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Why Activist Investor Robert Chapman Has Put 35% of His Portfolio into Ackman Short Herbalife
Posted by: CanadianValue (IP Logged)
Date: January 3, 2013 01:18PM

Activist investor Robert Chapman has put an astounding 35% of his portfolio into Herbalife, which has of course recently been in the news because Bill Ackman has shorted the company, calling it a pyramid scheme.

Here is his explanation why:

HLF+by+Chapman+Capital+12!29!2012.Unlocked[1]


Here is CNBC discussing the situation:







Guru Discussed: Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF,
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Re Why Activist Investor Robert Chapman Has Put 35 of His Portfolio into Ackman Short Herbalife
Posted by: gusto.duel@gmail.com (IP Logged)
Date: January 4, 2013 12:12AM

Thank you for posting. However the author's logic is not something I agree with.
FTC may launch an investigation despite it being busy with MSFT, AAPL (Google sttled already)
The commodity/overpriced aspects of the HLF products escapes the article, entirely.
Wonder how relevant is the sample for the distributor's survey mentioned in there?
What about Belgium?




Guru Discussed: Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF,
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Re Why Activist Investor Robert Chapman Has Put 35 of His Portfolio into Ackman Short Herbalife
Posted by: sjzhao2003 (IP Logged)
Date: January 6, 2013 12:58PM

Thanks for sharing!

The merit of the short vs. long case aside, it would be a shame if some well-known big time investors take advantage of their media-savvy and celebrity status for personal gains (NYT has a recent article on this as well). Shouldn't a focused value investor spend all of his/her valuable time on fundamental research? The fact that mere questions during conference calls by a "guru", not to mention the pretty heavy-handed 360-page ppt stack, can move the market so much tells a pretty sad story about the investing public.

I do agree with the author that SEC should require disclosure of short positions just as they do longs. That'd take a big step toward a more level playing field.



Guru Discussed: Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF,
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Re Why Activist Investor Robert Chapman Has Put 35 of His Portfolio into Ackman Short Herbalife
Posted by: batbeer2 (IP Logged)
Date: January 6, 2013 03:22PM

@CanadianValue
Thanks!

>> Shouldn't a focused value investor spend all of his/her valuable time on fundamental research?

An investor spending time on research is trying to outperform at the expense of someone:
- less informed
- less well capitalized (forced seller)
- less savvy
- more susceptible
- disinterested and/or
- disheartened

Last year, my stock picks outperformed most indexes.* Unless it was sheer luck, it was because I have an edge on the last three items on that list; not the first three. One could argue I preyed on the weak** so I'm in no position to judge Ackman.

What is your edge? You tell me that and I will tell you who you are taking money from.

IMHO, those who bailed out of Herbalife because of Ackman's presentation got precisely what they deserved.


*Check out the OSTK comments to see precisely how superior returns come at the expense of someone else's loss.

**I like to think I'm just trying to be nice. I'll buy from you when no one else will and sell when there's no one else selling.



Guru Discussed: Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF,
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Re Why Activist Investor Robert Chapman Has Put 35 of His Portfolio into Ackman Short Herbalife
Posted by: paulwitt (IP Logged)
Date: January 8, 2013 12:07AM

ESI is down 19.3% today on heavy volume. The news is they have to pay a settlement to Sallie Mae of $46 million.

My comment:

high-frequency trading + short sellers = superb value investing. Thank you high-frequency traders + short sellers!

*I picked up a few shares today to add to the event-driven part of my portfolio




Guru Discussed: Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF,
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