel by Laclos.
But I kid. Here's the top part:
Third Point LLC sent Yahoo! a demand today pursuant to Section 220(b) of the Delaware General Corporation Law to inspect books and records relating to the hiring of CEO Scott Thompson, the appointment of Patti Hart to the Yahoo! Board, and the selection of Board Members Peter Liguori, John Hayes, Thomas McInerney, Maynard Webb, Jr., and Fred Amoroso. A copy of Third Point’s demand is attached below.
Third Point believes that Yahoo! shareholders and employees will be best served if the Board accepts responsibility quickly for this latest debacle. If the Directors are truly interested in “working in a constructive manner with Third Point”, they should provide answers promptly. We believe that this internal investigation by this Board must not be conducted behind a veil of secrecy and shareholders deserve total transparency.