New Threads Only:  Add to Google Reader or Homepage
New Threads & Replies:  Add to Google Reader or Homepage
Forums are for serious investors only. GuruFocus Forum Rules.

Forum List » Guru News and Commentaries
Guru News, Stock picks and commentaries
New Topic Search
Goto Thread: PreviousNext
Goto: Forum ListMessage ListNew TopicSearchLog In
Daniel Loeb Counters Bill Ackman by Taking 8 Percent Herbalife Stake
Posted by: Holly LaFon (IP Logged)
Date: January 9, 2013 11:24AM

“Event-driven value investor” Daniel Loeb viewed Herbalife (HLF)’s stock price drop due to Bill Ackman’s $1 billion short announcement as an opportunity to buy a lot of the company. GuruFocus Real Time Picks reports that Loeb has purchased 8.9 million shares of Herbalife, an 8.24% stake in the company, on Jan. 3, 2012. He filed a 13G with the SEC, meaning he does not have activist intentions.

Shares of Herbalife tumbled as low as 38% in December after Bill Ackman unveiled Pershing Square’s short position in the company. On Dec. 20, Ackman lambasted Herbalife in a 342-slide presentation at a Sohn Conference event in New York, calling it a “pyramid scheme” and saying that it preys on the most vulnerable, low-come segments of society. He has even set up a website dedicated to unmasking its supposed business transgressions.

"Herbalife inflates the suggested retail price of its products and overstates retail sales… recruiting worth is substantially greater than the retail profit that they generate,” Ackman said.

The doomed-to-fail company has a price target of zero, according to Ackman, whose team spent a year researching it.

Irate Herbalife CEO Michael Johnson countered Ackman’s claims on CNBC on Nov. 19, saying Ackman was attempting to manipulate the markets, and the company will discuss them further in their investor conference tomorrow.

The stock’s price has since returned to almost its pre-presentation price, with an additional 9% lift on news of Loeb’s stake, to trade for $40.34 on Wednesday. Loeb’s fund is up 21.2% through December, boosted by gains from Greek government bonds, successes with his activist position in Yahoo! (YHOO) and the resurgence of AIG (AIG).

HLF data by GuruFocus.com


In the past ten years, Herbalife has increased its revenue almost every year, and produced a profit in nine out of the ten years. It has produced free cash flow for the past ten years as well, generating a record $419 million in 2011.

The company has been aggressive about repurchasing shares in recent years. Since 2006, its shares outstanding declined from 143 million to 112 million.

Herbalife has a P/E of 10.3, P/B of 10.7 and P/S of 1.5, according to its 10-year financials.

GuruFocus Real Time Picks alerts you for the stock purchases and sales that Gurus have made within the last two days. Follow your favorite Gurus closely with GuruFocus' Premium Membership! If you are not a Premium Member, we invite you for a 7-Day Free Trial.






Guru Discussed: Daniel Loeb: Current Portfolio, Stock Picks
Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF, AIG, YHOO,
Rate this post:

Rating: 4.3/5 (10 votes)



Re Daniel Loeb Counters Bill Ackman by Taking 8 Percent Herbalife Stake
Posted by: batbeer2 (IP Logged)
Date: January 9, 2013 12:37PM

Why is the CEO not complaining about the stock "manipulation" by the longs?

If he thinks the stock is too low, he should buy-back 35% of the company.
Actions speak louder than words.



Guru Discussed: Daniel Loeb: Current Portfolio, Stock Picks
Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF, AIG, YHOO,
Rate this post:

Rating: 0.0/5 (0 votes)



Re Daniel Loeb Counters Bill Ackman by Taking 8 Percent Herbalife Stake
Posted by: sjzhao2003 (IP Logged)
Date: January 9, 2013 01:07PM

As pointed by Chapman, the company is prohibited by law to buy back their shares during the "quiet period" surrounding important announcements.

The herbalife show is getting quite interesting.



Guru Discussed: Daniel Loeb: Current Portfolio, Stock Picks
Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF, AIG, YHOO,
Rate this post:

Rating: 0.0/5 (0 votes)



Re Daniel Loeb Counters Bill Ackman by Taking 8 Percent Herbalife Stake
Posted by: wescileppi (IP Logged)
Date: January 9, 2013 01:16PM


It appears Ackman might have really set himself up. Oh wait, his JCP investment will counter this chicanery. Oops, maybe not.



Guru Discussed: Daniel Loeb: Current Portfolio, Stock Picks
Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF, AIG, YHOO,
Rate this post:

Rating: 0.0/5 (0 votes)



Re Daniel Loeb Counters Bill Ackman by Taking 8 Percent Herbalife Stake
Posted by: batbeer2 (IP Logged)
Date: January 9, 2013 01:41PM

>> As pointed by Chapman, the company is prohibited by law to buy back their shares during the "quiet period" surrounding important announcements.

Good point. See what they do thereafter then.



Guru Discussed: Daniel Loeb: Current Portfolio, Stock Picks
Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF, AIG, YHOO,
Rate this post:

Rating: 0.0/5 (0 votes)



Re Daniel Loeb Counters Bill Ackman by Taking 8 Percent Herbalife Stake
Posted by: stevenramsey (IP Logged)
Date: January 9, 2013 01:46PM

This is a fascinating spectacle. You can't make this stuff up! Only in real life. I'm enjoying watching and am content not to coat-tail this escapade. One foot hurdles....



Guru Discussed: Daniel Loeb: Current Portfolio, Stock Picks
Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF, AIG, YHOO,
Rate this post:

Rating: 0.0/5 (0 votes)



Re Daniel Loeb Counters Bill Ackman by Taking 8 Percent Herbalife Stake
Posted by: traderatwork (IP Logged)
Date: January 15, 2013 11:13AM

Dan Loeb is trying to short squeeze HLF and he would care less if Herbalife is a pyramid scheme. Until FTC take action, Ackman will have a long 2013.



Guru Discussed: Daniel Loeb: Current Portfolio, Stock Picks
Bill Ackman: Current Portfolio, Stock Picks
Stocks Discussed: HLF, AIG, YHOO,
Rate this post:

Rating: 0.0/5 (0 votes)





Sorry, only registered users may post in this forum.

Please Login if you have an account or Create a Free Account if you don't
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK